LOSS OF EARNINGS: THE “OGDEN APPROACH” IN PRACTICE: TWO CASES EXAMINED

ge By Gordon Exall

Several years ago the notes to the Actuarial Tables set out a more “scientific” means of assessing damages for future loss of earnings. In essence this is done by using the difference between the multipliers in relation to disabled and non-disabled claimants. See the guidance at paragraph 45 of the explanatory notes.  Here we look at two cases where the use of this approach has been considered. In Ward it was held not to be appropriate; in Billett it was greatly modified. 

WARD -V- ALLIES & MORRISON ARCHITECTS [2012] EWCA Civ 1287

In order to carry out the conventional multiplier/multiplicand tables valuation exercise a judge has to deal with two aspects before a multiplicand figure can be calculated.

  • Make findings on the likely pattern of the claimant’s future earnings if she (or he) had not been injured;
  • Make findings on the likely pattern of the claimant’s future earnings given the fact that he/she has now been injured.

Where these findings cannot be made it is appropriate to adopt the Blamire approach when awarding damages for future loss of earnings.

This was considered in the case of Ward -v- Allies & Morrison Architects [2012].

THE FACTS

W, who had a degree in model making, had suffered an accident while on a placement with the respondent architects’ firm in which the index finger of her non-dominant hand was cut off and her middle finger was significantly damaged by dislocation. Her finger was reattached.

THE DECISION AT FIRST INSTANCE

  • W had not been prevented from becoming a model maker, but would be disadvantaged in having been out of circulation for four years in a competitive industry – an award of £5,000 for loss of congenial employment was made.
  • There was insufficient evidence as to what W had lost, her likely future earnings, and the time during which she needed compensation for loss of futureearnings. The Judge was not satisfied that W was a disabled person. He therefore awarded loss of future earnings on the basis of Blamire v South Cumbria HA [1993] P.I.Q.R. Q1, awarding W £30,000 as funds enabling her to retrain.

THE ISSUES ON APPEAL

W argued that the judge:

  • Had erred in using Blamire for loss of future earnings rather than the Ogden tables;
  • Should have found that she was disabled, which would have affected the use of, and any award under, the Ogden tables.

THE DECISION ON APPEAL

“Issue One: did the judge err in adopting the Blamire approach when awarding damages for loss of future earnings?

  1. It is 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, in order tocarry out the conventional exercise a judge has to deal with two aspects before a multiplicand figure can be calculated. First, he has to make findings on the likely pattern of the claimant’s future earnings if she (or he) had not been injured; secondly, the judge has to make findings on the likely pattern of the claimant’s future earnings given the fact that he/she has now been injured as a result of the defendant’s negligence. As Steyn LJ pointed out in the Blamire case itself, in respect of both those issues the burden is on the claimant.
  2. This means that in this case it was for the appellant to satisfy the trial judge, on a balance of probabilities, first, what career path it is likely that she would have taken and so what she would have earned over the period for which a claim for future loss of earnings could be made, which period would, itself, be a matter of proof on a balance of probabilities. This exercise would involve establishing both the type of work the appellant would have undertaken had there been no accident and also the level of remuneration that she would have obtained from it. Secondly, the appellant would have to satisfy the trial judge on what work she was going to be able to undertake following the accident, whether that would be less remunerative than the work that she would have undertaken had there been no accident and, if so, by how much.
  3. The judge’s findings of fact, in particular those at [38] and [40], are clear. First, he was not satisfied, on a balance of probabilities, that the appellant had demonstrated that she would have been able to establish herself or would have been able to retain a position over a long period as a theatrical model maker. Secondly, he was not satisfied that the appellant had proved what she would do now, following the accident. More importantly, it is clear from [40] that the judge was not satisfied that the appellant had proved that she would actually suffer a loss of earnings as a result of the accident.
  4. Mr Huckle had to attack those findings of fact and conclusions if he was to make any progress on Ground 5. He pointed to the appellant’s first class degree, the high regard of her tutor, Mr Tindall, her placement with therespondents and Mr Yates’ offer, during his evidence, to take the appellant on placement again and also to his evidence that the market for model makers was “buoyant”. Mr Huckle drew our attention to the evidence of earnings levels in particular forms of employment and the appellant’s evidence that she was not attracted to teaching but was motivated to carry on as a model maker.
  5. Mr Huckle submitted that the Blamire approach was principally used where the claimant was in business and there was “wholesale uncertainty” as to the future earnings of the claimant; or where the claimant had failed to establish his former or subsequent earning capacity. He argued that neither situation applied here.
  6. I cannot accept Mr Huckle’s submissions. In my view the judge was entitled to reach the conclusion that there were too many imponderables to enable him to hold, on a balance of probabilities, what the likely career pattern and earning capacity of the appellant would have been but for the accident and what it was likely to be as a result of the accident or that she would be likely to suffer a loss of earnings in the future. The evidence before the judge entitled him to conclude that it was uncertain (a) whether the appellant would have succeeded in becoming a theatrical model maker; (b) whether she would have remained in that position throughout her working career,[] (c) what the levels of remuneration in thatoccupation would have been; (d) as to whether the physical and psychiatric recovery of the appellant was such that she could do either the job of a theatrical model maker or other jobs as a model maker after the accident. The judge also held that it was likely that she would earn at least as much as a theatrical model maker in the future.
  7. In these circumstances it seems to me that the judge was “driven” to adopting the Blamire approach. As I read the judgment at [42] – [43], the judge was not even actually convinced that the appellant had proved that she would suffer any loss of earnings in the future at all, but he was prepared nonetheless to award a sum to enable her “to retrain if she so chooses and to take the time to do so and to be compensated for that exercise”. The respondents do not object to that approach, so I say no more about it.

 IN SUMMARY

  • To be able to calculate a multiplicand, the judge must be able to make findings on the likely pattern of the claimant’s future earnings if she had not been injured and on the likely pattern of her future earnings given that she had been injured.
  • The judge had not been satisfied that W had demonstrated that she would have been able to retain a position over a long period as a theatrical model maker, nor that she had proved that she would actually suffer a loss of earnings because of the accident.
  • The judge was entitled to find that there were too many uncertainties to enable him to hold what W’s likely career pattern and earning capacity would have been and what it was likely to be. Accordingly, he had been driven to adopting the Blamire approach.
  • Whether W was to be regarded as disabled was not the determining factor on whether or not the Ogden tables were to be used. Even if the Blamire approach had been wrong in principle, the disability factor in the Ogden tables could not have been used: on the judge’s findings of fact, C had not met the conditions set out in the introduction to the Ogden tables to define disability.

THE ACTUARIAL APPROACH MODIFIED: BILLETT -v- MOD

Billett -v- Ministry of Defence [2014] EWHC 3060 (QB) (Andew Edis Q.C).

“A judicial approach to the assessment of damages involves an exercise of judgment in the individual case being considered. Sometimes statistics give an answer which appears obviously too high, given the picture which emerges in the particular case. Where that happens, the Judge has to make an apparently arbitrary adjustment to that result”

 THE FACTS

The Claimant suffered a non-freezing cold injury at work in February 2009. The injury had minor effects on C’s life.

He left the army in October 2011. He claimed that he left partly because of his injury. He arranged new employment shortly after leaving the army and has continued in that employment.

It was held that the Claimant’s injury was not the real motivating factor in causing him to leave the army. The real reasons were family commitments and plans for a civilian life.

THE ISSUES

Since B would have left the army regardless of his injury, future loss of earnings could not be assessed on the basis that he would have stayed but for his injury. There were therefore three potential methods of calculating future loss of earnings:

  • A traditional Smith -v- Manchester lump sum award
  • An award based on Ogden tables A and B without reduction
  • An award using Ogden tables A and B with adjustments to reflect the minor nature of the injury.

THE DECISION:  A HIGHLY MODIFIED APPROACH TO AVOID OVER-COMPENSATION 

  • A traditional Smith -v- Manchester lump sum would be inappropriate.
  • Such awards were appropriate where there was great uncertainty about what the claimant would have done if uninjured. Since there was no doubt that B would have left the army regardless of his injury, for as much of his future career as he could arrange, he would have been earning exactly the same as if he had been uninjured; the only difference was that if he had to change jobs, he would have had more difficulty finding alternative work than he would otherwise have done.
  • The concern about the use of tables A and B unadjusted was that the factors identified as relevant to the job path of an injured or disabled Claimant are very broad categories. The definition of disabled in the Notes is very broad and captures people such as the Claimant with very mild conditions, and others with very severe ones.
  • Ogden tables A & B are designed to reflect the experience in the labour market of those claimants classed as “disabled” where that disability affects the kind of work and the amount of work they might do.  The court was conscious that there were few people who could be classified as disabled and yet remain as fit and able as the Claimant.

If I apply the RFs without deduction, he will be clearly one of those whose award will be wrong, because he will be compensated as any other disabled person would be compensated when in reality his disability is, by the standards of disability, quite minor. His condition qualifies as a disability under the test I have applied, but only just.”

 It would therefore have beenwrong to apply the reduction factors without deduction. 

  • Accordingly, the multiplier was substantially reduced for contingencies other than mortality to reflect the minor nature of B’s disability.

 “61…I consider that in the absence of other evidence or guidance I should take a mid-point between the not disabled RF of 0.92 and the disabled RF of 0.54, which is 0.73. There is little logic in this approach, except that it gives a figure which appears to me to reflect fully the loss sustained by the Claimant, but to do so in a way which does not obviously understate that loss. A judicial approach to the assessment of damages involves an exercise of judgment in the individual case being considered. Sometimes statistics give an answer which appears obviously too high, given the picture which emerges in the particular case. Where that happens, the Judge has to make an apparently arbitrary adjustment to that result, or to decline to use the statistical material at all. It appears to me that it is preferable to make some use of the Tables and thus give weight to the data from which they are derived…”

THE ACTUARIAL APPROACH– HAS IT EVER BEEN ADOPTED IN FULL?

I have not yet seen a reported case where the approach has been adopted wholeheartedly.

1. In many cases, such as Allies, it is not possible to prove the basic facts.

2. In other cases an uncritical acceptance of the approach could lead to “over-compensation”.

There is still a degree of judgment, and close examination of the facts in relation to ability to work, in cases where a claimant’s ability to work is impaired or disrupted.

ITS ALL ABOUT THE FACTS: TAKING FULL STATEMENTS

The interesting thing about boththese cases is that the evidence of the claimants was not accepted on certain key issues.  Before embarking on any analysis of the legal approach to adopted it is essential that a claimant is certain that the facts are clear and likely to be accepted.

 

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2 comments

  1. […] Issues relating to the appropriate way to award damages for future loss of earnings are considered in Gordon Exall’s “The Ogden Approach in Practice” […]

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