Future Loss of Earnings - is the Ogden approach the only calculation? - DAC Beachcroft

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Future Loss of Earnings - is the Ogden approach the only calculation?

Published On: 21 September 2015

On 23 July 2015, the Court of Appeal, led by Jackson LJ, handed down its judgment in Billett v Ministry of Defence which involved a claim for future loss of earnings where the Claimant suffered from a minor disability but was in steady employment and earning at his pre-accident level.  The issue was whether the court should follow the approach in the Ogden Tables or adopt the traditional Smith v Manchester approach.

Billett joined the army on leaving school and became an HGV driver in the Royal Logistics Corps.  Whilst on a field exercise, he suffered a non-freezing cold injury to his feet as a result of wearing unsuitable boots in extreme cold weather.  Following treatment over a prolonged period, he was assessed as being medically fit for deployment but continued to suffer symptoms.  Almost 3 years after the injury, he left the army for personal reasons rather than due to his injury and began work as an HGV driver for a haulage contractor one week later.

The medical evidence indicated that he suffered a minor injury, that he will be more vulnerable to cold weather than people who have not suffered the injury and that he needs to protect his feet with thick socks and specialist footwear in winter.  The condition was not causing him problems in his work as an HGV driver but it would have precluded him from occupations that required him to work outside.  It also had more impact on his domestic and leisure activities, particularly in cold weather, but he continued to enjoy fishing and clay pigeon shooting all year round provided the weather was good.  He was earning as much as he would have been if he had not been injured and, therefore, this was a case of loss of future earning capacity rather than a conventional loss of earnings.

At trial, the judge used the Ogden Tables (albeit adjusting the Table B reduction factor by increasing it from 0.54 to 0.73 to reflect the minor nature of the disability) and awarded £99,062, which equated to over 4.5 years' salary, for loss of future earning capacity.

On appeal, Jackson LJ accepted that the Claimant fell within the definition of 'disabled' in the Ogden Tables but, taking into account the Claimant's ability to work in his current occupation without problems, concluded that the best the court could do was to make a broad brush assessment and that the appropriate method of doing so was to adopt a Smith v Manchester approach.  He therefore based the award on two years' loss of earnings and rounded this up to £45,000.  Whilst the award remains substantial, it is significantly lower than a full Ogden-based award which would have been close to £200,000.

Jackson LJ described this as a classic case when the Smith v Manchester approach should be adopted and added that, if he had instead followed the approach in the Ogden Tables, he would have adjusted the Table B reduction factor even more than the judge and come out with the same result, i.e. in the region of 2 years loss of earnings.

This was the first occasion that the application of the reduction factors in Tables A to D of the Ogden Tables has come before the Court of Appeal and indicates that there is still a place for the Smith v Manchester approach in appropriate cases, e.g. where the disability is minor and the claimant is still earning at his pre-accident level.  It also illustrates that, even when the Ogden Tables are followed, the reduction factors in Tables A to D only provide a starting point and need to be adjusted, and often heavily adjusted, in appropriate cases.  In short, each case needs to be decided on its own facts instead of adopting a slavish actuarial approach.