Damages for dashed hopes


It often seems that the most dangerous time in life is when your client has just started a dream job. Fate conspires to cause an accident to deprive the claimant of this opportunity. But quantifying loss without a long-established earnings history can be tricky.


In Brown v Ministry of Defence [2006] EWCA Civ 546, the claimant came from an 'army family'. Although she had done other jobs, she had always dreamed of joining the army, and eventually did so at the age of 24. But she suffered an injury just eight weeks into her service and retired.


There was only a limited claim for future loss of earnings, as she retrained as a physiotherapist with comparable earnings. However, her claim included nearly £150,000 for loss of pension rights, assuming a full 22-year army service with retirement at age 46. The defendant contended that the average length of service for female recruits was just six years. In finding for the claimant on this issue, the judge found that she would probably have served 22 years with promotion to staff sergeant and with a 30% chance of promotion to Warrant Officer Class 1 by the end of her service.


Faced with a judgment of £150,000 for pension losses for someone who had been in the service only eight weeks, the defendant appealed. The Court of Appeal pointed out that in Herring v Ministry of Defence [2003] EWCA Civ 528, although the pension loss claim had received less attention than the loss of earnings claim, the judge had applied a 25% Auty-style reduction that would deal with contingencies such as retirement early.


Normally, provided a fair career model is chosen, the court considered that contingencies can be dealt with through the multiplier and multiplicand with a discount for contingencies. But this case was particularly unusual, partly because of the short period of service in the army, and also because army pensions can be taken relatively early (age 46 rather than 60 or 65), which would lead to a larger pension loss claim, as discount for accelerated receipt would be far less than usual.


The court set out principles for calculation of the loss following the style of the 'loss of a chance' promotion calculations approved for loss of future earnings in cases such as Langford v Hebran [2001] EWCA Civ 361 (the 'kick boxer' case). It worked out the percentage chances of her reaching various lengths of service and ranks, and remitted the calculation back to the parties or the trial judge. The only drawback of this approach is that for those who hate doing one final salary scheme pension calculation, it is necessary to do several and then apply the various percentage chances to each calculation.


In Ronan v Sainsbury's [2006] EWCA Civ 1074, the Court of Appeal clarified the approach the judge should take where the past earnings history or the future prospects are sketchy. In 1999, the claimant was a 19-year-old art student working part-time at Sainsbury's when he was injured at work, breaking his leg. The post-operative course was stormy, with a failed operation to remove a nail.


At the time of the accident, the claimant had been on a one-year foundation art course, intending to go to university to study graphic design. However, six months after the accident, when his recovery was following a normal course, he decided not to go to university but took a job with Abbey National.


The court accepted that this was unconnected with the accident and just the case of a teenager being unsure of his future career. However, in 2002, after being off work for nine months following a failed second operation, he decided to give up that job and go to university where he read sports science, completing his degree just before trial in 2005. He then proposed to do two years' on-the-job training to become a teacher.


So far as future loss of earnings was concerned, in his (ex tempore) judgment, the judge said: 'Looked at in the round, I have got to make some allowance in monetary terms for the upheaval in his life, whether dealt with by Smith v Manchester, or some calculation as to future loss, and I have come to the conclusion that approaching it in an all-round way in a Blamire sense, and I do not propose to set it out in more detail than that, that the sum of £50,000 would be a reasonable and appropriate.'


On appeal, the Court of Appeal stressed that the three methods of calculating loss - specific future financial loss, a Blamire award or a Smith v Manchester award - were all very different. 'The [Blamire award] is appropriate where the evidence shows that there is a continuing loss of earnings, but there are too many uncertainties to adopt the conventional multiplier and multiplicand approach to its quantification.


'The [Smith v Manchester award] is nothing to do with a continuing loss. It is an award for a contingent future loss, in the event of the claimant losing his current job, where, as a result of the accident, he would then be at a handicap on the labour market at which he would not have been but for the accident.'


In this case, there was no Blamire award. Instead, there was a period of specific future loss because, even if he had returned to banking, there would have been a period of net loss while he worked his way back up. The Court of Appeal calculated the net loss as £12,000 over 18 months. It also allowed for three years' lost pension contributions (pension loss had also been subsumed in the £50,000) of £1,800.


There was also a handicap on the labour market, particularly because of his history of depression, which had resulted from the accident. As the risk was 'relatively slight', the court awarded £15,000, making a total of £28,800 in place of the judge's £50,000.


The judgment shows that it is essential to clarify in a schedule exactly what the loss attributable to the injury is and how it is contended that this should be quantified.


By David Marshall, Anthony Gold, London