Smee v Adye

Future loss must be assessed by evaluating risks, rather than by treating future events as historical facts established on the balance of probabilities and converting that finding into a certainty. The assessment may take account of the claimant’s character, personality, injuries and working circumstances. An appellate court should allow the trial judge a wide margin of appreciation and interfere only where the assessment is plainly wrong. This approach applies both to the assumed uninjured career and to the risk that injury will cause earlier retirement. A residual earning capacity should not be disregarded without justification, but the evaluation remains fact-sensitive. The appeal was dismissed because the 30 per cent discount, although generous, was not shown to be plainly inadequate.

The claimant suffered severe injuries in a road traffic accident for which liability was admitted. He returned to full-time work as a highly successful chartered accountant and partner, but claimed future earnings and pension loss based on the risk that his injuries would cause him to retire earlier than he otherwise would have done.

The Deputy High Court Judge awarded substantial damages, including £925,512.70 for future loss of earnings and pension. She assessed the loss by reference to early retirement, reduced the calculated sum by 30 per cent for the chances element, made no deduction for residual earnings, and assumed that pension benefits would be drawn on retirement.

The defendant challenged the factual and actuarial assumptions, including the assumed retirement ages, the risk of early retirement, residual earning capacity, future earnings growth and pension drawdown.

1. Appeal dismissed. The award was generous, but the Court of Appeal was not satisfied that the Deputy High Court Judge had been plainly wrong.
2. Future events and hypothetical events must be assessed as risks and degrees of probability. It is erroneous to find that a future event is more likely than not and then treat it as certain. The relevant approach was supported by Allied Maples Group Ltd v Simmons and Simmons [1995] 1 WLR 1602 and Doyle v Wallace [1998] PIQR Q146.
3. The judge’s assessment of future retirement was not a finding of primary fact based on credibility. Nevertheless, the claimant’s personality and character could materially inform the evaluation. The appellate court should allow a wide margin of appreciation, analogous to its approach to general damages, apportionment of liability and contributory negligence, and should interfere only if the judge was plainly wrong.
4. The judge was entitled to find a substantial risk of early retirement arising from the cumulative effects of pain, disability, travel, short-term memory loss and the risks associated with an inevitable hip replacement and venous complications. The 30 per cent discount represented the assessed chances element.
5. There was a substantial risk that the claimant would be unable to obtain paid employment after retiring from the partnership, but the possibility of residual earnings should not be entirely disregarded. The judge was also entitled to assume pension drawdown on retirement because the contrary case had not been properly put to the claimant or advanced in the defendant’s counter-schedule.
6. The appeal was dismissed with costs.

• Court of Appeal (Civil Division): Appeal from the judgment of HH Judge Steel, sitting as a Deputy High Court Judge in the QBD. The appeal was dismissed with costs.