ASSESSING CAREER LOSS

HERRING RE-VISITED

On 1st May 2006 Paul Kilcoyne reviewed in PIBULJ the cases in relation to this topic with particular reference to Herring -v- MOD.[2004] 1 All ER 44.  On 10th May 2006 the Court of Appeal returned to this subject in the context of a claim for damages by a servicewoman who had injured her ankle in training so that a career in the Army was no longer open to her (Brown -v- MOD [2006] EWCA Civ. 546).  Although Ms. Brown had been able to find alternative employment at a similar rate of pay to that which she would have been earning in the Army, such employment did not provide the pension which she would have earned had she completed 22 years military service and which would have been payable immediately at the end of such service,i.e. when she was in middle age. 

The Court of Appeal noted that the District Judge who initially heard the assessment of damages had expressed the view that it was difficult to reconcile some of the earlier cases and Herring.  The Deputy Circuit Judge who heard the first appeal had also impliedly found some tension between the authorities.  In reviewing the issue the Court of Appeal said that there "appears to have been a degree of misunderstanding about the effect of [earlier] decisions and in particular the decision in Herring -v- MOD".

 The effect of Herring was succinctly summarised.  It was said to be "that in order to assess loss of future earnings it is necessary in most cases to adopt … a "career model" for the claimant in question which fairly reflects his earning capability.  In many cases that will be the job in which the claimant is currently employed since it can usually be inferred that he would continue in the same or similar employment.  The chances of promotion can then be taken into account by adjusting the multiplicand at appropriate points along the multiplier.  In a case where the claimant has yet to enter employment, it is necessary to adopt a career model by reference to his abilities and reasonable aspirations.  That may not be an easy task, but provided that the career model that is selected does fairly reflect the claimant's earning capability, the chances of his actually obtaining the particular form of employment used as the model or of his leaving it before the normal retirement age will usually be irrelevant, since it can be assumed, if he does so, he will take up some alternative employment at a broadly comparable rate of pay.  The chances of a career change need only be separately assessed if it is one that would significantly alter his earning capability one way or the other." (Para 22 Moore-Bick LJ giving the judgment of the Court).

The Court added that "provided a fair career model is chosen as the basis for the loss of future earnings and pension entitlement the prospects of enhanced or reduced earnings resulting from the ordinary chances of life can be allowed for by adjustments to the multiplicand and multiplier as appropriate.  It is only when the Court has to consider the possible effects of an unusual turn of events that would have a significant effect on earnings or pension rights that it is necessary to assess the chances of such events occurring and to assess their financial consequences”. 

In Ms. Brown's case the Army career model provided a satisfactory guide to her future earnings but the potential entitlement to a military pension following completion of a full term of service was an unusual aspect which ought to be assessed by reference to the loss of a chance approach.  This was because the payment of a pension after 22 years service when the recipient would usually be in his or her 40s was itself an unusual feature and because the statistical evidence showed that only a minority of recruits actually completed 22 years service.  Accordingly the pension loss aspect of the claim was assessed by reference to a percentage chance of the Claimant actually completing 22 years service.On the evidence that chance was held to be one of 30%, so that a 70% discount was applied to that part of the loss which related to the Claimant’s notional pension entitlement had she completed 22 years service.

The case appears to confirm that Herring is now the starting point in cases which involve significant claims for lost career opportunity.Such a development is likely to be welcomed more by Claimants than by Defendants .