LOSS OF EARNINGS: THE APPROPRIATE LOSS OF EARNINGS MULTIPLIER FOR AN INJURED CLAIMANT: MITIGATION OF LOSS

It is always interesting to look at those cases where the judge decides on loss of earnings. In Syred -v- Powszecnny Zaklad Ubezpieczen (PZU) SA [2016] EWHC 254 (QB) (Mr Justice Soole. In particular there is an interesting riposte to an assertion that the claimant failed to mitigate his loss.

KEY POINTS

  • The judge found that the claimant, if he had not been injured, would have continued to work at the same rate and increased to earning a figure equivalent to £53,000 a year gross.
  • The multiplier for residual income now the claimant was injured was assessed at 12, compared to the “non-injured” multiplier of 15.85.

“The Defendants also submit he failed to mitigate his loss by taking the job with BK at a salary which was kept artificially low in order to ensure that he did not lose any of the benefits to which he was entitled. In my view this was a sensible and reasonable course to take; and reflected the professional intervention which was gradually giving him the necessary insight into his disability.”

THE CASE

The claimant was seriously injured in a road traffic accident in Poland. He brought an action in England. Polish law applied (however on the issue of quantification of loss of earnings it appears to be identical with law in England and Wales). He had been made redundant from his previous job; worked part-time for a period being paid an amount which did not affect his benefits;his contract was terminated a month before the trial. At the time of the trial he was unemployed.

Loss of earnings : past (B.1)
    1. There is now agreement that (i) Mr Syred’s immediate pre-accident earnings at Young’s were £2637.24 pm net (ii) actual earnings received to date of trial are £106,407. The dispute concerns his past earnings if uninjured.
    2. Mr Syred claims that uninjured he would have continued to earn at the same rate but subject to 2% annual increases, either at Young’s or in equivalently paid alternative work with another employer. In addition he claims a sum (£20,000) to reflect the prospects that he would have improved his remuneration and/or achieved the status of chartered surveyor.
    3. The Defendants submit in particular that : his redundancy was unrelated to his injuries or he would have resigned in any event; there is no evidence that he would thereafter have earned more than at HW; he would have wanted the easier lifestyle and work/life balance which HW provided; he would not have sought chartered status; the expert evidence does not justify any annual increased remuneration in this sector. In short, that his career path until termination of employment with HW on 31.1.15 would have been the same.
    4. In the light of all the evidence I have no doubt that, before this accident, Mr Syred was a highly driven, hard working, proud (in the best sense) and ambitious man, who enjoyed respect from his employers and work colleagues.
    5. That said, I accept that the employment picture was to some extent qualified by the following factors. First, he was a person who could hold and give vent to strong adverse views about those in authority over him (e.g. his line manager at Young’s). I note the pre-accident personality questionnaire at Young’s which included the comment that ‘In distress he may become overwhelmed by detail, become rude and perhaps not to realise the impact his behaviour may have on other people. May also be unable to focus and lack direction.’ (4/346). Secondly, he was less motivated by status for its own sake than the practicalities of what that status would or might produce. Thirdly, and driven as he was, he was evidently concerned by the need for an appropriate work/life balance; and for that reason had sought to protect his first marriage by moving to a work environment with a (relatively) less demanding ethic and at the cost of lower earnings for equivalent work. That said, his marriage was over by the time of the accident.
    6. The first question concerns the cause of his redundancy. Mr Syred believes that his injuries and their effect on his working ability must have played a part in the redundancy. He says that another employee who was made redundant had recently had a heart attack and won his case at the tribunal.
    7. The redundancy process used a scoring method for the two competing surveyors. The employment expert retained by Mr Syred, Mr Doherty, analyses the scoring and questions whether it was affected by his post-accident work. His opposite number, Mr Gilbert, says that he has no reason to doubt the fairness of the process.
    8. I well understand the instinctive concern that Mr Syred’s injuries might have played a part in the decision; and the contemporary documentation is not as clear as it might be as to the steps taken to ensure that they did not. Young’s first letter concerning the process (9.2.11) was written 6 months after Mr Syred’s return to work and includes ‘…taking into account recent appraisals’. A document explaining the process (8/24) says that ‘The Company has chosen to evaluate your performance over the last 2 years based on the individual tasks in your current job description and it has applied a points system as below.’ However, the note concludes that ‘This selection method is fair, objective and non-discriminatory’.
    9. The scoring assessment includes the task of ‘annual building maintenance inspections and fire risk assessments’. At this point he was office-bound. The scoring is 14/20 and the comment box notes that ‘The score is made up of a balance prior to his return to work. At present he is not taking any due to stress of the visit’. I agree with Mr Gilbert that this indicates an exclusion of the effects of the accident, albeit this is not made clear in respect of the other scored ‘tasks’.
    10. In the result he received a lower score than his rival and so was chosen for redundancy. Mr Syred, quite understandably in all the circumstances, chose not to challenge the decision. I have no further information about the other candidate. In my judgment the available evidence provides no sufficient basis for the conclusion that Young’s took account of his disability, i.e. acted unlawfully, in their redundancy decision.
    11. In any event, I consider that, uninjured, he would have voluntarily left Young’s by no later than the date when he began with HW. When asked about his pre-accident work plans he told Mr Doherty that he doubted whether he would have remained very long at Young’s as he did not particularly like the organisation nor have a positive relationship with his line manager. I accept this and am satisfied that he would have left voluntarily, perhaps taking advantage of the opportunity of voluntary redundancy.
    12. The next question concerns his employment after leaving Young’s. The Defendants say that he would have taken the same course as happened, namely employment with HW at a significantly lower financial package. They point in particular to the evidence of HW’s Paul Bunting that when they met he ‘came across well’ (i.e. with the implication that his presentation was unaffected by the injuries); and to the evidence of his wish for a better work/life balance which a family business such as HW provided.
    13. I disagree and consider that this submission takes no adequate account of the difference between Mr Syred’s position injured and uninjured. His evidence is that he struggled in his post-redundancy search for work. He managed to get several interviews but did not get past the first interview in any application. This he contrasted with his pre-accident experience where he had always got the job he was going for. In the interviews with HW he was ‘open about my issues following the accident’ and took the lower rate of pay (£30,000 pa plus car allowance) in order to get back into work. Whilst acknowledging that his lack of insight into his true post-accident capabilities would have resulted in him playing down the effect of his injuries, the fact is that he was struggling in his daily life and work.
    14. By contrast, I am satisfied that uninjured he would have sought to achieve employment at a package of at least the amount he had received from Young’s. By this stage his marriage was over and I see no reason to conclude that uninjured his personal relationship (whether with Kate Cieslar or Samantha or anyone else) would have caused him to hold back on his work ambitions and drive. This would have included, as he told Mr Doherty, a willingness to return to GK.
    15. On balance I think it unlikely that he would have proceeded to chartered status as a surveyor. He did not value status for its own sake and considered that its advantages in the brewery sector were limited. Against his base salary with Young’s (£39,960 : 2009/10), the employment experts’ agreed table of salary earnings for ‘property professionals’ shows that his earnings as ‘non-professionally qualified’ were above the average for 2009 (£33,121), virtually identical for 2010 (£39,962) and below that for 2011 (£42,757). In addition bonuses were commonplace. Mr Syred had received between £2000 and £6000 pa at GK albeit none at Young’s. Of course I accept that averages are averages and the table figures are subject to many variables.
    16. My conclusion is that Mr Syred uninjured would have required and found employment by the end of May 2011 with a base salary of no less than the amount he had earned at Young’s. With a planned departure date from Young’s, the likelihood is that there would have been no interval between jobs.
    17. As to the claim for 2% annual increases the Defendants point to the experts’ table which shows the average base salary for all property professionals falling from 2011 (£50,250) to 2102 (£48,901), rising only in 2014 (£51,179). For non-professionally qualified the figures go down from £42,757 (2011) to £36,552 (2012), and then up to £40,235 (2013) and £44,870 (2014). They also point to the lack of any rise in Mr Syred’s salary at Young’s between 2008 and 2011. Mr Syred points to the Defendants’ conceded figure of £48,000 p.a. gross for future earnings if uninjured.
    18. True it is that the average figures in the experts’ tables show both falls and rises in average base salary. However, absent a most unlikely contractual provision, an existing employee will not be subject to a reduction in base salary. At worst there will be no increase. The overall trend is of increase between 2010 and 2015; and this is reflected in the Defendants’ figure for future earnings. All in all I consider that the claim of 2% annual increase is appropriate.
    19. Having regard to Mr Syred’s abilities and drive (e.g. his ‘high achiever’ status at GK) I also consider that there were good prospects that he would have done better than average in the job and rewards that he secured, through higher base salary and/or bonus over the period to date of trial. I also consider that his package would have included a car or car allowance, such as he had at Young’s; and that this should be reflected in this head of claim rather than on the separate basis claimed in item B.2. I would allow £20,000 as claimed, but to include the car element.
    20. In reaching these conclusions I have taken account of the Defendants’ points about dyslexia and the pre-accident personality questionnaire but am clear that these did not and would not have had an adverse effect on his career. It is not unusual for driven people to have the sort of characteristics identified in the questionnaire; and it is often a part of their success. Likewise dyslexia did not prevent him taking a good degree or otherwise hinder his career.
    21. The Defendants also submit he failed to mitigate his loss by taking the job with BK at a salary which was kept artificially low in order to ensure that he did not lose any of the benefits to which he was entitled. In my view this was a sensible and reasonable course to take; and reflected the professional intervention which was gradually giving him the necessary insight into his disability.”

QUANTIFICATION OF THE LOSS OF EARNINGS

Loss of earnings : future (C.1)
    1. In the course of the trial the parties agreed the multiplicand for residual income (£15817 net p.a.) and the multiplier for future earnings to retirement at 67 if uninjured (18 x 0.88 = 15.84). The issues therefore concern the multiplier for residual income and the multiplicand for future earnings if uninjured.
Multiplicand for earnings if uninjured
    1. Mr Syred claims £55,000 gross, £39,225.70 net; the Defendants contend £48,000 gross, £35,166 net.
    2. Mr Syred’s figure is based on a package including base salary, and any bonus and additional benefits. Supported by the evidence of Mr Doherty he points to the table showing the average base salary in 2013 for all surveyors in his higher-earning age range (36-45) at £57,079; for all property professionals regardless of age at £48,901; to 39% of surveyors receiving bonuses, identifying an average bonus for surveyors in project management of £11,252; to a limited effect of chartered status; for the agreed prevalence of other benefits (including pension, health insurance, car, shares); to the earnings and bonuses achieved at GK and the car benefits enjoyed. If chartered status is excluded, contrary to his view, Mr Doherty puts forward a base salary range of £47,849 – £49,586, based on age-related base salaries for all male surveyors in 2014 less a deduction of 13% to reflect non-chartered status.
    3. Against this, and supported by the evidence of Mr Gilbert, the Defendants point to the factors discussed above in respect of past loss of earnings including his pre-accident personality, dyslexia, chartered status, life/work balance. Mr Gilbert discounts the importance of bonuses because they are discretionary; Mr Syred received modest bonuses at Greene King and HW and none at Young’s; and suggests that Mr Doherty’s average bonus figure may be skewed towards a few high earners. He concludes with an age-related base salary range of £43,174 – £47,776.
    4. Helpful as was the expert evidence and the RICS table, there are many variables and individual factors which I must assess. As already held I think it unlikely that Mr Syred would have proceeded to chartered status, albeit I consider that this would have been of less significance in the brewing industry where he had his background and particular expertise. On the basis of the experts’ evidence this produces a relatively narrow division on base salary, cf. Mr Gilbert’s highest figure (£47,776 : age range 46-55) and Mr Doherty’s lowest (£47,849 : age range 56+). I do not accept that he would have been held back by dyslexia or personality factors. I conclude that Mr Syred uninjured, with his qualities and drive, would have earned not less than £48,000 gross as a base salary from November 2015. I also consider it likely that he would have obtained a bonus and a car and possibly other benefits. Doing the best I can I assess the likely overall package and multiplicand at £53,000 gross.
Multiplier for residual income
    1. Mr Syred is now 42. The basic multiplier is agreed at 18. Mr Cory-Wright submits that this should be discounted by a factor of 0.33 to reflect the fact that he is unemployed and disabled : see Ogden table B (degree category). This produces a multiplier of 6.
    2. The Defendants submit that, as with the multiplier for future earnings if uninjured, the discount should be limited to 0.88, reflecting general contingencies other than mortality. It would be wrong to treat Mr Syred as unemployed or disabled for the purpose of the Ogden tables (a) in any event and (b) in circumstances where the agreed residual income includes benefits whose purpose is to provide income for those who are unemployed or suffer disability. The annual benefits (ESA; PIP; Housing; Council Tax rebate; Tax credit : total £27,200.42) substantially exceed the agreed multiplicand (£15,187). In the event that he uses his award of damages to buy a house and housing benefit (£8736 p.a.) is lost, the remaining benefits will still exceed the agreed multiplicand. A personal injury trust ring-fences the award when assessing eligibility for means-tested benefits; and the value of owned accommodation is not taken into account. The non-means-tested benefits (ESA/PIP) total £11,093 p.a. On top of that he can take low paid work up to c.£100p.w. which brings the total income back up above the multiplicand of £15,187. The threat to means-tested-benefits only arises if and when Mrs Syred returns to work when the children are older. Whilst they are of school age she accepts that she will not be able to return to her pre-marriage full-time occupation.
    3. Mr Cory-Wright responds that Mr Syred is unemployed and disabled within the meaning of the Ogden tables; and that the starting point is therefore a discount of 0.33. He acknowledges the general point concerning the receipt of benefits but submits that the full discount should still apply (alternatively be no less than 0.5) having regard to the prospects that their receipt of benefits will cease or diminish. The particular factors are the Syreds’ strong work ethic and repugnance for taking benefits; the likelihood that they will buy a house and thereby lose Housing Benefit; Mrs Syred’s unchallenged evidence that she will go back to work when both children are of school age, citing her previous employment in sales management at earnings of £36-37,000, thereby forfeiting child tax credits and council tax reduction; the phasing out of ESA as part of Universal Credit; the risk to PIP from ‘austerity measures’.
  1. As a matter of categorisation under the Ogden tables I have no doubt that Mr Syred falls within the description of unemployed and disabled. Such status is to be determined at the date of trial : Ogden para. 39. Mr Syred was and remains unemployed. As to disability, the consequences of his head injury satisfy the three conditions set out in Ogden para. 35, viz. (i) permanence (ii) substantially limiting his ability to carry out normal day to day activities and (iii) affecting either the kind or the amount of paid work that he can do (in his case, both). The Ogden examples of impaired daily activities are no more than that. I am satisfied that the deficit from which suffers and the various forms of professional and family help that he has needed and will continue to need in his daily and working life bring him comfortably within this category.
    1. Accordingly in principle the starting point is the discount (0.33) identified in the Ogden tables. However there must be significant adjustment from that starting point where the benefits currently received substantially exceed an agreed multiplicand which is derived from either earnings or benefits.
    2. In my view the likelihood is that the Syreds will at an early stage purchase a home with their damages award and will in consequence lose their housing benefit. However that will still leave them with benefits of £18,464 p.a., i.e. £2647 above the agreed multiplicand.
    3. The prospects that PIP and ESA will be withdrawn or replaced with a less valuable benefit are too speculative to admit of a discount. I accept that Mr Syred has an inherent dislike of claiming benefits – he used the word ‘hate’. However, he has now taken that course and faces the need to provide for his family. All in all, I do not consider there is a real chance that he will forego claiming available benefits.
    4. I accept Mrs Syred’s evidence as to returning to work and consider the likelihood is that she will do so when the younger child William (born July 2014) is 5. As she acknowledged this will have to be part-time until the younger child leaves school. This is likely to affect entitlement to child tax credits and council tax rebate. If removed in full (£7371 p.a.) this, together with the lost housing benefit, would limit benefits to ESA/PIP, i.e. below the multiplicand. I consider that Mrs Syred will eventually progress to full-time work.
    5. My overall conclusion is that there is a measurable prospect of benefit falling below the agreed multiplicand. The 0.88 discount for general contingences other than mortality is inadequate in the circumstances. A discount of 0.33, or 0.5, is too much. All in all, I assess the appropriate discount at two-thirds. This produces a multiplier for residual income of 12.”

RELATED POSTS

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: