England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF DISTRICT REGISTRY
His Honour Judge Hickinbottom
4CF20148

		Royal Courts of Justice Strand, London, WC2A 2LL
		15/02/2008

Post Judgment Discussion




Lady Justice Smith:

Introduction

1. This is an appeal from the order of His Honour Judge Hickinbottom, sitting in Cardiff as an additional judge of the High Court, on 1^st June 2007. Following a hearing for the purpose of assessing the quantum of damages in a claim under the Fatal Accidents Act 1976 as amended, the judge awarded the claimant, Mrs Jennifer May Williams, damages of £1,711,195.85 plus interest of £109,308.95, making a total award of £1,820,504,80. The judge himself gave permission for the defendant, the Welsh Ambulance Services NHS Trust, (now the appellant) to appeal to this Court.

The Factual Background

2. Gordon Francis John Williams (Mr Williams) was killed in a road traffic accident on 16 June 2001. His car was struck by an ambulance driven by an employee of the defendant. The claimant commenced proceedings under the Fatal Accidents Act in June 2004 and liability was admitted. By amendment of her claim in 2006, the claimant sought damages not only for her own loss of dependency but also on behalf of her three adult children, David (born July 1977), Sarah (born August 1978) and Ruth (born January 1982).
3. At the hearing, the factual evidence was hardly at all in dispute. The family history is unusual, indeed remarkable. Mr Williams was born in August 1951. He died shortly before his 50^th Birthday. His parents were agricultural workers but his father gradually changed to doing building work. In the early 1960s, the family moved to Hay on Wye and the father purchased a builder's yard with a cottage in the grounds. The family began by selling wood from the yard and then began also to sell builders' supplies. When Mr Williams was 22, his father died. He became primarily responsible for supporting his mother and younger brother who was still at school. The business was at that stage quite small but Mr Williams was a man of unusual energy, flair and drive. He continued to run the builders' merchant business and also diversified into property. Within a short time, he had raised a loan to buy two houses near the yard and converted them into flats.
4. Mr and Mrs Williams married in 1975. They became joint partners in the business. Mr Williams continued to develop it and Mrs Williams helped him when she could, consistently with her family responsibilities. Mr Williams worked very long hours; indeed, at the trial he was described as a workaholic. Work was a pleasure to him and, along with his family, his main interest in life. In addition to expanding the builders' merchant business, he bought and redeveloped a number of properties. He also had an interest in acquiring and refurbishing old steam engines and agricultural machinery.
5. The eldest child David developed an interest in the business from an early age and, in 1995 when he was 18, after acquiring a diploma in business management, he entered the business full time. His duties were appropriate to his youth and lack of experience. He worked in the yard and on the maintenance of vehicles. At the trial it was accepted that the economic value of his labour was about £15,000 per annum. He received no salary but he became an equal partner with his parents. By this time, the business had a fairly stable annual turnover of about £1.1 million and profits of about £300,000. Thus David, as a one third partner, was receiving very much more from the business than the economic value of his labour. Mrs Williams was still working in the business, for about 8 hours a week. She sent out invoices to customers. She too received no salary and her share of the profits was far greater than the economic value of her labour (about £3,000 per annum). That was in accordance with the wishes of Mr Williams. Although he was the manager of and driving force behind the business, he always wanted it to be a family venture, run for the benefit of every member of the family. It should be added that this way of distributing the profits was tax efficient.
6. In 1998, when she was 20, Sarah too joined the business, after leaving college. She too was made an equal partner. She undertook general office duties. She received no salary and her share of the profits was much greater than the economic value of her labour (about £15,000).
7. Ruth, the youngest child, suffered ill health during her teenage years. She began to undertake very light duties in 2000. These increased after her father's death and, when her health had recovered in 2002, she became a partner and eventually became responsible for running the office.
8. The family's financial position in the period before Mr Williams' death was extremely comfortable. In the year ending 31^st March 2001, the business profits were about £384,000. The 2001 capital accounts of the family members amounted to about £1.6 million including £650,000 in cash. In addition Mr Williams had amassed a family property portfolio. It was not valued at that time but, when valued in 2006, it was estimated at £3.9 million. By the time of his death, each of the three children of the family had been provided (in his or her own name and free from mortgage) with a house to live in when he or she wanted to move away from the family home. Further than that, there was the steam engine and farm machinery collection then worth about £300,000 (over £500,000 when valued in 2006). At today's values, the family was then worth of the order of £6 million.
9. The income position was also very satisfactory. At the year ending March 2001, each partner was entitled to £88,630. Mrs Williams, the claimant, had in that year put in labour worth approximately £3000. David and Sarah had put in labour worth about £15,000.
10. As the judge observed, the business had grown as the result of Mr Williams' drive, energy and flair. The property portfolio and the steam engine collection had all been financed from the business and had grown in value as the result his keen eye for good investment and his energy and skill in carrying out work of development and refurbishment. The judge aptly described Mr Williams as a 'wealth creator'.
11. It is convenient at this stage to mention briefly the rather unconventional way in which the family organised its finances on a daily basis. All the household and personal expenses of each member of the family were paid for directly from the business's current and savings bank accounts. So also were property and steam engine purchases. The independent accountant instructed by the business had the unenviable task of sorting out which payments were for business purposes and which of the non-business payments were to be allocated as private drawings to which partner. Similarly non-business income such as rent had to be allocated to each partner's account.
12. The sudden death of Mr Williams in June 2001 came as a devastating blow to the family. That is always the case with any close knit and affectionate family, as this one was, but in this case there was the additional loss of the driving force behind the family's economic success. On the death, Mrs Williams inherited Mr Williams' share of the business. However, in accordance with the family policy, the shares were equalised between the remaining partners. It says a great deal for their resilience and resourcefulness that, within a short time, David and Sarah had taken over the management and direction of the business in place of their father. They had to put in longer hours than before. Mrs Williams, too, increased her hours of work. Before long, Ruth also joined the business and, on doing so, was made an equal partner with her mother and siblings.
13. The period after the death was an anxious and distressing time for all of them but their efforts have been rewarded by the continued success of the business. In the years since Mr Williams' death, the business has thrived; turnover and profits have risen. Each year, profits have exceeded £400,000 and in the year ending March 2005, which was particularly good, they reached £513,000. It is not clear whether these increases are due to expansion of the business, improved financial management or external economic factors. But the position is that, in each year since the death, each member of the family has received more as profit than he or she had done before Mr Williams' death. David and Sarah have also continued to make some property acquisitions and David has undertaken a few transactions in respect of the steam engine collection.

The Claim for Damages

14. As initially advanced in 2004, the claimant sought damages only for the loss of her own dependency. The claim was advanced in a conventional fashion, based upon the loss of Mr Williams' share of the profits of the business and from the property portfolio. The annual loss of dependency was assessed, in round figures, at £31,500 from the business and £18,000 from property. Updated for inflation to 2004 values, the claim was for an annual dependency of £49,500. It was said that the multiplier was a matter for the court and nothing was said about the children.
15. In 2006, permission was obtained to advance a completely restructured claim. It was then alleged that the children also had been dependants of Mr Williams. Also a completely new approach was taken to the assessment of the dependencies. Instead of looking at profits/earnings figures, it was claimed that the right approach was to value the cost of replacing Mr Williams' services to the business and the family. It was contended that the cost of his replacement as the manager of the builders' merchant business was £87,500 per annum, to which was added 11% for the employer's National Insurance contribution, making a total of £97,125 gross or £58,300 net of income tax. (Those figures as such were eventually agreed by the appellant.) It was contended that Mr Williams would have worked in his leading managerial capacity until the age of 70, after which time he would have undertaken limited duties worth £11,660 until the age of 80.
16. The replacement cost of Mr Williams' services as a property developer were also assessed. Although the basis on which this was advanced was hotly contested at the trial, no issue arises on the appeal and it suffices to say that the annual cost of replacing his services was estimated at £42,900 until the age of 70 and £39,000 thereafter until the age of 80.
17. The annual cost of replacing Mr Williams' activities in finding, buying and restoring steam engines and other machinery was estimated at £25,840 until the age of 70 and thereafter at £4,000 until age 80. Although these figures were not agreed, no issue arises on this appeal.
18. The amended claim also claimed tax relief on Mr Williams' pension contributions. He had been contributing about £15,000 per annum to his pension fund. This would have continued to the age of 60. He would have benefited from tax relief at 40% on those contributions, which came to £6,000 per annum.
19. As for the dependency, it was alleged that Mr Williams spent very little on himself. In the six years before his death, his personal drawings from the business had been only £62,644 in total. He neither drank nor smoked. He did not take holidays. He did not buy expensive clothes or vehicles. A dependency of 85% of his 'value' to the business was suggested, with no deduction from the value of his property or steam engine activities.
20. In addition to the replacement of his economic services, it was alleged that Mr Williams did gardening and DIY jobs around the home. These were valued at £9 per hour for 5 hours a week, which came to £2,300 per annum. It was claimed that he would have continued with such services until the age of 80. It appears that the indefatigable Mr Williams would then have allowed himself to take a well-earned rest.
21. Submissions as to the appropriate multipliers were advanced, all on the (unchallenged) basis that Mr Williams was in excellent health at the time of his death. Using a multiplier from the Ogden tables, the claim was said to be worth £2.5million. However, at that time, the courts were not prepared to use the Ogden tables. Multipliers based on the principles expounded in Cookson v Knowles [1979] AC 556 were put forward on two bases. On the less generous basis, the total award claimed came to £1.7 million. There were also claims for damages for bereavement and funeral expenses, including a wake.
22. In neither the Amended Particulars of Claim nor the Amended Schedule of Loss was the alleged dependency of the children expressly explained. It was simply said that they were dependants. It must be observed that, as three able- bodied adult children, they were unusual dependants. However, this was an unusual case. When the hearing began, the judge was asked to assess the loss of dependency of the family as a whole and not to apportion it between the widow and children. They wished to deal with apportionment themselves and all were (and are) of full age and capacity. The judge acceded to that request and no point now arises on that in this appeal.
23. The appellant's response to this claim was to allege that there had been no loss of dependency at all. The family business, property and steam engine activities had all been carried on after Mr Williams' death and had continued to make profits or added value of at least as much as before. Comparing the positions of the claimant and children before and after the death, it could be seen that they had not been dependent on the deceased at the time of the death. The claim should be limited to damages for bereavement, funeral expenses and some other expenses (in effect the cost to the business of replacing David and Sarah in their modest pre-2001 jobs) and other incidental expenses, none of which had been claimed.
24. On the face of it, it seems surprising that the death of a man as hardworking and successful as Mr Williams, who had by his own efforts amassed so considerable a fortune and who would have continued to generate wealth for many more years, should give rise to no significant dependency, not even for his widow. However, it was on that basis that battle was joined.

The Judgment

25. Judge Hickinbottom rejected the appellant's contentions. To all intents and purposes, he accepted the claimant/respondent's case. He adopted the claimant's proposed method of assessing the cost of replacing the services rendered by Mr Williams. He held that Mr Williams' personal expenditure accounted for only 12.5% of the cost of his services as manager of the builders' merchants business. Everything else had been for the benefit of the family and this should all count as their dependency. He made some minor adjustments to the figures claimed and, as I have said, awarded just over £1.7 million plus interest.

The Appeal - Submissions

26. Although the notice of appeal set out seven separate grounds, at the hearing these were abandoned or amalgamated, so that one main ground remained. Indeed, we understand that it was on this issue alone that the judge gave permission to appeal. The issue was that the judge had erred in law in holding that there was any dependency at all, whether for the widow or the children. Some criticism was made of the judge for assessing the dependency by reference to the cost of replacing his services but no alternative method was suggested. The real complaint was that there was no dependency.
27. Mr William Stevenson QC for the appellant submitted that the judge had correctly set out the issue between the parties and had cited the relevant sections of the Fatal Accidents Act. But, complained Mr Stevenson, instead of then grappling with the real issue between the parties, he had assumed that there was a dependency and moved immediately to the assessment of its value. To the extent that he had dealt with the dependency point at all, the judge had been wrong. He had awarded a substantial sum when, in truth, there was no dependency. The family had been at least as well off after the death as before. Their income came from the builders' merchants business; that business had continued to provide them with a similar (or larger) income after the death. The judge had been wrong to focus on the efforts of the deceased. He should have focussed on the business and its generation of profit.
28. Mr Christopher Purchas QC for the respondent submitted that the judge had not failed to deal with the main issue of law; indeed he had dealt with it at some length. Moreover, his conclusions were right for the reasons he gave.

The Judgment

29. The relevant section of the judgment began at paragraph 40. The judge had already set out the facts and had said that they were not in dispute. He summarised the submission advanced by Mr Christopher Purchas QC for the claimant that there was a loss of dependency, 'namely the loss of Mr Williams' contribution to the business and other activities – in effect, the loss of his services – which can be valued by assessing what it would cost to replace'. He summarised Mr Stevenson's submission that 'the members of the family claiming as dependent (i.e. Mrs Williams, David, Sarah and Ruth) were, both collectively and individually, financially better off now than they were before Mr Williams' tragic accident.' He quoted from Mr Stevenson's closing submission:

"This, in the submission of the Defendants is the antithesis of dependency. It may be his greatest memorial is that Mr Williams, during his lifetime, achieved all of this and succeeded, without qualification, in providing security and independence for his wife and children."

30. The judge then explained the origin of the first Fatal Accidents Acts in 1846 and noted that the main sections had not changed significantly. He quoted sections 1(1), 1(2) and 3(1) as follows.

"1(1) If death is caused by any wrongful act, neglect or default which is such as would (if death had not ensued) have entitled the person injured to maintain an action and recover damages in respect thereof, the person who would have been liable if death had not ensued shall be liable to an action for damages, notwithstanding the death of the person injured.

1(2) …[E]very such action shall be for the benefit of the dependants of the person .. whose death has been so caused ….

3(1) In the action, such damages, other than damages for bereavement, may be awarded as are proportioned to the injury resulting from such death to the dependants respectively."

31. The judge did not mention section 1(3), which defines the word dependants in section 1(2) but no issue arises from this because both Mrs Williams and the children were within the class of persons who can be dependants. Of course, merely being within the class of dependants does not mean that there was in fact a dependency. As is apparent from section 3(1), the claimant has to show that the death has resulted in loss (capable of being valued in financial terms) to the dependants. That does not mean to say that the claimant necessarily has to show that each alleged dependant was in fact being financially supported by the deceased immediately before the death or even that the deceased was providing services for the alleged dependant. That will often, indeed usually, be the way the case is put; it will be said that the deceased would have continued to do what he had been doing just before the death. But it is sufficient if the claimant shows that each alleged dependant had an expectation of future benefit (whether in money or services) deriving from the deceased, which has been lost as the result of the death.
32. At paragraph 46, the judge embarked upon an explanation of the way in which the law relating to fatal accident claims had changed over the years, in particular in respect of the way in which benefits accruing to the dependants as a result of the death are dealt with. He noted the early rule that all benefits were to be deducted and that claimants were only to recover their net loss, as expounded in Davies v Powell Dyffryn Collieries [1942] AC 610. He noted that there a tide flowing against the deduction of benefits culminating, in 1982, in an amendment of the FAA 1976 by the substitution of a new section 4 as follows:

"In assessing damages in respect of a person's death in an action under this act, benefits which have accrued or will or may accrue to any person from his estate or otherwise as a result of his death shall be disregarded".

33. Then at paragraph 47, the judge said:

"This entirely swept away the common law rule of deduction. 'The immense range of this omnibus provision needs to be appreciated' (McGregor on Damages, 17^th Edition (2003), Paragraph 36-103); and the Courts have generally resisted attempts to limit the meaning or effect of the section 4 (see, eg, Stanley v Siddique [1992] QB 1 and Roerig v Valiant Trawlers Ltd [2002] 1 WLR 2304). As Dr McGregor says (Paragraph 36-110):

Even before the Act of 1982 swept all benefits into oblivion, Lord Diplock in Cookson v Knowles [1979] AC 556, with reference to the provisions of the 1976 Act, was saying this:

'Today the assessment of damages in fatal accident cases has become an artificial and conjectural exercise. Its purpose is no longer to put dependants, particularly widows, into the same economic position as they would have been in had their late husband lived.'

It is therefore important to be cognisant of the limited extent to which, despite Section 4, benefits accruing to a claimant may be effective to impose checks upon the damages."

This is a stark warning against the superficial attraction of arguments such as that of Mr Stevenson in this claim that there is no dependency because the purported dependants are financially better off now than they were before Mr Williams' death. Because of the general statutory principle of non-deduction of benefits consequent upon the death, one cannot simply look at the financial position pre- and post-accident to determine whether there is a dependency and, if so, its value."

34. Having said that, the judge turned, at paragraph 48, to consider the usual method of assessing the dependency or, as he put it, assessing the amount of the pecuniary benefit which the dependants could reasonably have expected to receive from the deceased in the future had he lived. Looking at the judgment at that point, it does seem that the judge moved to the quantification of the dependency without dealing with the question of whether there was any dependency. However, if one reads on, one finds that the judge had not forgotten the point. In paragraphs 48 to 52, he considered the usual methods of assessing dependency.
35. In paragraph 53, he considered what the position is where the assets, which had given rise to the income by which the deceased had supported the dependant, passed to her under the deceased's will. He referred particularly to Wood v Bentall Simplex [1992] 1 PIQR 332 at pages 348-9. In that case, the deceased was a farmer in partnership with his parents and brother. The partnership assets were worth about £600,000. He earned only £3,000 per annum in salary although the farm provided him with accommodation and some benefits in kind. The annual value of the dependency was agreed at just over £14,000. On the death, the widow inherited the deceased's interest in the farm but was unable to realise it, unless it was sold. She accepted the house and some grassland in part satisfaction of her share of the assets and was also to receive 12.5% of the profits. Some time later, the partnership was dissolved and a new arrangement entered into by which the widow became entitled to 20% of the profits. At the trial, the question arose as to whether the dependency was to be reduced by taking into account the income from the assets that had passed to the widow under the will. It was accepted that these benefits could not be deducted under section 4 of the Act but it was contended that they should be taken into account under section 3. (In effect this was similar to Mr Stevenson's argument in the present case). The judge rejected that submission and this court upheld him.
36. Judge Hickinbottom drew from this case the general principle, which is plainly correct, that where the widow inherits the assets which have produced the income from which the dependency derived, she cannot have both the inherited assets and damages for loss of the income. The judge also noted that Staughton LJ had held that, before there could be any consideration of deductions under section 4 of the Act, the judge had to assess what loss the dependants had suffered. He observed that this reflected the two stage approach advocated by Oliver LJ in Auty v National Coal Board [1985] 1 WLR 784 at page 804D namely that the questions for the court were (i) is there any loss resulting from the death? and (ii) if there is, what are the appropriate damages for that loss? The judge said that if the dependants inherited the capital which was the source of the income, the answer to the first question was in the negative and the second question did not arise.
37. Then, at paragraphs 54-55, the judge turned to consider what the position would be in a case in which the deceased's income before death had been derived partly from capital and partly from his labour. This was relevant because this family's support before the death had derived partly from the capital Mr Williams had amassed and partly from his work as manager of the business. The judge referred again to the judgment of Staughton LJ in Wood where he had concluded that the judge had to ascertain how much loss had arisen because the deceased was no longer alive and able to work and how much of his income had been derived from capital which the dependants had inherited. In short, assuming that the dependants had inherited the capital (as was the case here) the judge had to separate out capital (which did not give rise to any loss of dependency) and income which had been earned and which would give rise to a loss of dependency because it would come to an end at the death. The judge noted that, in the case of Wood, the value of the deceased's labour had been accepted as the proper measure of the dependency.
38. The judge then referred to the case of Cape Distribution v O'Loughlin [2001] EWCA Civ 178. In that case, the deceased had owned a number of properties. His employment had been to manage the existing properties and also to develop and enhance his portfolio. After his death, the widow inherited the properties and, for a while, she attempted to manage them as her husband had done. She did not have the aptitude for asset development and enhancement so she sold some of the properties and lived on the income. She claimed a loss of dependency. At first instance, Forbes J held that there was a dependency. Had he lived, the deceased would have gone on managing and enhancing the property portfolio as before. The judge valued the loss of dependency as the cost of replacing the deceased's skills as manager. The Court of Appeal approved this approach, saying:

"In the present case, the judge came to the clear conclusion that the dependants had lost the flair and business acumen which would, by clear inference have resulted in a successful development of the property portfolio which represented the family assets, with the consequential increases in both the capital and the income value of the portfolio. In my view the judge was clearly correct in concluding that the dependants had thereby suffered a loss capable of being measured in money terms."

39. The judge said that O'Loughlin bore considerable similarities to the present claim. Mr Stevenson submitted that it could be distinguished on the facts. Whereas Mrs O'Loughlin had tried to run her husband's business and had failed, David and Sarah Williams had tried and succeeded. That could not be ignored. Whereas Mrs O'Loughlin was worse off after the death, the Williams family were just as well off as they ever had been. The judge rejected that submission because it was based on the premise that, if Mrs O'Loughlin had had the aptitude to run the property business, there would have been no dependency. He did not accept that premise. The judge cited a passage from paragraph 16 of the judgment of Latham LJ in O'Loughlin where he said:

"The cost of such advice therefore represents the most secure basis from which to attempt to place a pecuniary value on the loss to the dependants arising from Mr O' Loughlin's death. Whether she chooses to have such an advisor or not is another matter. But the fact will always remain that she and the dependants will have lost the services of Mr O'Loughlin as the manager of the family assets and that loss is capable of being valued in money terms. I have no doubt, in these circumstances, the judge was entitled to take the course that he did." (Italicised emphasis added by Judge Hickinbottom).

40. Quite apart from the factual differences between O'Loughlin and the present case, the judge rejected Mr Stevenson's submission as a matter of principle. He acknowledged that there were some types of factual development which the court would take into account if they occurred between the death and trial. For example, money values such as wage levels would be dealt with on the basis of the most up to date information available. Also, if for example a dependant died before the trial, that would have to be taken into account. He continued:

"64. However, generally dependants cannot by their actions affect, either to their advantage or to their disadvantage, the existence or value of a dependency. For example, as Mr Stevenson accepted (Closing submissions, Paragraph 22(f)), had Mrs Williams and the other dependants in the case before me decided to sell the builders' merchant business and live off the income of the capital produced, that would not have affected any dependency claim they might have had. It would have been no answer to such a claim that they ought to have attempted to carry on the business and tested out their ability to do so. The same would have applied if they had sold that business and purchased a business of a different type – a hairdresser's was the example used in debate – which was as financially successful as the builders' merchants had been under Mr Williams. As Beldam LJ said in Wood (at page P342 and P346):

'It is immaterial that after the deceased's death the family put the whole or part of the assets to a different use producing additional income …

[W]here there is clearly established a loss from one source, the fact that it may be made good from another by using the benefit received from the estate of the deceased is beside the point …'

Neither, in my judgment, can the identification and valuation of a dependency depend upon the success or otherwise of dependants' efforts to run a business that they inherited. On policy grounds alone, this would be repugnant, as it would encourage failure and penalise success."

"65 The fatal flaw in these linked submissions is the same as that identified in the defendants' case in Wood and O'Loughlin respectively. The business insofar as it was owned by Mr Williams was a capital asset that was inherited by the dependants. As such, in respect of dependency it has to be left out of account altogether on the grounds elucidated in Wood, ie insofar as the dependants are concerned, that asset was wealth producing for them before Mr Williams' death and that remains the case after his death, so no loss to them has resulted from the death. (This is how I consider income effectively produced from assets should be dealt with. However, if I am wrong and such income is regarded as a loss which would otherwise be taken into account for the purposes of a dependency claim, it would in any event have to be disregarded by virtue of Section 4 of the 1976 Act. In either case, such assets and whatever might happen to them after the deceased's death cannot adversely affect a dependency claim.) What the dependants have lost is not income derived from a capital asset, but the contribution of Mr Williams as the manager of the business and family assets (including property and steam engines); his flair, skill, expertise and energy in the various wealth creating projects on which he engaged in his life and which, had he lived, he would have continued to engage upon. That is a real loss, which can be valued in moneys worth. Given that that is their loss in my judgment, just as it was irrelevant whether Mrs O'Loughlin hired expert assistance or not, it is irrelevant whether the Williams' dependants hired someone to replace Mr Williams' skills and services, or sold the business and reinvested the proceeds in capital assets or another business, or indeed (as they did) replaced those skills and services with their own. None of these can affect or diminish the true loss to the dependants as dependants. (Italics added by me)

67. By Mr Williams' death, his dependants have lost his very considerable skills and services in relation to the builders' merchant business, and wealth creating property and steam engine activities. They can be valued in moneys worth: and, in the circumstances of this case, I consider their dependency can most appropriately be measured by asking how much it would cost to replace those skills with another person capable of bringing those skills to bear upon the various activities engaged upon by Mr Williams. That is the approach I propose to adopt."

41. That disposed of Mr Stevenson's argument that there was no dependency because the family was as well off after the death as before. However, the judge went on to deal with an issue that had worried him (and I confess worried me for a time) even though it had not been specifically pursued by Mr Stevenson. It was the question of whether the children could properly be described as dependants at the time of the death and, even if they were, whether their dependencies would have lapsed at some stage. All the children were over 18 in 2001. David and Sarah were in full time employment. Ruth was not; her health had been poor in her late teens, although she was to take full time employment in 2002. It is unusual to find that adult children, sound in mind and body are dependent on their father; it is even more unusual to find that they would have remained so for the rest of their father's working life. The judge was also concerned that he had been asked to assess the dependency of the family on a collective basis, rather than, as is usual, to assess the dependency of each dependant individually.
42. The judge dealt with both of these issues together, observing that, on reflection, he thought that Mr Stevenson had been right not to argue either point. At paragraph 72 he said:

"In respect of dependency claims, the Court will look to the reality of the family situation (see, eg, Malyon v Plummer [1964] 1 QB 330). Although it may well be that much of the dependency value would be applicable to Mrs Williams' dependency in any event, the reality of this family is that, for the reasons I have given, Mrs Williams and the three children were each dependent upon Mr Williams at the time of his death, financially relying upon his skill and wealth creation. Their own respective contributions to that effort were small, and did not correlate to the rewards they obtained as partners in the business. To a large extent, they were dependent upon their father; and, on my findings, would have remained dependent. For the reasons I have given, the reality was that this was very much a family business and the property and steam engine activities were also family enterprises, and therefore, given the agreement between the parties, I am content to make a global award and not to deal with the dependency entitlement inter se. The loss of Mrs Williams and the three children as dependants is, in my judgment, properly valued in the manner I have proposed."

43. The judge was then satisfied that he had dealt with all issues of principle and he went on to quantify the dependency, as to which no issue arises on this appeal.

Discussion

44. It must, I think, be apparent from the passages of the judgment I have quoted that the judge did indeed deal with the issue of law raised by Mr Stevenson. It cannot be said that he assumed that there was a dependency and went immediately to assess its value. He considered the cases of Wood and O'Loughlin, which he thought were of assistance in that they had some similarity to the present case. O'Loughlin was particularly useful, not merely because it supported the method of assessment which the judge was eventually to adopt (by valuing the cost of replacing the deceased's skills) but also because it dealt with a case in which the deceased was an entrepreneur who, during his life, had by his effort accumulated assets and earned income and who would, if he had lived, have continued to earn income and accumulate assets. That helped the judge to see what the dependency was in the instant case and to describe it as he did in the passage in paragraph 65 which I have italicised.
45. The position was that, during his lifetime, Mr Williams was a wealth creator. He worked hard physically and he had entrepreneurial skills which he put to good use. It is instructive to note that, between the ages of 20 and 50, his efforts resulted in the accumulation of over £6 million. With all due respect to his wife, who was plainly supportive of him as a wife and mother, she played no significant role in the wealth creation. It was agreed that her services to the business could have been purchased for about £3000 per annum at today's values. Yet, her benefits from her husband's efforts had been very substantial. She was already the joint owner of a number of properties and she enjoyed a share of the business profits far in excess of the value of her labour. If Mr Williams had lived, he would have gone on generating wealth in the way that he had done before and, as the judge found, would have continued to do so for another 30 years, although with some reduction in rate after the age of 70. Mrs Williams would plainly have continued to benefit from his efforts as she had benefited before. Nothing could be more obvious than that Mrs Williams lost a very valuable dependency upon her husband's death.
46. Consider the children's position. At the time of the death, David and Sarah were working in the business doing jobs with an agreed economic value to the business of £15,000 per annum. Yet, they were in receipt of profit shares of about £75,000. Why was that? The answer was because their father was generating large profits by his management of the business and (instead of taking out a large salary for himself as he could well have justified doing) giving them far more than they were earning. David and Sarah were plainly dependent on their father for the profits they were receiving to the extent that those profits exceeded the value of their labour.
47. Ruth's position was different in that she had not yet begun to work in the business and had not yet been made a partner. At the date of the death, her dependency was the conventional dependency of a child, in that she was being supported by money generated by her father. However, it was always the family's intention that Ruth would enter the business and would become an equal partner. So, on the death, she lost the expectation that she would benefit from a share of the profits generated by her father, which would have greatly exceeded the economic value of the services she would have rendered.
48. There was another aspect to the children's dependency. During his lifetime, Mr Williams (by his efforts) generated the money with which a property had been bought for each of the children. By his physical efforts, these properties had been done up or were in the course of being done up. If he had lived, there is every reason to think that he would have continued to generate the money for more properties to be purchased and that some of those properties would have been given to the children.
49. Thus it is plain, in my view, that Mrs Williams and the children were dependants of Mr Williams at the time of his death. The fact that each of them was as well off after the death as before, because David and Sarah took over responsibility for managing the business and did so successfully is nothing to the point. As the judge observed, a dependant cannot by his or her own conduct after the death affect the value of the dependency at the time of the death. To take Mrs O'Loughlin as an example, her dependency was the same whether she tried to run the property business but failed, or tried to run it and succeeded or refused to try at all. In refusing to try, she might have decided to sell all the properties, or she might have employed someone to run it as a manager or she might simply have done nothing and let it run downhill. Whatever she did and with whatever result, good or bad, she could not affect the value of her dependency on her husband at the date of his death.
50. Accordingly, in my judgment, Judge Hickinbottom was right when he held that it was irrelevant that David and Sarah had made a success of the business. That was not because the financial benefit which they had brought to the family was a 'benefit accruing as a result of the death' which had to be ignored under section 4. It was because that financial benefit was irrelevant to the assessment of the dependency under section 3. He was correct when he said that nothing that a dependant (or for that matter anyone else) could do after the death could either increase or decrease the dependency. The dependency is fixed at the moment of death; it is what the dependants would probably have received as benefit from the deceased, had the deceased not died. What decisions people make afterwards is irrelevant. The only post death events which are relevant are those which affect the continuance of the dependency (such as the death of a dependant before trial) and the rise (or fall) in earnings to reflect the effects of inflation.
51. Once it has been established that the surviving members of the family were indeed dependants of Mr Williams, the judge's task was to assess the value of the dependency. He was asked to do that on a global basis. It was apparent to the judge that the method of assessment which had been adopted in Wood and O'Loughlin was much the most convenient way of doing this. That was because, by focussing on the value of the deceased's services, it was possible to exclude any benefit which had come to the family by inheritance under the deceased's will. Any other method of assessment would have been difficult and complicated because of the need to separate out income which was derived from capital from that which was derived from labour. The method adopted by the judge went straight to the value of the deceased's labour. The judge was right to choose this method of assessment.
52. For the sake of completeness, I mention that, in the course of his reply, Mr Stevenson sought to argue a new point. He submitted that the judge had fallen into error because he had failed to appreciate that the relationship between Mr Williams and the other members of the family was in fact a business relationship. He sought to rely on Burgess v Florence Hospital for Gentlewomen [1955] 1QB 349. That case is authority for the proposition that, where the relationship between the claimant and the deceased was primarily a business relationship, the claimant cannot claim a dependency merely because he or she also happens to fall within the class of dependants of the deceased. The Fatal Accidents Act does not give a right of recovery for the loss of business profits suffered by the surviving business partner(s) on the death of one partner. It provides a right of recovery for the loss of a dependency which is founded in the relationship of husband and wife (or parent and child or whatever the relationship was). If the relationship is primarily that of business partners, the mere fact that the partners happen to be husband and wife or father and son does not enable the survivor to claim a dependency on the death of the other partner. If the relationship is primarily that of family membership where the deceased provides support or services for other members of the family, it matters not that their financial arrangements take the form of a business partnership. I do not think it would make any difference if the arrangement was that of a limited company. The court will look at the substance of the relationship and the real nature of the support provided.
53. Mr Stevenson had not sought to argue this point before the judge and it was too late for him to do so in reply on the appeal. But in any event, the case did not assist him. Any attempt to demonstrate that the relationships here were primarily business relationships was doomed to failure. It was plain that the members of this family were brought into what would otherwise have been Mr Williams' sole business because they were members of the family and it was his intention that they should benefit from it. In my view, far from assisting the appellant, consideration of Burgess underlined the correctness of the judge's ruling.
54. In my view, the judge's approach was correct, for the reasons he gave. I would dismiss the appeal.

Lord Justice Lloyd: I agree.

Lord Justice Thomas: I also agree.

Post Judgment Discussion

Lady Justice Smith DBE:

1. For the reasons set out in the judgment which I now formally hand down, this appeal is dismissed. The parties have very helpfully agreed the terms of the order as follows, subject as provided as follows. The stay on the judgment of the court below is lifted. The appellants will pay interest on the judgment sum of £1,820,504.80, from date of judgment to today, being the sum of £103,343, and thereafter continuing to date of payment at the rate of 8 percent per annum. The sum of £50,000 in court to be paid out forthwith to the respondent's solicitor in part satisfaction of the judgment sum; interest that has accrued on the money in court to be paid out forthwith to the appellant's solicitor. The appellants are to have 28 days to satisfy the balance of the judgment sum together with interest. The appellants are to pay the respondent's costs of the appeal on the standard basis to be subject to detailed assessment if not agreed, and the appellants are to pay £100,000 on account of costs within 28 days.

Order: Appeal dismissed.