Widow claims for loss of financial dependency

The amount of compensation you can claim for mesothelioma will depend on the circumstances surrounding the exposure to asbestos and the other factors. Generally you would be able to claim for the following:

Pain, suffering and loss of amenity of the deceased If death was preceded by an asbestos-related disease, compensation can be claimed for pain and suffering of the deceased during their lifetime as a result of the disease.

Actual losses Expenses from caring as well as any administrative expenses. This includes hospital expenses, nursing care, medicine, housing adaptations, cost of travelling and funeral expenses.

Loss of earning During the time the deceased was alive but unable to work are also taken into consideration.

Loss of services If the deceased provided childcare, housework, gardening and other DIY chores, this can be factored in to the claim. Also providing care for family members and the cost of hiring replacement carers.

Losses for dependency This can the largest component of mesothelioma compensation claims. If the deceased has dependents - spouse, minor children or aged parents - who depended their income. The amount will vary depending on the income and loss of pension and bonuses. Also allowances such as healthcare benefits, use of company car and mobile phone usage.

Mesothelioma loss of dependency

The following example, Rix v Paramount (2020), focuses on the dependency element of a mesothelioma claim

Mr Rix founded a kitchen fitting and granite worktop firm called MRER Ltd in 1977. The company had a turnover of around £1.5 million a year and had recently purchased new premises with a 15 year business mortgage. Mr Rix had hoped to pass the firm on as a going concern to his 2 sons.

Mr and Mrs Rix each held 40% of the shares in the company and their 2 sons each held 10%. MRER Ltd had gross annual profit in the 2 years prior to death was 358K but Mr & Mrs Rix only paid themselves relatively small dividends and benefits from the business.

Unfortunately, he was diagnosed with mesothelioma and died from the disease aged just 60, so his sons were first to take over the reigns early. In the short term they lost a couple of local authority contracts, but new contracts were won and the company went from strength to strength.

The Case

Mrs Rix decided to pursue a compensation claim against Paramount - where Mr Rix was exposed to asbestos whilst working as an apprentice carpenter and shopfitter in the 1970s.

The court was asked to decide whether Mrs Rix had suffered a loss of dependency. Paramount argued that she had inherited her husbands share in the company and that it was continuing to make a substantial profit. They pointed out that it was a limited company, so was an income producing capital asset and Mrs Rix had suffered no loss of financial dependency.

If there was a financial dependency the court was asked to decide how it should be assessed, and whether Mr Rix would have continued to draw income from the company after his retirement.

The Decision

Mt Justice Cavanagh found in Mrs Rix’s favour in every regard.

The judge stated that there was a loss of dependency as Mr Rix's efforts were a significant factor in the continued success of the company. Following his death from mesothelioma, Mrs Rix should still be entitled to financial benefit from this success. The amount of this dependency should not be determined by the cost of replacing Mr Rix's services, rather by the amount she would have received as a result of his efforts in the business had he lived.

The success or failure of the company after death is not relevant. If it were relavant then there would be a “perverse incentive to fail, because the damages recovered if the business fails would be greater than if the business succeeds”.
The fact the business was a long established, limited company did guarantee Mrs Rix an income generating asset that would continue to generate profits regardless of who was in charge.

Also it was noted that attaching significance to profits generated by company was after the death of Mr Rix would be contrary the Fatal Accidents Act of 1976, which states that benefits flowing from the death are to be disregarded.

The courts considered the practical reality of the financial dependency, which they assessed on the basis of 70% of the likely continuing profits of the company. They also factored in around £100K in pension provisions. The Court also considered whether the usual financial dependency figure of 33% should be deducted from the income or whether a more appropriate figure of 17.5% to reflect Mr Rix’s frugal lifestyle.

As a result of receiving both the damages for dependency and the continued profits from the company, Mrs Rix was better off financially than she would have been had her husband survived.

The parties will now negotiate what losses flow from this judgment, and the final outcome is awaited with interest.

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