There are some important matters considered in the decision of Mr Justice Picken in Dr Sido John -v- Central Manchester and Manchester Children’s University Hospitals NHS Foundation Trust  EWHC 407 (QB).
The claimant was a doctor who was injured in a fall. He was successful in establishing clinical negligence on the part of the treating hospital. The court had to consider the claim for loss of earnings.
- The court rejected an argument in relation to failure to mitigate loss. The claimant had not gone back to work. However it was appropriate for him to have waited to see whether he could have returned to work as a GP.
- The claimant would never have returned work as a GP after the accident even without the medical negligence. His residual earning capacity was £5,000 a year his “but for” earnings were found to be £20,000 a year.
- There was a dispute over the appropriate multiplier. The judge adopted a mid-way point between the two parties and found it to be 17.35.
THE JUDGMENT ON LOSS OF EARNINGS
Coming into the trial, Dr John’s claim in respect of past loss of earnings was put forward on the basis that earnings could be recovered in respect of an eight year period: specifically that Dr John is entitled to recover 4 years’ full loss of earnings, and then a further 4 years’ partial loss of earnings. Ultimately, however, acknowledging that there would, in any event, have been some delay in Dr John’s return to work owing to the injury sustained in Dr John’s fall, Mr Allen QC accepted that the claim should be reduced by six months to reflect this. This reflects an acknowledgment by Mr Allen QC that, whereas until 2012 it was legitimate for Dr John not to work to allow for his legitimate attempts to return to work as a GP, after 2012 it is appropriate to regard Dr John as having a residual earning capacity of £5,000, calculated on the basis of part-time work in an administrative capacity. I agree that this is appropriate, making the total claim one which covers a 7 ½ year period and not the 8 year period originally claimed.
Mr Kennedy’s submission was, however, that nothing is recoverable because Dr John has made no attempt to find employment, something which he confirmed in cross-examination when he explained that his focus throughout has been on returning to practice as a GP. I cannot accept that submission. It seems to me that it was not unreasonable for Dr John to do what he could to achieve this aim, and that he should not be penalised, in effect, for doing so. Mr Kennedy’s argument amounts essentially to a contention that Dr John has failed to mitigate, yet I do not consider that Dr John’s conduct has been unreasonable. It follows that I accept that Mr Allen QC is right and that Dr John is entitled to recover in respect of the 7½ years to which the claim for past loss of earnings relates.
The parties are agreed that Dr John’s residual actual earnings are no more than £5,000 per annum. Mr Allen QC submitted, and it was agreed, that the totality of Dr John’s injuries (to which the damaging raised intra-cranial pressure made a ‘material contribution’) prevent him from working at anything other than the most basic part-time level. The parties are not, however, agreed as to the appropriate ‘but for’ earning capacity. It is clear, based not least on Dr Ford’s evidence, that, in all probability, it is unlikely that Dr John would have returned to work as a GP given the demands of that role. However, it is not easy to say precisely what his earning capacity would have been, other than that it would have been greater than it is now. Mr Allen QC submitted that, although in the ‘but for’ scenario Dr John would have suffered some minor cognitive deficits which would have prevented him from working as a GP, Dr John would have been capable of working full-time and in a role drawing on his degree level qualification and medical experience. He suggested that, with only minor cognitive impairment, Dr John would have been capable of full-time work, adding that, even in his injured state, Dr John has not lost his desire or ambition to work. The obstacle to work, Mr Allen QC explained, is not lack of motivation or initiation; it is his profound cognitive and neuropsychological deficits. Mr Allen QC submitted that net annual earnings for such a role in the order of £25,000 a year would be appropriate, therefore, for Dr John’s ‘but for’ earning capacity. He added that £25,000 is a level of figure which recognises that Dr John might have earned more, and so is nothing like a ‘high point’ but instead represents a sensible balance.
Mr Kennedy did not agree. He highlighted how Dr Ford acknowledged when she gave evidence in relation to Dr John’s ‘but for’ employment potential that it is unlikely that, even excluding the effects of damaging raised intra-cranial pressure, Dr John would have been able to work as a biological scientist. Dr Ford agreed, essentially, that the combined effects of the initial brain injury and the post-operative effect had “clobbered” Dr John from an employment perspective, albeit that in re-examination Dr Ford agreed that it was not possible to make a balance of probabilities prediction. Mr Kennedy reminded me, in particular, that when it was suggested to her that Dr John might have been able to obtain work as a biological scientist (an example which had been given in the updated schedule of loss), she indicated that she thought that unlikely. The most that Dr Ford could really say was that, in the ‘but for’ scenario, Dr John might have been at a level above that of an administration clerk (the type of employment which it is accepted that Dr John could now perform) but how far above she was unable to say. Mr Kennedy suggested also that, in making the assessment about Dr John’s ‘but for’ earning capacity, I should take into account the restrictions which are unrelated to any damaging raised intra-cranial pressure, pointing in particular to Dr John’s inability to drive and his restricted ability to read and use a computer, factors which Mr Kennedy suggested by themselves call into question whether Dr John would have been able to work, for example, as a medical researcher as is also suggested in the ‘but for’ scenario described in the updated schedule of loss.
Mr Allen QC responded by submitting that, if there is to be any reduction from the £25,000 ‘but for’ earning capacity figure which he put forward, it should only be modest. He suggested, in particular, that it would be wholly unrealistic to reduce the ‘but for’ level of earning by too great an amount, pointing out that in his Written Closing Submissions, possibly purely for illustrative purposes, Mr Kennedy had given a figure of just £7,500 by way of ‘but for’ earnings, so resulting in a very modest loss of £2,500 a year. Mr Allen QC submitted that Dr John would have been bound to have earned more than this level of income, highlighting also that, whilst Dr Ford agreed that Dr John would have been unable to return to work as a GP, it does not follow that his earning ability would have been as limited as suggested by Mr Kennedy. I consider that there is some force in these observations. Doing my best, in the circumstances, and inevitably adopting something of a broad brush approach, it seems to me that, on a balance of probabilities, Dr John would have struggled to earn at a level of £25,000 per annum. Equally, however, I cannot accept that the ‘but for’ level of earnings would have been as low as the £7,500 put forward by Mr Kennedy by way of illustration. Adopting a necessarily broad brush approach and doing the best that I can, I conclude that a more appropriate figure would be £20,000 net. It follows that the damages payable are: for the first 3½ years £70,000 (calculated at £20,000 per annum); and for the next 4 years, £60,000 (namely £20,000 less £5,000 each year). This totals £130,000, to which needs to be added interest at the rate of 4.21% per annum (as agreed between the parties) running from 1 June 2008 and so totalling £5,473 to date.
As to future loss of earnings, the issues which arise concern: (i) what Dr John’s ‘but for’ (which is to say his uninjured) annual earnings would have been; (ii) the appropriate discount for risks other than mortality in the ‘but for’ scenario; and (iii) Dr John’s retirement age. The parties are again agreed that Dr John’s residual actual earnings are no more than £5,000 per annum. As to (i), the appropriate figure is, again, in my judgment, £20,000 per annum. As to (ii) (the appropriate multiplier), the position was very helpfully set out in a note which Mr Kennedy prepared, at my request, after oral closing submissions. As explained in that note, the multiplier is not the number of years over which the loss is sustained as this would overcompensate a claimant by permitting immediate recovery of sums which otherwise he would have received in the future. This is why the multiplier is calculated by reference to a prevailing discount rate (currently set at 2.5%) to take account of the early receipt and presumed investment of the capital sum. It is also why account is taken of mortality risks. However, when considering loss of earnings, account needs additionally to be taken of other risks in order to cater for the possibility that there may be periods when a claimant may have ceased to earn, typically through unemployment or illness. Relevant to these risks are factors such as educational attainment, disability status and employment status, which the 7th edition of the Ogden Tables distil into contingency discounts. Specifically, for men the discounts are contained in Tables A and B, with paragraphs 38 and 39 explain how the discounts are to be applied, as follows:
“38. In order to calculate the value of the earnings the claimant would have received, if the injury had not been suffered, the claimant’s employment status and the disability status need to be determined as at the date of the accident (or the onset of the medical condition) giving rise to the claim, so that the correct table can be applied. For the calculation of future loss of earnings (based on actual pre-accident earnings and also future employment prospects), Tables A and C should be used for claimants who were not disabled at the time of the accident, and Tables B and D should be used for those with a pre-existing disability. In all of these tables the three left hand columns are for those who were employed at the time of the accident and the three right hand columns are for those who were not.
39. In order to calculate the value of the actual earnings that a claimant is likely to receive in the future (i.e. after settlement or trial), the employment status and the disability status need to be determined as at the date of settlement or trial. For claimants with a work-affecting disability at that point in time, Tables B and D should be used. The three left hand columns will apply in respect of claimants actually in employment at date of settlement or trial and the three right hand columns will apply in respect of those who remain non-employed at that point in time.”
Mr Allen QC and Mr Kennedy were agreed that the relevant earnings multiplier to retirement at age 70 derived from Table 11 is 18.08, and that the multiplier to retirement at age 67 (the Defendant’s case) is 16.61. They were also agreed: that, as Dr John has a degree level qualification (in fact, rather more than that), the relevant column in Table A or B is column ‘D’; that because at the time of trial Dr John was aged 44½ the appropriate row is ’40-44′; and that in the ‘but for’ or ‘residual’ scenario, Dr John is to be regarded as ‘disabled’, and so the appropriate table is Table B. As Mr Kennedy rightly observed, and as confirmed by Mr Allen QC in the note which he prepared in response to Mr Kennedy’s note, the issue between the parties is whether Dr John is to be treated as employed or unemployed in the ‘but for’ scenario. In monetary terms, again as helpfully explained by Mr Kennedy, the relevant multipliers and contingency factors on these alternative bases is as follows:
|Retirement age||Earnings multiplier||Contingency discount employed||Result employed||Contingency discount unemployed||Result unemployed|
The parties are agreed that the appropriate discount factor for Dr John’s actual injured scenario is 0.33. The dispute is as to the ‘but for’ discount factor. In this regard, it is recognised that in some cases Tables A & B may produce a discount which is either too small or too great, so as to mean that some addition to, or reduction of, the contingency factor is permissible in certain cases. This is because Tables A and B provide average discount factors based on a large study cohort. The tables, therefore, simply represent a starting point which enable the Court to make a specific assessment for a specific claimant. As Mr Kennedy explained, a recent example is Billett v Ministry of Defence  EWCA Civ 773, where the claimant only just satisfied the Table B criteria, the trial judge taking a multiplier based on a mid-point between the Tables A and B contingency factors and the Court of Appeal adopting a broad brush approach by awarding a lump sum for loss of earnings rather than a figure calculated on a multiplier/multiplicand basis. Mr Allen QC also cautioned against ‘double discounting’ whereby Dr John’s ‘but for’ earning capacity is reduced both at the level of earnings stage and when arriving at an appropriate discount factor. Mr Allen QC emphasised in these respects how Dr John has a high work ethic, coming from a family of high achievers and himself achieving much despite his illness as a teenager, and prior to 23 December 2007 working consistently without any or any significant periods of unemployment.
In these circumstances, it was Mr Allen QC’s submission that the appropriate discount factor is 0.57, the figure stated in Table B for a 44 year old employed degree level qualified disabled male. As he pointed out, this translates to a statistical chance of long-term continuous employment of 57%, which Mr Allen QC explained reflects the probability that Dr John would have spent approximately 57% of the remainder of his career in employment. I agree with Mr Allen QC that this is both reasonable and realistic. I reject Mr Kennedy’s submission that a more appropriate discount factor would be 0.33. As Mr Allen QC pointed out, this is the same discount as the parties are agreed is appropriate in the injured scenario, so suggesting that the Defendant’s position is that the totality of Dr John’s injuries have not adversely affected his employment prospects. That is a proposition which cannot be right. I agree with Mr Allen QC that in all probability Dr John would have been employed by now in the ‘but for’ scenario.
As to (iii) (retirement age), I propose taking a middle position between the position adopted by Mr Allen QC (retirement at 70) and Mr Kennedy’s position (67). The halfway point between the two multipliers (18.08 and 16.61) is 17.35.
Drawing the threads together, the future loss of earnings claim falls, therefore, to be calculated as follows:
(1) Stage 1 – ‘But for’ projected earnings
Multiplier x Discount for risks other than mortality x ‘but for’ annual earnings = Projected earnings
17.35 x 0.57 x £20,000 = £197,790
(2) Stage 2 – Residual earnings
Multiplier x Discount for risks other than mortality x Predicted actual annual earnings = Residual earnings
17.35 x 0.33 x £5,000 = £28,627.50
(3) Stage 3 – Dr John’s net loss
‘But for’ earnings – Residual earnings = Net loss
£197,790 – £28,627.50= £169,162.50
- Loss of earnings: the appropriate loss of earnings for an injured claimant:mitigation of loss.
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- The Ogden Tables -v- Smith -v- Manchester.
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- Loss of earnings: the Ogden approach in practice
- Disability in the labour market: another example where the Actuarial Tables could not be used.
- Damages assessed on a loss of a chance basis: Interesting Court of Appeal observations