Derek Sweeting QC, representing the Claimant in Swift v Carpenter has written a short explanation of the calculation:
In Swift v Carpenter the Court of Appeal departed from the approach set out in the case of Roberts v Johnstone.
“…that approach is no longer capable in modern conditions of delivering fair and reasonable compensation to a claimant.” [Irwin LJ @ §203]
It gave guidance as to the methodology which is to be used in its place to calculate a claimant’s entitlement to the additional capital cost of special accommodation. It is clear that this guidance is meant to be of wide application.
“for longer lives, during conditions of negative or low positive discount rates, and subject to particular circumstances, this guidance should be regarded as enduring.” [Irwin LJ @ §209].
The Court decided that the “windfall” to a claimant that Roberts v Johnstone had sought to avoid could, in effect, be regarded as the present value of the notional reversionary interest (“RI”) in the additional cost of purchase.
Read more here.
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