horwich farrelly

Billett v MOD: Lump Sum Approach Preferred Over Ogden Tables

August, 5, 2015

The judgment in a recent personal injury case has provided a useful reminder of the principles which underpin a Smith v Manchester claim/award. The decision was eagerly awaited as it was believed to be the first case to reach the Court of Appeal to consider the application of Tables A-D, which were incorporated in to the Ogden Tables in 2006.

LJ Jackson’s decision earlier this month to instead take a “broad judgement” to assess the head of loss saw the claimant’s damages slashed from £128,000 to £70,000. This came after the defendant questioned the level of disability sustained and the extent of any loss of future earnings.

Billett v Ministry of Defence (2014)

The claimant, John Billett, joined the army in 2002 where he trained as a lorry driver. In February 2009 he took part in a field exercise where he spent six days living outdoors in snow and freezing temperatures. He claimed the army supplied him with unsuitable footwear which caused him to suffer non-freezing cold injury (NFCI) to his feet.

In 2010, after receiving treatment the claimant was declared medically fit for duty and went on to complete a tour of duty in Afghanistan. In 2011 he successfully applied to be discharged from the forces; this was on the basis of family commitments and was not related to his injury.

Just a week after leaving the army Billett started working as a lorry driver for a haulage firm. However, he continued to suffer symptoms relating to injuries sustained to his feet and launched a claim for negligence against the MOD. Whilst the two parties eventually reached an agreement that the MOD was liable for 75% of the damages, they were unable to agree quantum. Accordingly that issue went to trial in July 2014.

The court heard evidence from the claimant’s medical expert which described how the injury had left the former soldier with swollen and painful joints and that he was no longer able to participate in outdoor sports. However, the same expert concluded that there was less of an impact on the claimant’s ability to work as a lorry driver as he was able to keep warm in his cab.

The judge rejected the defence’s submission to make a broad assessment of damages using the Smith v Manchester approach. Instead, he opted to calculate the claimant’s loss of future earnings using Ogden Tables.

Ogden Tables use a scientific approach to take into account a claimant’s benefit of early receipt (where he could invest the lump sum) and premature mortality. This is done by using an appropriate multiplier. In 2006 additional tables (Tables A-D) were introduced to take into account contingencies other than mortality which could reduce a claim for loss of earnings. Claims for future loss of earnings are calculated via a series of reduction factors (RFs), ranging from .06 (the lowest) to .93 (the highest) depending on factors such as the claimant’s age, qualifications and anticipated retirement age.

The bulk of the claim related to loss of future earning capacity. However, the court heard that the claimant was earning the same amount in his new job as he was when he was in the army.

While he had suffered no financial loss an employment expert argued that should he lose his job he would “have a disadvantage on the labour market for some occupations due to his injuries”. She also considered that his inability to work outdoors would further limit his employment options.

The judge considered that the claimant was “only just” disabled, as defined by the Ogden Tables, and applied a reduction factor of .73 which assessed the claimant’s loss of future earnings at £99,000. Including other damages the total amount awarded was £128,000. However the judge rejected that the claimant leaving the army prematurely had caused him substantial financial loss.

The Appeal

The MOD appealed the amount of damages with a hearing listed for 1-2 July 2015. The appeal was significant as it considered how the courts should assess damages for potential loss of future earnings where the claimant: –

  • suffers from a relatively minor disability,
  • continues to be in steady employment and,
  • is earning at their pre-accident rate.

It also marked the first instance of the CoA considering the application of Tables A – D.

LJ Jackson rejected the MOD’s argument that the claimant, now aged 30, failed to meet the definition of “disabled” set out in the Ogden Tables. LJ Jackson adopted the definition of Longstaff J in Aderemi v London and South Eastern Railway Ltd [2013] ICR 591 in respect of what constitutes a “substantial adverse effect” on a person’s “ability to carry out normal day to day activities”.

The defence focused on what the claimant could do, not what he could not do. A summary of activities the claimant could not do included DIY in cold weather, playing rugby and swimming regularly and playing with his children in the winter.

Despite that, LJ Jackson agreed with the defence that the application of the Ogden Tables was not appropriate in this case. He noted that the claimant was working in his chosen career with virtually no hindrance from his disability. Furthermore, the claimant was reemployed within a week of leaving the army, had strong qualifications and an excellent CV.

The judge considered there was no “rational basis for determining how the reduction factor should be adjusted” on the basis that the claimant was on the “outer fringe” of the disability spectrum and his injuries had a limited impact on his ability to work.

In his ruling LJ Jackson said “Determining an appropriate adjustment to the RF is a matter of broad judgment. In the present case that exercise is no more scientific than the broad brush judgment which the court makes when carrying out a Smith v Manchester assessment.”

Accordingly the judge reduced the claimant’s claim for loss of future earnings from £99,000 to £45,000, the equivalent of two years net earnings. The original award of £12,500 of general damages was unchanged. The total amount awarded, with interest, came to £70,000.

Conclusion/Observations

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 disability, is in steady employment and is earning at his full pre-accident rate.  LJ Jackson acknowledged that Tables A-D will prove valuable in many instances. Equally, he made reference to the Explanatory Notes of the Ogden Working Party acknowledging that in some cases a Smith approach remains appropriate.

It is a helpful judgment for defendants and insurers who are faced regularly with excessive Schedules on the basis of the claimant alleging that they are ‘just disabled’. This should enable them to argue more forcibly that a traditional Smith award is more appropriate than an assessment using the Ogden Tables, where it is felt that there is a genuine claim for Disadvantage on the Labour Market.

Paragraphs 52 – 57 of LJ Jackson’s judgment serve as a useful reminder of the necessary hurdles the claimant must get over to succeed with such a claim.

The judgment may also cause some concern to defendants and insurers regarding the claimant in this case meeting the disability threshold, based on what appear to be fairly limited activities he could not do and when he could not do them. Of interest LJ Jackson noted that Dr Wass, in her 2015 paper ‘Billett v MOD and the meaning of disability in the Ogden Tables’, did not accept that the claimant was disabled and was critical of the judge at first instance for finding that he was.

A final point relates to the assessment of PSLA. The judge at first instance seemingly preferred the claimant’s factual evidence over the medical evidence in this regard and in respect of the severity of the claimant’s symptoms. LJ Jackson stated that he may have been sceptical of the claimant’s evidence against the background of the (effectively agreed) medical evidence, but he was not the trial judge so would not interfere with the assessment of PSLA, which he described as ‘explicable’ on the basis of the claimant’s evidence of fact. Somewhat frustratingly, the case is also a reminder of how a valuation of PSLA can be as much down to the factual evidence as the medical evidence.

A copy of the CoA decision is available here.

If you would like any further information or to discuss these matters further please do not hesitate to e-mail Kevin Coakley or call 0844 740 4401 / 07780 694 992 or e-mail Catherine Cox or call 0292 167 6012.

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