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Clarke v Maltby, High Court, 28 May 2010

14 June 2010
The issues

Handicap on the labour market – future loss – Special Damages. Reduced earning capacity – method of calculation.

The facts

The Claimant was born in 1964 and was 45 years of age at the time of trial. In 2004 she was a front seat passenger in a car driven by the Defendant. He negligently collided with an oncoming vehicle whilst attempting a dangerous overtaking manoeuvre. Liability was admitted in April 2005 and judgment for damages to be assessed was entered in August 2008. The Claimant suffered multiple and life threatening injuries including an acute psychiatric reaction to the accident and it was accepted by the Defendant by the time of trial that she had suffered brain injury. The nature and extent of the injury was disputed. The Claimant was a solicitor in private practice. The issue for the trial Judge was the extent to which the brain injury had affected her capacity to function as a solicitor specialising in banking related transactions. All heads of damage had been agreed save as to General Damages and to the claim to loss of earnings past and future. The Claimant was aware of a range of problems including mental fatigue, cognitive disfunction, disinhibition, temper, impaired memory and concentration and to processing, compromised and inappropriate speech and word finding. It was the Claimant’s case that those symptoms were attributable to injury to the brain and that no further significant improvement could be expected. In addition she suffered from a chronic/severe post-traumatic stress disorder and a chronic/severe major depressive disorder from which recovery had been made such that any persisting psychopathology was now at a sub-clinical level. It was therefore her case that the continuing symptoms such as they were had to be attributed to the brain injury. She maintained that she was unable to pursue a career as a solicitor in private practice and had a markedly reduced earning capacity.

On the evidence there was no explanation for the Claimant’s continuing cognitive and behavioural problems other than traumatic brain injury. The Claimant would not be able to sustain the required level of performance as a solicitor undertaking work in the field in which she had specialised. The defence had conceded, and in the view of the Judge wisely, that she would be acting reasonably if she were to withdraw from private practice and take up less onerous employment.

On the balance of probabilities the Claimant would have fulfilled her ambition to pursue her career in London and would have moved to a medium sized Central London or City law firm at the latest by the end of 2007. The appropriate approach to the assessment of future loss was that approved by the Court of Appeal in Langford v Hebran (2001). In that case, the trial Judge held in relation to the Claimant’s career that there were a number of alternative scenarios, based upon the prospective attainment of higher levels of success, each scenario carrying a percentage chance of earnings over and above the “basic” income that the Claimant would have received. Damages were awarded for future loss of earnings based on the basic income plus the lost chance of higher earnings calculated by reference to the percentage chance of attaining the higher levels of success.

In this case three scenarios were advanced. The first assumed a series of promotions culminating in a fixed share equity partnership in a regional law firm; the second followed the same progression until January 2007 when she would have joined a medium size City or Central law firm as a Partner; and the third followed the same progression as in scenario two, save that as at January 2007 she would have joined a large/medium size City or Central law firm as a Partner.

On the evidence the Judge was satisfied that there was a 100% chance that the Claimant would achieve the baseline scenario, i.e. that she would have obtained a fixed share equity partnership in a regional law firm. There was an 85% chance on the evidence that the Claimant would go on to join a medium size City or Central law firm as a Partner and a 30% chance that she would have joined a large or medium size City or Central London firm as a Partner.

The Claimant’s loss would therefore be assessed on the following basis:

i. On the evidence she would have achieved a ceiling as a salaried partner of a regional law firm of £110,000 per annum by May 2007. She would therefore receive 100% of the loss calculated on that basis.
ii. The evidence in respect of scenarios two and three were that there was a salary range of £100,000-£230,000 and £130,000-£260,000 respectively. A reasonable figure to work with for the purposes of the scenarios was £130,000 for scenario two and £180,000 for scenario three. She would therefore receive, in addition to the baseline scenario, 85% of the differential between that scenario and the income that she would have received under the second scenario and 30% of the differential between her prospective earnings under the second scenario and the income she would have received under the third.

Her reasonable residual earnings would be assessed at £40,000 per annum gross.

As to multipliers, there was no reason to depart from the normal retirement age of 65 and accordingly it was appropriate to calculate the multiplier by reference to the 6th Edition Ogden Future Loss of Earnings table at the 2.5% discount rate to cover the period between the date of judgment and the Claimant’s 65th birthday on 30th October 2029.

As to residual earnings capacity, it was not appropriate to apply a Table D Ogden discount as her degree of disability had been fully reflected in the difference between her lost and residual earning capacity. The appropriate award for General Damages was £60,000. The calculations would be therefore:

Notional earning capacity to the date of judgment

£321,877 x 100% chance £321,877

Plus: £349,806

Minus: £321,877

£27,929 x 85% = £23,740

Plus: £419,452

Minus: £349,806

£69,646 x 30% = £20,894

Total £366,511

The notional earning capacity after the date of judgment

£908,723 x 100% = £908,723

£1,055,915

Minus: £908,723

£147,192 x 85% = £125,113

£1,403,860

Minus: £1,055,915

£347,945 x 30% = £104,384

Total £1,138,220

From which there ought to be deducted earnings received and future earning capacity.

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