LOSS OF EARNINGS AND THE SELF-EMPLOYED: SOME KEY ISSUES: (ALSO A WEBINAR…)

There are now a record number of self-employed people working in the UK and the numbers are increasing.  The self-employed amount to 5 million, that is 15.3% of the workforce, (up from 12% in 2000).  Here I want to look at some of the issues that face the self-employed claimant when claiming loss of earnings.  We also look at some of the key cases in relation to “loss of chance” in relation to the self-employed.

 

PROOF AND EVIDENCE

The first problem that often arises in a claim for loss of earnings is the absence of clear evidence.   There are no wage slips and it is not uncommon for the self-employed claimant not to know precisely what their net earnings are.  Here a claimant lawyer has to be tough and robust (because sooner or later a defendant lawyer will be).  Damages are awarded on the basis of evidence and not speculation.

  • Tax returns are the key in many cases (where they actually exist).
  • It can be a struggle to persuade a claimant that the court is only interested in their net losses rather than their gross turnover.
  • Evidence is needed from the claimant to show the work they did and how they earned their income.

This stage of the case is difficult. However it cannot be avoided. Because it is difficult it is often left until late in the action. There is much (indeed everything) to be said for doing this first.  An early, and realistic, assessment of the actual net losses is an essential aid to assessing a Part 36 offer and making an offer.

 Proving the loss

The need to prove the loss is emphasised in the case of Bonham Carter v Hyde Park Hotel Ltd [1948] WN 89, 92 Sol Jo 154, KBD:

Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage, it is not enough to write down the particulars, and, so to speak, throw themselves at the head of the court saying “This is what I have lost. I ask you to give me these damages”. They have to prove it.’

This requirement to prove that a loss has occurred will present the self-employed claimant with the most problems. The onus is on the claimant to prove every item of loss claimed that is not agreed. Proving loss of profits, or potential profits, is extremely difficult in a lot of businesses. If an extra employee has been taken on to cover the absent claimant then the calculation is relatively simple; the losses caused because of absence from work, inability to supervise staff, meet business contacts etc is more problematic.  Further, and this is a point that often needs reiterating, the court is only concerned with the net loss of income to the claimant.

Pleading the loss 

Although there is no case on the subject after the Civil Procedure Rules 1998, SI 1998/3132 it is prudent to ensure that special circumstances of the claimant’s case is set out in the particulars of claim. Failure to mention circumstances such as loss of profits or loss of a business opportunity will lead to the loss not being allowed at trial: Domsella v Barr (trading as AB Construction) [1969] 3 All ER 487, [1969] 1WLR 630, CA; see also Perestrello e Companhia Ltda v United Paint Co Ltd [1969] 3 All ER 479, [1969] 1 WLR 570, CA.

PLUG THE GAPS IN YOUR KNOWLEDGE BY ATTENDING THIS WEBINAR

On the 4th December 2020 I am looking at this is a lot more detail and presenting a webinar “Claims for loss of earnings: the self-employed, the sportsperson and the entertainer”.  This deals with the legal principles, and cases, where a claimant is self-employed or has an uncertain career path, typical of those involved in sports and entertainment.

 

This webinar looks at the particular difficulties of acting for self-employed people who suffer loss of earnings due to injury, focussing on:

  • The particular problems of the self-employed claimant
  • The injured business owner
  • The effect of a limited company
  • Calculating net loss
  • Pension losses and the self-employed claimant

The webinar then goes on to look at particular issues relating to claiming losses in cases where the injured claimant earns, or hopes to earn, a living through sports and entertainment,  looking at cases where damages have been awarded and when a claim for “loss of chance” has been found to be appropriate.

Those attending the webinar will also be sent a set of useful links to relevant cases and articles on this topic together with a helpful “loss of earnings” questionnaire.

Booking details are available here.