Beyond Swift v Carpenter – An Accommodation Expert’s View

Here we look at the judgement made recently in the Royal Court of Justice on the Swift v Carpenter case and its impact on accommodation reports. Many solicitors and case managers will have been inundated with barristers explaining the workings of this judgement and the Expert Witness’ at Cowan Architects would not presume to impinge on their area of expertise. However, we felt that a synopsis of how this judgement affected the whole range of Accommodation options might be a useful reference.

In short, the Court of Appeal Judgment provides an effective solution for those cases involving longer life expectation and higher value properties, where the Roberts v Johnstone methodology was considered no longer fit for purpose due to a shifting financial landscape.

For such cases approaching settlement, the ‘reversionary formulae’ applied by the Court of Appeal will be adopted and whilst the instruction of financial experts can be dispensed with, it will be for the Barrister to undertake the requisite financial calculations based on the evidence of the Accommodation Expert. Likewise, the reversionary formula will be adopted in future cases where it is appropriate to do so.

There has been very little explanation of what a Reversionary interest entails. Essentially it is a method used by valuation surveyors to assess the freehold value of a property let on a long lease. The longer the lease, the longer the wait until its reversion to the Freeholder, consequently this relatively reduces its freehold value. While the Defendant in these cases doesn’t benefit from an actual reversion, their Lordships opined that the methodology was sound. Unfortunately, the calculation shows that the shorter the delay to reversion, the higher the freehold value and this rises exponentially. It is generally considered therefore that the formula in Swift v. Carpenter will not be appropriate for ‘short’ life expectancy cases.

However, significant issues remain in relation to the determination of accommodation claims involving short life expectation. This was acknowledged by the Court and Irwin LJ noted that the guidance should not be regarded as a “straitjacket to be applied universally and rigidly”.

The Court of Appeal Judgment in Swift v Carpenter did not:

  • Provide a solution that is appropriate for cases with shorter life expectation;
  • Consider the treatment of betterment;
  • Consider the treatment of wrongful birth claims;
  • Consider the treatment of parental property.

In the significant number of cases where the application of the reversionary interest formula applied in Swift v Carpenter will be inappropriate, there will be little option but to consider the following alternative options that were previously proposed by the Claimant in Swift v Carpenter in the Lower Court:

  • Claiming the cost of an Interest-only mortgage;
  • The funding of an interest-only mortgage through periodic payments;
  • Roberts v Johnstone calculation with say a 2.0% rate of return;
  • Claiming the cost of renting special accommodation.

In short life expectancy cases, Claimants are still likely to pursue such alternative remedies and will require the evidence of both Architects, with authority in disability adaptation, and Financial experts.

David Callin