The assessment of loss for the future earning capacity of a person suffering residual disability through injury has always been unsatisfactory. The method for calculating multipliers, multiplicands and understanding the at times unfathomable awards of the head of damages known as Smith v Manchester has been cloaked in mathematical illogicality.

The Ogden tables were introduced in 1984 and came into prominence following Wells v Wells; a case in which the House of Lords carefully examined how multipliers and future loss claims should be calculated. The tables were designed to create mathematical certainty by pinpointing the multiplier precisely. They take account of the risk of mortality and have built in a discrete factoring to reflect the working world, to properly finalise the multiplier for loss of future earnings.

In the 6th edition in 2007, and the latest 7th edition in 2011, the factors have mostly changed from the more remote and objective economic status of the country, and the risks inherent in a specific type of employment and geographical residency, to a more personal analysis of the claimant’s employability by reference to their qualifications, level of disability and employment status. The circumstances of the claimant’s sex and age remain constant.

Furthermore, with the arrival of the 6th edition, the methodology of the calculation now involves two multipliers to reflect life pre- and post-injury.

The issue which many thought would cause disagreement between the parties was the question of ‘disability’. This has, however, not been the case – save for two or three High Court cases in which the issue has arisen, the claimant has been accepted as ‘disabled’. The argument then develops as to the degree of disability and when the discount/reduction factor, applied to the base multiplier from tables 3 to 10, should be interfered with.

In a number of cases, most recently Billett v Ministry of Defence [2014] EWHC 3060 (QB), judges have increased or decreased the discount factor depending, respectively, on if the impairment is relatively mild or particularly severe.

This judicial tinkering has led to a fraying of the mathematical certainty which made the tables so attractive.

It was in the context of a claimant’s disadvantage on the labour market that practitioners had hoped for/expected that judicial guidance would be provided in respect of the application of the tables to the assessment, thereby removing the ‘finger in the air’ approach, historically present in many decisions emanating from the award to Mrs Smith in Smith v Manchester Corporation, but perhaps best exemplified by the approach in Blamire v South Cumbria Health Authority. Alas, none has been provided.

It is worth remembering that in Smith, the court were trying to quantify the disadvantage that the claimant should have in terms of whether there was a ‘real’ risk she would find herself looking for future employment while suffering from a residual disability created by the injuries suffered in her accident.

It is in this swamp of imprecision that the deputy High Court judge Mr Andrew Edis QC (pictured) found himself trying to decide the correct amount to be awarded for a claimant who was employed at the time of the trial but no longer with the defendants, and who was able to carry out many tasks without difficulty, but was also limited to a degree by an ongoing disability.

At the time of the contraction of the non-freezing cold injury (NFCI) in his feet, the claimant was a soldier. He left the forces, for reasons the judge found were wholly unrelated to his injury, and gained employment as an HGV driver. He had to ‘continue to look after his feet’, and was ‘more vulnerable to adverse environmental cold’. It was accepted by the parties’ employment experts that though he was a hard-working and capable man, he had a disadvantage on the labour market.

The judge found that with 41 years of working life ahead of him, the claimant would have to seek employment in the future, despite the fact that the risk of losing his current employment was no higher than with any other job. Although not expressly stated as such, the judge presumably found that the risk of him arriving on the open labour market in the future was ‘real’ as he stated that there is ‘clearly a risk’.

His lordship identified three ways of calculating the loss:

1. A ‘traditional’ lump sum award as per Smith/Blamire. His assessment was that this would be three times the annual net earnings of the claimant, a figure of £64,326. The multiplier of three is, perhaps, generous for a man with a mild disability in steady employment, and with no greater risk of having that employment terminated than in any other work. In recent years, after a high point of five times annual net earnings in the mid 1980s, it is rare to find a case using this approach in which an award of more than two times net annual income is made.

2. Relying on the Ogden tables without adjustment.

3. Relying on the Ogden tables with adjustment.  

His lordship found the third approach to be attractive. He then had to decide what adjustment to make to the discount factor set out in tables A and B. The primary consideration, which was ‘by far and away the most important’, was the level of the claimant’s disability. In reviewing key commentaries by Dr Victoria Wass on this issue, his lordship accepted that a claimant suffering a disability would potentially suffer a twofold impact on earning capacity, namely: lower earnings from lower hours/occupational downgrading; and an increased risk to employment due to restricted capabilities.

Wass’s research showed that most of those injured maintain a disability in the least severe categories (1-3 on a scale of 10), with 86.8% outside the most severe category. This is reflected in the assessment of the discount rate to apply to the base multiplier. On the face of it, therefore, no further tinkering is required.

However, his lordship was concerned that while the discount factors in tables A to D provided accuracy in relation to a cohort of individuals who suffered from disability, in relation to the individual claimant the assessment will always be wrong. By example, in the instant case the disability was classed as ‘quite minor’.

He felt that he was obliged to make an award which reflected the individual claimant’s position to address his personal physical impairment created by NFCI, and the impact of that disability on his normal day-to-day activities, and the amount of paid work he could achieve, as per the Equality Act 2010.

Having assessed the claimant as very employable, in part due to a brief but consistent history of employment, he held that if he had not adjusted the discount factors significantly he would be ignoring this piece of evidence, and equating the claimant with someone who had worked very little but happened to have some work at the time of his assessment.

In the circumstances, he chose to take a mid point between 0.92 and 0.54 from tables A and B respectively, which is 0.73. Interestingly, his lordship held that there was ‘little logic in this approach’, and that the adjustment was ‘apparently arbitrary’. The calculation he made then produced a figure of £99,062.04.

Despite its ‘arbitrary’ labelling, this approach is a proper application of the Ogden tables to the question of the future disadvantage the claimant will likely suffer on the labour market.

It takes practitioners away from the ‘pick a figure out of the air’ assessment, so often set out in cases under the heading of damages for Smith v Manchester, and is a more technically adept method of mathematically ascertaining a figure to reflect the true disadvantage than simply taking a random fraction within the range from a 0.25 to 2, and applying it to the net annual income of the claimant.

While his lordship’s assessment under the ‘traditional approach’ of three times net annual income would have been generous by the standards of recent decisions, it would not, as his final calculation proved, have provided a proper financial reflection of the risk that the claimant suffers.

It is pleasing to see the Ogden tables applied correctly in assessing the disadvantage on the labour market caused by injury, and a good degree of mathematical logic layered on top of a sound statistical base to assess something that was previously uncertain and, at times, appeared to be little more than educated guesswork.

Simon Allen, Slater & Gordon