The court considered the principles for the award of damages for future loss of earning capacity.
Held: The court distinguished between an award for loss of earnings and compensation for loss of earning capacity. The latter head of damage arose where a plaintiff was at the time of trial in employment but there was a risk that he might lose that employment at some time in the future and by then, as a result of his injury, be at a disadvantage in getting another job or an equally well paid job. That was a different head of damage from an actual loss of future earnings which could be proved at the time of the trial.
Browne LJ said: ‘I do not think one can say more by way of principle than this. The consideration of this head of damages should be made in two stages. 1. Is there a ‘substantial’ or ‘real’ risk that a plaintiff will lose his present job at some time before the estimated end of his working life? 2. If there is (but not otherwise), the court must assess and quantify the present value of the risk of the financial damage which the plaintiff will suffer if that risk materialises, having regard to the degree of the risk, the time when it may materialise, and the factors, both favourable and unfavourable, which in a particular case will, or may, affect the plaintiff’s chances of getting a job at all, or an equally well paid job.
It is impossible to suggest any formula for solving the extremely difficult problems involved in stage 2 of the assessment. A judge must look at all the factors which are relevant in a particular case and do the best he can.’ and ‘If the Court comes to the conclusion that there is no substantial or real risk of the plaintiff losing his present job in the rest of his working life, no damages will be recoverable under this head.’
As to Smith v Manchester: ‘[it] laid down no new principle of law… [but was] merely an example of an award of damages under a head which has long been recognised – a plaintiff’s loss of earning capacity where as a result of his injury his chances in the future of getting in the labour market work (or work as well paid as before the accident) have been diminished by his industry. This court made an award under this head in Ashcroft v Curtin [l971] 1 WLR 1731 three years before Smith’s case. This head of damage generally only arises where a plaintiff is at the time of the trial in employment, but there is a risk that he may lose this employment at some time in the future, and may then, as a result of his injury, be at a disadvantage in getting another job or equally well paid job. It is a different head of damages from an actual loss of future earnings which can already be proved at the time of the trial.’
Stephenson LJ sought words to define the correct approach to be followed stated: ‘I avoid ‘speculation’ because this head of damage can really be nothing else’.
Browne LJ, Stephenson LJ
[1977] 1 WLR 132, [1976] ICR 253
England and Wales
Citing:
Cited – Ashcroft v Curtin CA 1971
A plaintiff, injured in a motor accident, was seeking to recover damages for loss of profit.
Held: The court commented adversely on the evidence and stated that no figures were given, and that counsel for the defendant had force in his . .
Explained – Smith v Manchester City Council CA 10-Jun-1974
Damages – earnings loss for persistent disability
The plaintiff, a part time domestic cleaner slipped and injured herself (a frozen shoulder) when working for the defendant. It was accepted that the cause of the slip was the defendant’s negligence. At the time of the claim she was still employed by . .
Cited by:
Cited – Software 2000 Ltd v Andrews etc EAT 17-Jan-2007
EAT Four employees successfully established before the Employment Tribunal that they had been unfairly dismissed for redundancy. The Tribunal found that there had been procedural defects. In particular the . .
Cited – Scope v Thornett CA 27-Nov-2006
The employee was an engineer. She worked on field assessments and in the manufacture and adaptation of equipment. She was suspended for alleged bullying and harassment and given a final written warning. It was proposed that she should be relocated . .
Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.241421