The judge erred in law in only including rental income and state pension as surviving income and failed to take account of surviving income in the form of a share of profits in MRER and Mrs Rix’s director’s salary.The Appellant argued that Mrs Rix’s shareholding and salary were designed to minimise tax and should not have been treated as Mr Rix’s income because she took no part in the business. The judge erred in law in treating Mrs Rix’s entitlement to a share of the profits of MRER based on her own shareholding in the company as if it had belonged to the deceased.The Appellant concluded that “ The identification and value of annual losses of financial dependency on Basis 1 was founded upon a material misdirection and error of law” and that if a dependency was properly found this should have been quantified per Basis 2.
But it does “ not provide the basis for a conclusion that without him there was no business at all.” His role was managerial not operational “ which could have provided the justification for a claim based upon Mr Rix’s death having a presumed impact upon the overall profitability of the company”.
MRER Ltd “ had a substantial value and income producing capacity even without Mr Rix’s continued involvement”. The Appellant referred to previous cases of Wood, O’Loughlin and Williams submitting these did not support the High Court judge’s approach of adopting Basis 1. The judge erred in treating all of the profits generated by MRER as providing the basis for the calculation of a loss of dependency without regard to whether profits survived Mr Rix’s death and continued to accrue to Mrs Rix.The Appellant submitted that the High Court was incorrect to rule that the income Mrs Rix continued to enjoy from the company after Mr Rix’s death was irrelevant as the business continued to thrive and provide an income for her. Mrs Rix inherited her husband’s shareholding meaning she now owns 80% of the shares with the remaining 20% being equally split between their two sons. Mr Rix had been the “ main breadwinner” and Mrs Rix was found to be financially dependent upon him. It was found by the High Court judge that this did not reflect her contribution to the business but was done for tax efficiency purposes. Mrs Rix was a major shareholder in MRER Ltd and drew a salary though she never worked in the business. The High Court ruled that Mrs Rix had suffered a loss of financial dependency, quantified per Basis 1. The Appellant argued there was no financial dependency claim because the family business had been profitable since Mr Rix’s death. Alternatively, it should be quantified by reference to the annual value of Mr Rix’s services to the business as managing director, calculated by reference to the cost of employing a replacement (Basis 2). When he left the company in the 1970s he built up his own business, MRER Ltd.įollowing Mr Rix’s death, his widow brought a financial dependency claim under the Fatal Accidents Act 1976 (FAA), submitting this should be calculated by reference to her share of the annual income which she and her husband would have received from the business had Mr Rix lived (Basis 1). Mr Rix died in April 2016 from mesothelioma contracted as a result of exposure to asbestos whilst working for the Appellant company. It is likely that the Appellant company, and their insurer, may look to further the appeal to the Supreme Court, given the Claimant's financial dependency claim was successful despite the business in question being more profitable since her husband died and her shareholding being greater. As the profit available for distribution was a direct product of the deceased’s management of the company, the continued development of the business since his death was irrelevant for the purposes of calculating the dependency claim. The Court of Appeal upheld the High Court decision, finding that the profit available was earned income, and therefore part of the financial dependency claim. The High Court had held that income the Claimant continued to receive from her late husband’s business was irrelevant to her claim. The Defendant had appealed an award under the Fatal Accidents Act made to the Claimant widow of a former employee following a successful claim for his exposure to asbestos. Paramount Shopfitting Company Ltd v Rix (widow and executrix of the estate of Rix (deceased)) EWCA Civ 1172
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