Future Loss of Earnings, Loss of Earning Capacity, Provisional Damages
Stewart Fairhurst
Slide 1
Welcome to this lecture, the second in the Quantum series.
Slide 2
In this lecture we will be developing the head of general damages by looking at Future Loss of Earnings, Loss of Earning Capacity and Provisional Damages.
Slide 3
This type of damage arises where there is an annual loos of earnings at the date of trial. It must be measurable at today’s values and there must be evidence that it will continue in to the future. As you can imagine in some circumstances where the is a personal injury, this head of damages may constitute a significant proportion of the claimants loss and therefore is a very important factor to consider when calculating a claimants quantum. There is a specific method that must be used when calculating this type of loss. We will look at this method next.
Slide 4
You do not need to have a degree in mathematics in order to be able to calculate this head of loss, so do not be daunted by the formula. It is a simple calculation, but as always practice makes perfect. I recommend that you practice this by setting up certain scenarios and also by reading books which cover this topic.
Basically two separate figures must be arrived at. There are broken down in to two groups, the multiplicand and the multiplier. The multiplicand is multiplied by the multiplier. Once done you will arrive at you figure for the claimants loss of earnings.
The multiplicand represents the claimants NET annual loss of earnings at the date of trial. In effect it will be his current annual loss. You will have to split multipliers if the claimant is to be awarded a greater NET annual loss. This will occur if the claimant is due to begin a new job, which is paid more.
The multiplier represents the number of years the claimant will be awarded for his Net annual loss. It is not the number of years the claimant will not be able to work for in the future because this will provide the claimant with accelerated receipt. Therefore the figure is an artificial number which takes in to account the accelerated receipt. To get this figure you must look at the Ogden tables.
The Ogden tables were setup to take in to account the accelerated receipt issue. It is an approved method of calculating this type of loss. Having a look at their implementation would is a good method of working out how they are used. See the case of Wells v Wells which can be found in volume 1 of the 1997 All England Law Reports at page 673. I advise that you look in Kemp and Kemp or other manual where these are located. In essence they are tables with several tables setting out different figures. Along the top of the tables is a percentage. This percentage represents a rate of discount. It has been set at 2.5% by the Lord Chancellor and changes are made in accordance with the economic climate. The last change in this rate was in 2001.
Slide 5
Where the is evidence that the claimant will not earn as much in the future as he or she would have done BUT FOR the injury, then that claimant can seek to compensate for that damage under this head; loss of earning capacity.
The first test is the BUT FOR test. But for the claimants injuries the claimant would not have lost his earning capacity. The second requirement before this head is awarded is that there must not be a measurable loss. If there was a measurable loss then the loss of future earnings head is appropriate. Once this has been established the claimant can seek an award under this head. The award will be a lump sum and is quantified as a lump sum. Calculating the amount awarded uses a similar principle as for that used to work out pain suffering and loss of amenity. We must look and have reference to similar previous cases. Kemp and Kemp gives detailed guidance for this.
This type of award is appropriate in 4 main circumstances, although this is not an exhaustive list. These are: -
-Where the claimant is back in the employment he or she was in prior to the accident or is in work of equal value.
-Where the claimant is back in the employment he or she was in prior to the accident or is not likely to loose their job.
-Where the injury has handicapped the claimant so much so that he or she cannot get employment or is handicapped on the market place.
-IF the claimant is a child who has not worked.
This head of damage is important because it allows people to gain compensation, which they otherwise would not have been able to get under the loss of future earnings head.
Slide 6
There is a stark similarity between these damages and the items of damage awarded under special damages. The main difference however is that these, although quantifiable, are losses which a claimant will suffer in the future. For example, the claimant may have to endure continued treatment for his or her injury. This could include future cost of prescriptions or even future physiotherapy. Another main example is Future Care Expenses. These are very important in cases where the claimant has suffered extreme loss, in particular if that claimant as a result of the tortuous act has become disabled. There are specific methods for calculating future care expenses and as usual it comes in the form of a multiplicand and multiplier formula. The formula is the same as that for future loss of earnings, but this time the end result is the amount that will be awarded for future care costs.
The multiplicand in this case is the annual cost of care. To work out what this figure will be a care report will be needed.
There are different scenarios that can occur, each depending upon the life expectancy of the victim. This we use to arrive at our multiplier. There are 3 different tables that can be found alongside the Ogden tables, each representing a certain type of outlook. The first is where the life expectancy is that of a normal person. The second is where the life expectancy of the claimant has been reduced and finally where care will only be needed for a fixed period. Depending on which of these your claimant falls in to, guides you as to which table you should use to calculate this type of damage.
Slide 7
Interest can be awarded on general damages, in particular for that award representing pain suffering and loss of amenity. Interest runs from the date the claim form was filed and is currently set at 2%. For the rate see the case of Pickett and the Chief Constable of Staffordshire Police which can be found in the Time Law Reports on 25th July 2000.
Slide 8
A claimant can be awarded Provisional damages instead of damagers alone. This is provided for under Section 32A of the Supreme Court Act 1981 or of an action is in the county Court Section 51 of the County Courts Act 1984. This states: -
(1) This section applies to an action for damages for personal injuries in which there is proved or admitted to be a chance that at some definite or indefinite time in the future the injured person will, as a result of the act or omission which gave rise to the cause of action, develop some serious disease or suffer some serious deterioration in his physical or mental condition.
(2)Subject to subsection (4) below, as regards any action for damages to which this section applies in which a judgment is given in the High Court, provision may be made by rules of court for enabling the court, in such circumstances as may be prescribed, to award the injured person— (a)damages assessed on the assumption that the injured person will not develop the disease or suffer the deterioration in his condition; and (b)further damages at a future date if he develops the disease or suffers the deterioration.
(3)Any rules made by virtue of this section may include such incidental, supplementary and consequential provisions as the rule-making authority may consider necessary or expedient. (4)Nothing in this section shall be construed— (a)as affecting the exercise of any power relating to costs, including any power to make rules of court relating to costs; or (b)as prejudicing any duty of the court under any enactment or rule of law to reduce or limit the total damages which would have been recoverable apart from any such duty.]
Part 41 of the Civil Procedure Rules governs provisional damages. It is recommended that you have a look at this part in your own time. In the mean time I will have a brief look at what these are and when they can be awarded.
Provisional damages only affect general damages and can be awarded where the claimant has suffered an injury which will deteriorate at some point in the future. What they allow is for the claimants case to be re-assessed at some point in the future. It is up to the claimant as to whether or not to make a claim for this type of damages however it will only be awarded in certain circumstances.
Provisional damages can be awarded in only limited circumstances. It must be proved or admitted that the claimant has a chance which is measurable rather than fanciful that at some time in the future the claimant will suffer serious deterioration in his or her physical or mental condition, or develop some serious disease. The case of Wilson and the Ministry of Defence which can be found in volume 1 of the 1991 All England Law Reports at page 638, gives good guidance as to when the court will make an award for provisional damages. Please look at this case in your own time.
Slide 9
Thank you for listening during this lecture. In the next set of lecture we will be looking at Fatal Accident claim awards. Until then take care.