The Court of Appeal has upheld a first instance decision where a lump sum award for future earnings was made, on the basis that the evidence presented in support was wholly inadequate for a quantification of future loss of earnings.
The Claimant had argued that rather than dismissing the conventional method of quantifying this head of loss due to the lack of evidence; the Court should have discounted the multiplier figure to reflect the uncertainty of obtaining employment in another country.
The Claimant had suffered serious injuries in a road traffic accident in July 2013 including an open fracture of the left tibia and fibula, chronic leg pain, extensive scarring, and a cracked vertebra. Liability was not disputed.
The Claimant was employed as a polymer manufacturing engineer at the time of the accident. Post-accident, he was only able to return to work four days per week on lighter duties. He was made redundant in June 2015, finding employment again in December 2015. It was common ground that this break in employment, combined with his inability to find an alternative position within 60 days, had stymied his application for indefinite leave to remain in the UK. He would be unable to renew his visa on expiry in March 2020. His likely return to India after that date would have meant a reduction in his earnings.
The Court found the redundancy process undertaken was "a sham", and the primary rationale was to remove the Claimant from his role due to his ability to work to full capacity. His loss of employment was "as a result of the accident". Therefore, there was a need to make an award for his future loss of earnings.
However, when considering how to value this, the Claimant provided insufficient evidence to support his belief that his residual earnings potential on his likely return to India was only £10,000 per annum. The inadequacy of this evidence left the Court unable to determine a multiplicand for a future loss of earnings award.
The judge accepted that a Blamire lump-sum award for future loss of earnings should only be used where other methodology is not practicable, but in light of the inadequate evidence, he was entitled to do so.
The judge accepted that the Claimant was disabled on the open labour market, thus facilitating a Smith v Manchester award of £30,000, and that a Blamire award of £150,000 was appropriate as the evidence before him did not a "provide basis to find the level at which he will be earning in India".
The Claimant was awarded £406,888 in total.
Court of Appeal
The Claimant appealed the decision on two grounds:
- The judge was incorrect to award damages for future loss of earnings by way of Blamire award and Smith v Manchester for the disadvantage of the open labour market. A quantification using a multiplier/multiplicand should have been used instead.
- The Claimant's evidence on his residual earning capacity was "unchallenged and untested in cross-examination" and therefore the judge was incorrect to reject it.
The Claimant submitted that if ground (1) of the appeal was successful, then the damages award should be increased to £800,393; if both grounds were successful, then the amount payable by the Defendant should have been £1,259,256.
The Defendant cross-appealed, arguing that Mr Pittaway QC had "applied the wrong test of causation to the losses flowing from an apparent redundancy" which resulted in the Blamire award. The damages which should have been awarded were £219,188.
Lord Justice Hamblen, giving the lead judgment, dismissed the appeal and cross-appeal. Lord Justice Holroyde and the Master of the Rolls agreed with his findings.
Considering the two grounds of appeals, the Court found as follows:
- The judge was entitled to find that there was no real alternative to making a Blamire award, and was consequently also entitled to make a Smith v Manchester award. The Claimant had relied upon a letter from a friend and print-outs from an Indian jobs website in support of his submissions on the issue of residual earnings capacity; the jobs listed did not reflect the Claimant's qualifications. Against this background, Hamblen LJ found that "it is not surprising that the judge should conclude, as he did, that there was no proper evidential basis for making a finding as to the level of residual earnings which would be made in India."
- The Claimant's evidence on his earnings capacity in India was based on opinion. The Defendant had clearly stated in the counter-schedule that the evidence in support was inadequate; the Defendant was entitled to "adopt the stance that there was no need to cross examine the Claimant… as to his earnings in India." The judge was entitled to make criticisms of the evidence presented and reject those submissions, irrespective of the Defendant's position.
The Defendant submitted that the judge had not made the relevant 'but for' finding when considering the loss of the Claimant's loss of employment. The finding that it was a "material consideration" to the termination of the Claimant's loss finding was the wrong test.
The Claimant disagreed, arguing that when considering the whole judgment, it was apparent that Mr Pittaway QC had concluded that the Claimant's injuries were an "operative or effective cause of the redundancy". The Defendant's Counsel accepted that was "equivalent to and justifies the conclusion that the redundancy would not have occurred but for the accident".
Therefore, there was no error of law in reaching his conclusion.
What can we learn?
- This decision offers clear guidance about the appropriateness of a Blamire award. Such an award is appropriate if it is not possible for the Court to assess future loss of earnings on a multiplier/multiplicand basis and if there is clearly no other alternative basis.
- Whilst the Judge could assess the Claimant's "but for" future earnings, the evidence on the Claimant's residual earning capacity was wholly inadequate. He was unable to determine a multiplicand. The Claimant's evidence on his residual earnings amounted to his own opinions, a letter from a friend, and some "barely intelligible" internet ads for jobs. It is not unreasonable to suggest that the Claimant may have been awarded greater damages had detailed evidence been filed in support of those submissions; this is clear given he was still awarded a substantial lump sum in the absence of supporting evidence of any probative value.