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 the defendant, but she asked for an award of damages for a possible future loss of earning as a result of being disadvantaged in the employment market. .
Held: The court awarded damages for the potential loss to the plaintiff from the plaintiff’s reduced earning capacity, equivalent to the loss of her competitive position in the labour market. Such an award was intended to compensate a plaintiff who is in employment, for a handicap in getting a new job if he lost the current one and for the longer than normal periods out of work between jobs because of his disability.
The damages award of andpound;300 for this element was increased to andpound;1,000.
Scarman LJ said: ‘Loss of future earnings or future earning capacity is usually compounded of two elements. The first is when a victim of an accident finds that he or she can, as a result of the accident, no longer earn his or her pre-accident rate of earnings. In such a case there is an existing reduction in earning capacity which can be calculated as an annual sum. It is then perfectly possible to form a view as to the working life of the plaintiff and, taking the usual contingencies into account, to apply to that annual sum of loss of earnings a figure which is considered to be the appropriate number of years’ purchase in order to reach a capital figure. Fortunately in this case there is no such loss sustained by the plaintiff because, notwithstanding her accident, she has continued with her employment at the same rate of pay and, as long as she is employed by the Manchester Corporation, is likely, if not certain, to continue at the rate of pay appropriate to her pre-accident grade of employment. That element of loss, therefore, does not arise in this case.
The second element in this type of loss is the weakening of the plaintiff’s competitive position in the open labour market: that is to say, should the plaintiff lose her current employment, what are her chances of obtaining comparable employment in the open labour market? The evidence here is plain:- that, in the event (which one hopes will never materialise) of her losing her employment with the Manchester Corporation, she, with a stiff shoulder and a disabled right arm, is going to have to compete in the domestic labour market with women who are physically fully able. This represents a serious weakening of her competitive position in the one market into which she can go to obtain employment. It is for that reason that it is quite wrong to describe this weakness as a ‘possible’ loss of earning capacity: it is an existing loss: she is already weakened to Rat extent, though fortunately she is protected for the time being against suffering any financial damage because she does not, at Present, have to go into the labour market.
It is clearly inappropriate, when assessing this element of loss to attempt to calculate any annual sum or to apply to any annual sum so many years’ purchase. The court has to look at the weakness so to speak ‘in the round’, take note of the various contingencies, and do its best to reach an assessment which will do -justice to the plaintiff. ‘
Edmund Davies, Stamp, Scarman LJJ
(1974) 17 KIR 1, [1974] EWCA Civ 6
Bailii
England and Wales
Cited by:
Explained – Moeliker v Reyrolle and Co Ltd CA 1976
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 . .
Cited – Phillips v Holliday and Another CA 6-Jul-2001
The claimant was injured when scaffolding on which he was working collapsed. The defendants appealed the awards for loss of future earnings. The claimant was self-employed working through a limited company controlled by his wife. His past earnings . .
Cited – Woolley v Essex County Council CA 17-May-2006
. .
Cited – Billett v Ministry of Defence CA 23-Jul-2015
Defendant’s appeal against the quantum of damages awarded in a personal injury action. The principal issue is how the court should assess damages for loss of future earning capacity in circumstances where the claimant suffers from a minor . .
Lists of cited by and citing cases may be incomplete.
Damages, Personal Injury
Leading Case
Updated: 31 October 2021; Ref: scu.188135