Phillips v Holliday & Anor

Loss of earnings through a family company must be assessed by examining the claimant’s overall financial position, including relevant profits and benefits, rather than salary alone. Poor company records do not necessarily make an award impossible. Where some loss is clear, the court should make the best reasonable estimate available. Future damages may reflect both reduced business income and disadvantage in the labour market. A separate Smith v Manchester award is unnecessary where the multiplier and full-loss assessment already include adequate protection against the risk that the business may fail.

The claimant was injured when scaffolding collapsed while he was working on a building site. Liability was admitted, and the county court awarded damages for pain and suffering, past loss of earnings and future loss of earnings. The defendants accepted that the injury reduced his ability to perform manual work but challenged the assessment of past and future financial loss.

The business was operated through a company owned by the claimant’s wife. The company’s records were unreliable, while the claimant continued managerial and administrative work after the accident. The appeal concerned the proper basis for assessing loss where the claimant worked through a family company and the evidence did not permit precise quantification.

1. Appeal allowed to a limited extent. The awards for past loss were reduced from £22,209 to £18,748 and future loss from £62,137 to £59,398. Interest remained as ordered below. There was no order for costs, save for detailed assessment of the claimant’s costs.
2. Where a claimant operates through a family company, the court should assess the overall economic position rather than treating recorded salary as the only relevant benefit. Allowance must be made for sums properly attributable to other family members.
3. The claimant’s past loss had to be assessed by comparing what he obtained from the business before the accident with what he obtained afterwards. It was inappropriate to calculate the loss by reference to hypothetical earnings from employment elsewhere. Nevertheless, the evidence supplied a reasonable starting point, and the court should make the best effort to quantify the loss despite unreliable records.
4. The claimant’s continued managerial work did not eliminate compensation. His reduced capacity for manual work could have affected the profitability of the business and left him disadvantaged in the labour market.
5. For future loss, the appropriate assessment could incorporate both reduced business income and labour-market disadvantage. Applying the agreed multiplier to the adjusted multiplicand produced a reasonable figure. No additional Smith v Manchester award was required, although the possibility of business failure was relevant to the reasonableness of the multiplier and the resulting award.

• Court of Appeal (Civil Division): Permission was granted after renewal before the full court. The appeal was allowed to a limited extent, with the damages substituted as stated.
• Great Grimsby County Court: His Honour Judge P Clarke assessed damages on 11 September 2000.