PROVING THINGS 223: PROVING A SUBSTANTIAL LOSS OF EARNINGS CLAIM (£1,206,053 TO BE EXACT)

In  Palmer v Mantas & Anor [2022] EWHC 90 (QB)  Anthony Metzer QC (sitting as Deputy High Court Judge) awarded a claimant £1,206,053) in loss of earnings.  The judge found that the approach in Smith -v- Manchester was not an appropriate means of compensating the claimant on the facts of this case.

WEBINAR ON LOSS OF EARNINGS

On the 7th March 2022 I will look at this case, alongside many others, in a webinar on “Claims for Loss of Earnings: Learning from Recent Cases”.  Booking details are available here. 

The cases covered cover the following topics:-

  • Failing to prove future losses
  • When the court did l not accept a claim for future losses
  • Who is an “expert” and when is expert evidence allowed
  • Fundamental dishonesty when claiming loss of earnings (a case about psychic powers)
  • Reductions in claims because of Covid
  • “Loss of chance” considered in a fatal case
  • Loss of congenial employment.

THE CASE

The judge was assessing damages in the case of a 34 year old women who had suffered injuries which meant she could not continue in her pre-accident job. She has some residual earning capacity, but that was extremely limited. The judge did not accept that awarding damages on a multiplier-multiplicand basis was unfair on the facts of this case.

    1. The Claimant submitted that it is appropriate to use a multiplier and multiplicand approach and suggests at Paragraph 55 of the Updated Schedule of Loss that the Claimant would have worked to the age of 70 over the next 36 years and claims an earnings multiplier of 36.68 under Table 14 multiplied by 0.84 under Table C Level 2 equating to 30.18 years and sets out a calculation using variable multipliers applying a 15% discount.
    1. The Second Defendant denies that the Claimant should be awarded Loss of Earnings on a multiplier/ multiplicand basis as it is contended that would lead to an unrealistic result relying upon Billett v Ministry of Defence [2015] EWCA Civ 772 and Murphy v Ministry of Defence [2016] EWHC 03 (QB).
    1. In Aderemi v London and South Eastern Railway Ltd [2013] ICR 591, Langstaff J stated at Paragraph 14:
Because the effect is adverse, the focus of a Tribunal must necessarily be upon that which a Claimant maintains he cannot do as a result of his physical or mental impairment. Once he has established that there is an effect, that it is adverse, that it is an effect upon his ability, that is to carry out normal day-to-day activities, a Tribunal has then to assess whether that is or is not substantial. Here, however, it has to bear in mind the definitions of substantial which is contained in Section 212(1) of the Act. It means more than minor or trivial. In other words, the Act itself does not create a spectrum running smoothly from those matters which are clearly or substantially effect to those matters which are clearly trivial but provides for verification: Unless a matter can be classified as within the heading “trivial” or “insubstantial”, it must be treated as substantial. There is therefore little room for any form of sliding scale between one and the other.
    1. In Billet, reliance was placed upon that citation at Paragraphs 86 and 87 in respect of the definition of what constitutes a “substantial adverse effect” on a person’s “ability to carry out normal day-to-day activities” to determine whether the Claimant suffers a disability within the definition set out in the Ogden Tables. In Murphy, HHJ Coe QC, sitting as a Judge of the High Court found that the Claimant had suffered a modest disability within the definition as set out above at Paragraph 211 that “a sufficient adjustment to the disabled multiplier is too contrived an exercise …” and relying upon Billet made “use of the tables without significant adjustment produces an unrealistic figure for the Claimant”.
    1. On the facts of the Murphy case, HHJ Judge Coe QC found that a Smith v Manchester award would fit the facts better. However, in respect of that Claimant, he was in work and had been since he left the army, his employment was secure and he was handicapped on the labour market, but it was a limited handicap and meant simply that he was more limited in his choice of employment.
    1. Mr Grant referred me to Inglis v Ministry of Defence [2019] EWHC 1153 where Peter Marquand, sitting as a Deputy High Court Judge, considered whether the award should be on the basis of Smith v Manchester referring to Billet and the earlier decision of Connor v Bradman [2007] EWHC 2789 before reaching the following conclusions at Paragraphs 213 to 214:
I derive the following principle from the authorities. The multiplier / multiplicand method is the convention method of calculating future loss of earnings and should normally be used. However, where a Claimant has a handicap in the labour market a Smith v Manchester award will be appropriate where there are many uncertainties which mean the multiplier/multiplicand method cannot be used and the matter is one for a broad judgment. Such a circumstance will be where the Claimant has a disability within the meaning of the Ogden Tables, but it is one with a minimal impact on the Claimant’s ability to carry out his employment. In such a case, any adjustment to the Reduction Factors (RF) would be a matter of broad judgment.
The RF may be adjusted where evidence is available, and the broad judgment is not required. The RFs are averages based on population data and may be adjusted upwards or downwards from the starting point derived from Tables A to D, if there is evidence to point to such changes for the particular Claimant.
    1. In respect of the present case, I find that the Claimant is disabled and, given the extent of her present disabilities, I do not find this is analogous to the position of the Claimants in Billet and Murphy, in which they were able to continue with their chosen careers with virtually no hindrance from their disabilities and where the decision to award damages for Future Loss of Earnings on a multiplier/multiplicand basis would have resulted in a disproportionately large award. At Paragraph 96 of Billet, there is reference to the trial Judge confirming that the Claimant was able to pursue “His chosen career as a lorry driver with virtually no hindrance from his disability. He secured employment with Framptons within one week of leaving the army”. As indicated above, a similar finding was made in Murphy in respect of the Claimant’s continuing army career, in which there was a finding at Paragraph 207 that his disability was “modest only”. In the present case, as was held in Inglis at Paragraph 215, that not only is the Claimant disabled within the definition of the Ogden Tables, but her disability has a particular impact on her ability to carry out her day-to-day work. I therefore determine that this is not a case which it would be appropriate to make a Smith v Manchester award as I do not consider the Claimant would recover a disproportionate award for future loss of earnings. I therefore do so on the conventional multiplier/multiplicand basis with appropriate adjustment for the RF.
    1. I determine that the appropriate multiplier for Future Loss of Earnings to a pension age of 68 under Table 12 is 34.67. Although the Claimant has claimed that the retirement age by the time she would have retired would be raised to 70, I consider that the multiplier should be on the basis of the present retirement age for a female as set out at Table 12. She is presently 34 years old.
    1. Under Table C for Loss of Earnings to pensions under 60 if the Claimant was not disabled, the earnings discount factor would be 0.84, to take into account contingencies other than mortality, whereas under Table D it would be 0.42 for a disabled female. I note the flexibility referred to in Connor v Bradman in recognising a situation where the Claimant does come within the definition of disabled; this recognises there is an inherent flexibility as to the extent of her disability and it is undoubtedly the position that she can realistically expect to make at least a partial recovery, albeit accepting the concern as to the extent of her recovery. I note the Second Defendant considers she will make a full recovery with the multidisciplinary treatment, whereas the Claimant maintains it would be at most partial recovery.
    1. I consider that that flexibility takes into account that there will undoubtedly be recovery by the Claimant through the multidisciplinary intensive treatment, but that she still has vulnerability to psychiatric relapse and the risk of further migraines. I consider the appropriate discount factor to take this into account to be a figure mid-point between those under Tables C and D, namely 0.58. The earnings multiplier is therefore 34.67 x 0.84 which equates to 29.12 years.
    1. The Claimant has suggested three variable multiplicands to reflect her different likely earnings at different ages. It is broken down to 3 years from her present age at her projected £37,604.64 net per annum, an increase as set out at Paragraph 52 of the Updated Schedule of Loss when she would expect to become a marketing manager within the next 3 years for a period of 5 years to £49,293 net per annum and thereafter a further increase to the sum of £76,193 net per annum as a chief marketing officer for what is claimed to be 28 years to a projected retirement age of 70 years old.
    1. The Claimant makes an allowance of a 15% discount in respect of her not achieving promotion on the career ladder at the timeframe with all the salary levels stipulated and recognises that she would be likely within around 2 years to be able to work part-time. She concedes a notional residual earning capacity of 24 hours per week at £15 per hour combined with an Ogden 8 multiplier which again was claimed to the age of 70 of 34.51 years in accordance with Table 14 which equates to 32.52 years under Table 12 for a retirement age of 68. A further discount by Table D discount factor of 0.28 is made which is 9.66 years equating to £158,366, as set out at Paragraph 96 of the Claimant’s Updated Schedule of Loss.
    1. As far as the variable multipliers are concerned, I accept the first two periods of loss of earnings claimed, comprising the next 3 years at the net annual earnings of £37,664 and the following 5 years in which she would have received an increase to £49,293 net per annum. In respect of the following 26 years (to the age of 68), I would expect the period for which she would be earning that salary for a further 8 years until she is the age of 50 and then award her a period of increased salary as a chief marketing officer for 18 years at £76,193 net per annum. There is clearly a level of uncertainty whether and at what time she would be appointed as a chief marketing officer although as that appears to be the next level of promotion, I do consider it realistic that, given her overall generally impressive work record, she would achieve that promotion. I award that sum but for a lesser period which I consider avoids the risk of the Claimant being over-compensated under this head.
  1. In the circumstances, I consider the Claimant should receive a Loss of Earnings for 3 years at her presumed salary of £37,664 per annum which when applied with the percentage of the Table 36 term certain multiplier for a period of 34 years and uses the relevant percentage of discounted multiplier for those three years which is 2.48 equating to £93,407; for the next 13 years at £49,293 for 10.92 years equating to £538,280 and for the next 18 years at £76,193 for 15.72 years equating to £806,884 which totals £1,829,441 following a deduction of 15% which provides a net sum of £1,555,025. Making a deduction for likely residual earning capacity, recognising that the Claimant is likely to work for 24 hours per week, although I consider it should be at £20 per hour (not £15 per hour as claimed at Paragraph 96 of the Claimant’s Updated Schedule of Loss) equalling £20,637 net per year with an Ogden 8 multiplier to the age of 68 years of 32.52, combined with a Connor v Bradman reduction factor applying to residual earning capacity of 0.76 {(Table C, Unemployed, level 20 plus a discount factor of 0.28 (Table D, Unemployed, level 2)/2} equates to 16.91 years, which equates to £348,972, which results in an award in the sum of £1,206,053.