The Perverse “Benefits” of Death: Statistical Percentages and Loss of Services Claims

death claims accountants

By Lance Kahler

A recent judgement handed down by the Supreme Court of NSW makes it clear that a thorough understanding and working knowledge of the statistical percentages relevant to wrongful death claims is essential not only in respect of claims for loss of expected financial support; but also for matters where the only head of damage claimed is for loss of domestic services.

Practitioners who regularly advise in this area would be well acquainted with the so-called “Luntz tables” and the statistical dependency percentages published therein. Practitioners should also be aware of a paper titled “Personal Consumption Percentages in Australia – Current Tables for 2015” published in January 2015 and authored by my colleagues, Michael Lee and Julia Bossert (the Lee & Bossert paper[1]). Whilst a detailed discussion of the Lee & Bossert paper is beyond the scope of this article, for present purposes it is enough to say that (a) the Lee & Bossert paper sets out alternative statistical percentages that can be applied when attempting to assess a deceased’s “personal consumption expenditure”, and (b) Professor Luntz has foreshadowed publishing the Lee & Bossert statistical percentages in his upcoming Fifth Edition of his seminal text, Assessment of Damages for Personal Injury and Death.[2] Hereafter, I will refer to the dependency percentages set out in the Luntz tables and the personal consumption percentages set out in the Lee & Bossert paper collectively as “statistical percentages”.

Traditionally, in the writer’s experience, statistical percentages have been almost exclusively utilised in wrongful death claims to assess the loss of expected financial support suffered by the surviving dependents. In effect, the loss of expected financial support suffered by the surviving dependents is calculated as the difference between (a) the income the deceased would have contributed to the household but for his or her death, and (b) the income the household has saved and / or will save as a result of the death of the deceased. The amount saved by the household is commonly referred to as the deceased’s personal consumption. The statistical percentages are, in effect, utilised to assess household savings in respect of the deceased’s personal consumption, having regard to household composition (i.e. number of dependents) and household income (in the case of the Lee & Bossert percentages).

But what of the situation where the deceased did not and would never have contributed an income to the household (e.g. where the surviving spouse was the family’s sole income earner), regardless of his or her death? In such a case, the surviving dependents will be limited to the loss of domestic services claim. Are the statistical percentages relevant to this set of circumstances? The answer to this question is a resounding “Yes”. This is because whilst the surviving dependents will suffer a loss of the deceased’s domestic services, they will also receive a “benefit” being the savings in household expenditure that will accrue as a consequence of the death of the deceased; that benefit is the household savings in relation to the deceased’s personal consumption. This approach was affirmed in the relatively recent case of Norris v Routley [2015] NSWSC 883 (7 July 2015).[3]

In that case, the surviving spouse was a very high income earner and the household’s main “breadwinner”. After applying the Luntz statistical percentages to the assumed level of household income, the Court found that (a) the deceased’s personal consumption expenditure would have been much greater than his contribution to household income, and (b) the excess of the household savings in respect of the deceased’s personal consumption must be offset against the loss of services claim. The effect was to reduce what was, at first glance, a potentially large damages claim to an award of around $22,000.

Accordingly, a thorough understanding and working knowledge of the application of statistical percentages in the context of assessing a deceased’s personal consumption expenditure is essential when assessing all wrongful death claims; not just for those matters where a claim is made for loss of expected financial support.

[1] https://vincents.com.au/wp-content/uploads/2016/07/personal-consumption-rates-2015.pdf
[2] https://vincents.com.au/wp-content/uploads/2016/07/agreed-statistical-tables-for-loss-of-fi.pdf
[3] A decision which was recently upheld in the Court of Appeal – Routley v Norris [2016] NSWCA 367.

 

Want to know more?

For more information on assessing damages in wrongful death claims or forensic accounting services generally, please contact Lance Kahler our Forensic Services Director.

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