The Quantification of Future Losses. Graeme Garrett February 2014. Topics for Today. Blamire and Smith v Manchester awards The Ogden Tables Ogden 6 Cases The Discount Rate Periodical Payment Orders. Blamire and Smith v Manchester awards.
Published May 2007
Introduced a new methodology for calculating contingencies other than mortality
Used only for future loss of earnings claims
Ogden 5 factors – economic activity, occupation, geographical location. Discount factors very small and in practice frequently ignored.
Ogden 6 factors - sex, disability status, employment status, educational attainment
New methodology based on research by Dr Victoria Wass of Cardiff University and Zoltan Butt, Richard Verrall and Steven Haberman at City University
Data derived from Labour Force Surveys produced by Office for National Statistics.
Provides quarterly snapshot of working population and collects data on wide range of socio-economic and labour force characteristics.
Educational attainment –
D = degree or equivalent or higher
GE-A = GCSE/Standard grades A-C to A Level/ Higher Level
O = below GE-A or no qualifications
Definition of “disabled” is lifted from Disability Discrimination Act 1995
Must satisfy all three parts of test –
Illness expected to or has lasted for 1+ year
Must satisfy DDA definition “substantially limits person’s ability to carry out day to day activities”
Affects kind or amount of paid work
See examples of day to day activities – Para 35
No attempt to distinguish varying degrees of disability
Reduction factors are averages for broadly defined groups of working-age individuals.
The average indicates a typical outcome for individuals within each defined group
( £44,150) = £351,350
H., 36 at trial, suffered knee injury during army exercises.
Permanent weakness and instability – fit for light work only.
Had not worked - or looked for work – since accident.
Judge found he should have looked for light work – and would probably have found work by trial if had looked.
Judge adjusted Table B RF for disabled, unemployed 36 yo with no qualifications (0.20) upwards to that for disabled, employed 36 yo with no qualifications (0.39).
Judge went further by finding that level of disability did not warrant as large a discount as Table B suggested and made further upward adjustment to RF to 0.60 – mid point between Table A pre-injury RF (0.80) and Table B post-injury RF (0.39).
Illustrates significant benefit to defender of finding claimant has failed to mitigate losses by not returning to work.
C., 50 at trial, suffered serious knee injury in RTA.
Motor mechanic at time and remained so at trial. Also working part time as taxi driver.
Agreed would need knee replacement within a year and would have to give up work as mechanic.
C’s case was he would then work full time as taxi driver.
C claimed future LOE using multiplier adjusted under Table B on basis he was disabled (0.49).
His LOE claim £113,935.
A., 16 at trial, suffered CP at birth.
Severe physical and communication difficulties but very intelligent – had obtained 10 GCSEs.
Dr Wass gives evidence.
Educational level – D.
RF from Table C = 0.87.
No REC so no need to use Table D
L. 28 at trial. Lighting technician. Above knee amputation and injury to dominant hand.
Returned to work as lighting technician in limited capacity at lower pay.
At time of accident earning £13,000 net
Claim for LOE £2.7 M
Argued by 40 would have been lighting director for groups like Rolling Stones and Genesis earning £250,000 p.a.
“so remote as to be fanciful speculation”
“A difficult personality and a past history of poly-drug misuse who would have found it difficult to work in a team situation”
Judge found likely future earnings would have averaged £33,000 net pa
(i) definition of “disabled” a wide one and
(ii) reduced multiplicand already reflected some degree of disability
Peters v East Midlands Health Authority  EWHC 778 (Butterfield J)
P., incapax aged 20 at trial, suffered severe cognitive impairment, autism and blindness at birth.
Dysfunctional family with poor employment record. Mother of limited intelligence.
Claim for future LOE based on basis of Table C RF of 0.68 (not disabled, employed, lowest education).
Judge accepted defendant’s argument that RF of 0.68 did not adequately reflect realities of her limited uninjured earning potential. Likely to have been sporadic.
Applied a RF of 0.50.
Palmer v Kitley  EWHC 2819 (Seymour J) (Butterfield J)
P., 21 at trial, injured in RTA when 16 and still at school.
Had taken GCSEs and was in A level year. Had hoped to study midwifery at university.
No longer fit for other than sedentary work.
Judge found P. an unimpressive witness. Her school record was undistinguished and judge found that she probably would not have gone on to obtain midwifery qualification.
Evidence was that there were more applicants for midwifery posts than vacancies.
P. had married RAF serviceman – had to move to new posting every 3 years.
So many imponderables on evidence that Judge declined to make a multiplier/multiplicand award and instead made a Blamire award of £30,000 for loss of earning capacity.
Pursuer, 25 at proof, sustained serious foot and ankle injuries. Lord Malcolm rejected Pursuer’s Ogden 6 LOE claim (£330K) as “clearly excessive, presumably because the Tables are based on some average disability of greater severity than that which afflicts the Pursuer ”.
“The Tables are not well designed for the particular circumstances of this case” - because of an opportunity for retraining and enhanced employment prospects thereafter.
The Tables arguably do allow for retraining, for example, by an upward adjustment to the category of educational attainment.
Equally it should be possible to adjust the education category downward where a disability prevents someone using a qualification or skills.
Lord Malcolm made a Blamire award of £74,000.
Clarke v Maltby  EWHC 1201 (Owen J) (Butterfield J)
Solicitor, 45 at trial, injured in RTA.
Sustained various fractures as well as a head injury.
Substantial recovery from physical injuries but suffered from mental fatigue, cognitive dysfunction, disinhibition, anger, impaired memory, concentration and processing as well as compromised and inappropriate speech and word finding. Unlikely to resolve.
But for the accident she would probably have made salaried partner at regional law firm at £110,000 pa. Judge increased that figure to reflect possibility of higher earnings in a London or City firm.
Residual earning capacity assessed at £40,000 pa.
“I am not persuaded that it is appropriate to apply a Table D Ogden discount. Her degree of disability has been fully reflected in the difference between her lost and residual earning capacity.”
This decision knocked some £122,750 or 27% off her LOE claim.
This decision would suggest that a claimant who meets the definition of disabled is not going to face any additional disadvantage on the labour market. Particularly when one considers Mrs Clarke’s catalogue of permanent symptoms, can that really be correct?
5. Claimant employed at proof – a false impression? Employment may not be secure, e.g. temporary contract, probationary period or in sector particularly vulnerable to adverse economic conditions. May be over-optimistic to use employed/disabled post-injury RF without downward adjustment.