Smith v Manchester Corp

Loss of earning capacity is a real present loss even where an injured claimant remains in current employment and suffers no immediate reduction in earnings. Where the claimant’s competitive position in the open labour market is weakened, damages should be assessed in the round, taking account of relevant contingencies. The multiplicand-multiplier method is inappropriate where no annual loss can presently be calculated. General damages under distinct heads must be considered separately. If an award for future financial loss is clearly inadequate, it may be varied even though the overall award is not manifestly erroneous.

The claimant was injured while employed by the defendant as a part-time domestic cleaner. She sustained a fracture of the head of the right radius and developed permanently restricted shoulder, elbow and forearm movement, although she continued in suitable light work at the same rate of pay.

The trial judge awarded £2,000 for pain, suffering, physical handicap and loss of amenities, and £300 for possible loss of future earnings or earning capacity. The claimant appealed, contending that both sums were inadequate. The central issue was whether the general damages award should be disturbed and how the risk of future disadvantage in the labour market should be assessed.

1. Appeal allowed in part unanimously. The award of £2,000 for pain, suffering, physical handicap and interference with amenities was left undisturbed. The award for future financial loss was increased from £300 to £1,000, producing a total award of £3,000, with costs. Lord Justice Stamp and Lord Justice Scarman agreed with Lord Justice Edmund Davies.
2. The claimant’s continuing employment and unchanged wages did not eliminate loss of earning capacity. Her permanent disability weakened her competitive position in the open labour market. That was an existing loss, although it had not yet caused financial damage.
3. Where no present or clearly foreseeable annual financial loss can be calculated, the multiplicand-multiplier method should not be used. The court should assess the weakened position in the round, taking account of contingencies such as loss of employment, changes in management or policy, closure or relocation of the workplace, and the claimant’s prospects of obtaining comparable work.
4. The employer’s undertaking to continue employing the claimant was relevant but did not remove the risks arising from future changes in employment circumstances. The burden of proof remained on the claimant, but the court had to make the best assessment it could of a real risk and award genuine compensation.
5. Lord Justice Edmund Davies held in the postscript that, following Jefford v Gee 1970 2 Queen's Bench 130, separate heads of general damages had to be considered separately. The earlier approach described in Watson v Powles 1968 1 Queen's Bench 596 and Povey v Jackson 1970 2 All England Reports 495 did not prevent interference with a clearly wrong award under one head merely because the global award might remain broadly fair.

• Court of Appeal (Civil Division): Appeal from the judgment of Mr Justice Kilner Brown, delivered on 5 October 1973, allowed in part. The judgment below was varied by substituting a total award of damages of £3,000.