Van Oudenhoven v Griffin Inns Ltd

Higher foreign tax does not, by itself, justify an exceptional enhancement of a multiplier or a lower discount rate for future loss of earnings. The court must assess the actual tax effect, the size of the fund, and relevant advantages in the foreign country, including investment yields, indirect taxation and living costs. Any broad-brush deductions must be made before calculating a tax enhancement.

A Duxbury calculation may compare tax effects, but it does not replace mortality assumptions in the Ogden Tables. Applying [1999] AC 345, the court retained a 3% discount rate.

The claimant, a Dutch civil engineering student injured by a falling blackboard in a public house, succeeded at trial on the basis that the injury substantially reduced her future earning capacity. Wright J. awarded £969,335 for future loss of earnings and £35,000 for pain, suffering and loss of amenity.

The defendant appealed against the future earnings award, challenging an enhancement of the multiplier for higher Dutch taxation. The claimant cross-appealed, seeking a lower discount rate and increased general damages. The central issues were whether the foreign tax circumstances were exceptional and whether the general damages award should be adjusted under recent Court of Appeal guidance.

1. Future loss of earnings. The appeal was allowed. The court held that the 40% broad-brush deduction for uncertainties had to be made before any tax enhancement, since the tax effect could not be calculated without first establishing the size of the fund.
2. Foreign taxation. The multiplier could not be enhanced merely by adopting the percentage used in Biesheuvel v Birrel [1999] P1QR. Q40. The effect of taxation depends on the amount of the fund. The asserted Dutch wealth tax was unsupported by satisfactory evidence as a relevant factor, and the available evidence did not show that Dutch taxation reduced the return sufficiently to make the case exceptional.
3. Assessment method. A Duxbury calculation was useful for comparing the effects of United Kingdom and Dutch taxation, but it did not include mortality, which was reflected in the Ogden Tables. It was a check on the reasonableness of the discount rate rather than a necessary part of applying Wells v Wells [1999] AC 345.
4. Discount rate. The claimant failed to establish any justification for reducing the 3% rate to 2%. The net return remained within the range contemplated in Wells v Wells and the court’s approach in Warren v Northern General NHS Trust.
5. Cross-appeal. Applying Heil v Rankin, the award for general damages was increased from £35,000 to £38,000. The cross-appeal was allowed to that extent. The final judgment was entered for £954,716. The application concerning further evidence was dismissed with costs; costs below were varied so that the claimant recovered six-sevenths, with no order as to the costs of the cross-appeal.

• Court of Appeal (Civil Division): On 4 April 2000, the court allowed the defendant’s appeal, reduced the future loss of earnings award, and allowed the claimant’s cross-appeal in part. [2000] EWCA Civ 102.
• QBD (Wright J.): On 12 March 1999, Wright J. awarded total damages and interest of £1,203,508, including £969,335 for future loss of earnings and £35,000 for general damages.