Monday, 1 December 2014

Leigh Day: Buying houses for clients with spinal cord injuries

It is frequently the case that clients who have sustained a spinal cord injury cannot return to their home following injury because it is no longer suitable.

Instead, often clients need accommodation on one level, suitable for wheelchair use and with extra space for their equipment and therapy needs. Some clients need carers and space needs to be provided to preserve family life and privacy.

Invariably, the new home will cost more because of the need for more space and most homes require adaptation to make them suitable for wheelchair use which could include increasing door width, adapting kitchens and bathrooms and sometimes building extensions for therapy areas and making outside space accessible.

In practice, most houses require substantial adaptation works to make their new home suitable.  Many clients are surprised to learn that whilst the law allows them to claim the full cost of adapting their new home only a proportion of the extra purchase costs are recoverable in their compensation claim.

The legal principles that govern additional accommodation costs are set out in the 1988 case of Roberts v Johnstone.  In a nutshell, only the cost of borrowing the additional money needed to buy the larger house (calculated at the measly rate of 2.5% per year) for the remainder of the Claimant’s life is recoverable.  Not only can’t you borrow money at 2.5%  but life expectancy is based on actuarial tables rather than the actual number of years.  For older clients, or any client with a shortened life expectancy or where clients live in areas where property prices are high, the way this part of their claim is calculated results in a significant shortfall in the amount of funds that are needed to buy the new house.

A key part of our job is to find a solution to this problem.  Ways of getting round this issue are to use other parts of the Claimant’s compensation to meet the accommodation shortfall, for example by using the pain and suffering damages to plug the gap or part of the Claimant’s loss of earnings.

There are also alternatives to the conventional Roberts v Johnstone calculation which can put the Claimant in a far better financial position.  These include renting but only if you can find a landlord willing to allow the necessary adaptations, or an interest only mortgage.  Both of these options can potentially be funded by index linked annual payments for life (periodical payments) from the defendant to cover the expense involved.  Another option is an interest free loan from the defendant who in exchange are given a charge over the new home which is not realisable until after the Claimant has died.  However, many Claimants are not attracted to the idea of renting or living in a home that someone else owns. Where the Claimant has a family to provide for this solution can be unattractive.

At Leigh Day we have extensive experience of dealing with this issue and a track record of successfully obtaining large interim payments to enable clients to buy and adapt a new home during the course of their claims.  The advantages of doing so are that the Claimant is then moved before a case is settled and the actual costs of buying and adapting a home are known and can be claimed as part of the case.  It also enables the care and therapy regimes to be fully established and costed and equipment trialled and bought.  This means that the Claimant’s damages claim reflects the actual rather than anticipated costs which is invariably preferable.

One of the most satisfying parts of our job is seeing our clients and their families move into a new home which has been adapted to maximise their independence.  It can make a huge difference to a client’s life and often provides the platform from which they can build their future.

Sally Moore, Partner & Head of Personal Injury Team & Lorna Bidston, Solicitor - Leigh Day

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