PROVING THINGS 239: THE APPROPRIATE APPROACH TO LOSS OF EARNINGS WHEN A CLAIMANT IS DISABLED

We are looking again at at the judgment of David Allan KC (sitting as a Deputy High Court Judge) in  Riley v Salford Royal NHS Foundation Trust [2022] EWHC 2417 (KB).  This time in relation to the claim for future loss of earnings.  The judge rejected the argument that uncertainty as to earnings meant that a multiplier/multiplicand approach should not be adopted.

“My conclusion is that while there are uncertainties as to the Claimant’s employment history in the absence of an amputation and what are now his future employment prospects, this is a case where it is possible to reach conclusions that enable a court to adopt the multiplicand/multiplier method.”

THE CASE

The clinical negligence of the defendant had led the claimant to suffer an amputation of his right lower leg.  The claimant was now 27 years old. He had had various jobs and had identified a course on Sports Science he wanted to take in order to become a PE teacher. The injuries prevented this. He was considering various careers, including working in a night club and taking up qualifications in IT work.

THE AWARD FOR FUTURE LOSS OF EARNINGS

The arguments for the claimant and the defendant were among “traditional” lines. The claimant arguing that this should be a multiplier-multiplicand approach, the defendant that the uncertainties meant that the court should award damages on a Smith and Manchester or Blamire basis.  Future loss of earnings were awarded at £769,519 and pension loss at £27,403.

THE JUDGMENT

The judge held that there was sufficient evidence for an award to be made using the approach for future losses set out in the Ogden tables.

FUTURE LOSSES
Earnings
61. There is a major dispute between the parties as to the correct approach to loss of future earnings. Mr. Allen KC for the Claimant contends for a conventional multiplicand/multiplier calculation. Mr. Davy for the Defendant argues that because of the uncertainties regarding future earnings, the court should adopt what is termed a SMITH v. MANCHESTER or Blamire approach, and award a lump sum in respect of loss up to the age of 60. In WARD v. ALLIES AND MORRISON ARCHITECTS 2012 EWCA Civ 1287 Aikens L.J. at paragraph 20 stated it was common ground that the multiplicand/multiplier methodology and the Tables and guidance in the current edition of Ogden should normally be applied when making an award of damages for future loss of earnings, unless the judge really has no alternative. However, Aikens L.J. makes clear in the same section of his judgment that the burden is on the claimant to establish firstly, what the likely pattern of earnings would have been if uninjured and, secondly, what the likely earnings would be given the fact of injury. The current edition of the Ogden Tables, in section B paragraph 39, emphasises that merely because there are uncertainties about the future this does not of itself justify a departure from the well-established multiplicand/multiplier method.
62. When considering the ‘but for’ position I have already found that the Claimant would probably have begun a degree course in an IT subject in September 2016 and would have graduated in 2019. Further, that he was likely to have found full-time employment in the IT sector by September 2019 earning £17,240 net pa. Consistent with these findings the Claimant is likely to have remained in the IT sector until retirement at 68. A curious feature of the approach contended for by the Defendant is the submission seeking a BLAMIRE award up to age 60, but accepting there should be a multiplicand/multiplier approach from 60 to 68. One would normally anticipate that the uncertainties would be greater when predicting the position many years in the future, rather than predicting the immediate future position.
63. There is some uncertainty as to what work the Claimant will undertake in the future. He has the offer of employment in a new business venture being launched by his father, namely as a manager in a night club. I am doubtful that this will provide long-term employment for the Claimant. Opening a new night club without prior experience of such work is clearly a risky venture. In any event there must be doubt as to whether the Claimant will cope with the physical demands of the work. The hours will be unsociable, particularly for someone becoming a parent for the first time. I consider it much more likely that the Claimant will acquire some qualifications for IT work and will then be in a stronger position to obtain work in that sector. He will be subject to the restrictions imposed by his disability. I accept Professor Kulkarni’s evidence that given a possibility of working part of the time at home and part at an office, the Claimant should be able to acquire part-time work, gradually increasing his hours to full-time work with a tolerant employer. Given that the Claimant is likely to have weeks when he cannot use a prosthesis he will need disabled access.
64. My conclusion is that while there are uncertainties as to the Claimant’s employment history in the absence of an amputation and what are now his future employment prospects, this is a case where it is possible to reach conclusions that enable a court to adopt the multiplicand/multiplier method. The notes to the Ogden Tables contain guidance as to the methodology to be adopted when calculating the future loss. This is contained in Tables A to D of section B. The Notes state that it is guidance, rather than being prescriptive. The guidance should generally be followed but a claimant’s particular circumstances may justify departing from the guidance.
65. In the Revised Schedule of Loss the Claimant has assumed ‘but for’ earnings of £44,000pa gross, or £33,560pa net. This is slightly below the median earnings in the ASHE tables published by the Office for National Statistics for information technology and telecommunication professionals where the median gross salary is £45,219. The Defendant, in calculating the loss of earnings from age 60 has adopted a multiplicand of £33,560. There is a marked discrepancy between the figure adopted for past loss of earnings of £17,240 net, and the median figure for IT workers at various stages of their careers. The figure of £17,240pa is a starting salary and one would no doubt expect an IT worker to achieve substantial increases in his earnings during the first few years of his career. Whilst accepting that £33,560 is a reasonable multiplicand to adopt for a large part of the ‘but for’ career, it would be reasonable to use a lower figure for the early part of the career, namely £30,000pa gross, £24,115 pa net.
66. The appropriate multiplier for loss of earnings to retirement at 68 from Table 11 of the Ogden Tables is 41.88. It is reasonable to divide that multiplier so that 4 years is at £24,115pa, and the balance is at £33,560pa. A discount factor must be applied for contingencies other than mortality. The discount factors for loss of earnings for males are contained in Tables A and B. Table A is for males who are not disabled, and Table B for disabled males. The definition of disability for use in the Ogden Tables is that contained in the Disability Discrimination Act 1995, rather than the one used in the Equality Act 2010. The 1995 Act provides:
“A person is classified as being disabled if all three of the following conditions in relation to ill-health or disability are met:
(i) The person has an illness or disability which has or is expected to last for over a year or is a progressive illness and
(ii) The DDA 1995 definition is satisfied in that the impact of the disability has a substantial adverse effect on the person’s ability to carry out normal day to day activities; and
(iii) The effects of impairment limit either the kind or the amount of paid work he/she can do.”
67. The question arises whether the Claimant, if treated without negligence, would have been disabled within the above definition? Whilst he would have been restricted in the kind of work he could do, having to avoid work involving prolonged standing, walking or heavy lifting, the degree of persisting disability would not have had a substantial adverse effect on the Claimant’s ability to carry out normal day to day activities. Further, it would not have restricted the Claimant in carrying out the type of work in IT that he would have pursued. In terms of his ‘but for’ employment he should not be considered disabled and Table A should be used. This contrasts with the Claimant’s present condition which has greatly restricted his employment opportunities to date. He will eventually be able to work full-time but will remain restricted in carrying out everyday activities, particularly given that at times he will be unable to use a prosthesis. This means, when considering the Claimant’s potential earnings, he should be treated as a disabled person and Table B should be used to determine the discount factor to allow for contingencies other than mortality.
68. The Claimant was employed at the time of his injury. The discount factor in Table A for an employed male aged 27 of education level 2 or 3 is 0.91. The calculation is as follows:
                                                £24,115 x 4 x 0.91                  =          £87,779.
                                                £33,560 x 37.88 x 0.91           =          £1,156,840
                                                                                                Total    £1,244,619
69. When considering the level of earnings the Claimant will now achieve, the written final submissions on behalf of the Claimant take a multiplicand for net earnings at £19,475pa which represents a mid-point between median part-time earnings for an IT technician, and full-time earnings at the 25th centile for an IT technician. It seems likely that for the next few years, whilst he acquires qualifications and experience for IT work, the Claimant’s earnings will be from part-time employment, namely £11,882 gross/£11,816 net. After that period he should be able to find full-time or near full-time employment in the IT sector. It would then be reasonable to take his likely earnings at the 25th centile for IT technicians which are £34,688 gross, £27,245 net. The multiplier of 34.61 should be divided 4/30.61. Given my finding that he should be treated as disabled, the discount factor under Table B is 0.50.
70. I accept the evidence of Professor Kulkarni that the Claimant is likely to be forced to give up work some 3 to 5 years before the usual age of retirement. Taking the mid-point of this estimate means that the Claimant will retire at 64. I also accept Dr. Sooriakumaran’s evidence that the Claimant’s full-time work to retirement will be adversely affected by the state of his stump, increased incidence of complications, and periods when he cannot wear his prosthesis. It is therefore reasonable to allow for some reduction in earnings between the age of 60 and 64. The parties agree that an appropriate figure for earnings during this period would be £16,780net pa.
71. The calculation for residual earnings is as follows:
                        Multiplier to age 60 : 34.61 divided 4/30.61
                        £11,816  x 4  x  0.50                                                   =          £23,632.
                        £27,245 x 30.61 x 0.50                                               =          £416,985
                        Multiplier for period 60 to 64: 4.16
                        £16,780 x 4.16 x 0.50                                                 =          £34,902
                                                                        Total residual earnings            £475,519.
72. Future loss of earnings is £1,244,619-£475,519 = £769,100
Loss of Pension
73. The parties agree that the Claimant would have received 3% of his gross salary by way of employer pension contributions. As against this loss the Claimant must give credit for the pension contributions he will receive on his gross earnings. The pension loss calculation based on the gross earnings that the Claimant would have earned and will now earn, and making allowance for contingencies other than mortality is as follows:
                        3% of (£30,000-£6,240) x 4 x 0.91                            =          £2,594.
                        3% of £44,000-£6,240 x 37.88 x 0.91                                    =          £39,049
                                                                                                            Total    £41,643
                        Less:
                        3% of (£11,882-£6,240) x 4 x 0.50                                        £338.
                        3% of (£34,688-£6,240) x 30.61 x 0.50                                 £13,062
                        3% of (£19,000-£6240) x 4.39x 0.50                                     £840 
                                                                                                            Total    £14,240
                        Net loss £41,643-£14,240 = £27,403