Willemse v Hesp

Where a claimant’s actual pre-accident receipts are depressed because labour was devoted to creating a capital asset, damages for past earnings loss may reflect the realistic value of that labour and the claimant’s earning capacity. A court need not use a global award merely because the evidence is uncertain.

However, where future earnings loss depends on uncertain choices about whether and how the claimant will work or develop a career, a fixed annual multiplicand may be inappropriate. A broad Smith v Manchester-type lump sum should compensate the resulting loss of earning capacity and labour-market disadvantage.

The claimant, a blacksmith and boat builder, suffered head and psychological injuries in a road traffic accident caused by the defendant. Before the accident, he had spent several years building a valuable yacht, with correspondingly low recorded earnings.

Leveson J awarded damages including £53,000 for past loss of earnings and £110,000 for future loss. The defendant appealed those two awards, contending that the evidence did not establish loss and that the future award could not properly be calculated by a multiplier and multiplicand. The central issue was the proper method of assessing past and future loss where the claimant’s work history and future career intentions were uncertain.

Disposition

1. The court unanimously allowed the appeal only in respect of future earnings loss. It substituted a lump-sum award of £50,000 for the judge’s award of £110,000. The award for past loss of earnings was upheld. There was no order as to costs.

2. Potter LJ held that the judge was entitled to reject the claimant’s low pre-accident receipts as a measure of earning capacity. The claimant had effectively exchanged income for future capital value by devoting substantial labour to building his boat. The judge could therefore make a realistic assessment of the value of that work and of the earnings the claimant would otherwise have obtained. The calculation included appropriate discounts for uncertainty, tax, other labour and time which would have been spent sailing the completed vessel.

3. The court rejected the submission that uncertainty required refusal of any past-loss award. Blamire v South Cumbria Health Authority [1993] PIQR/Q1 illustrated that uncertainty can justify a broad global assessment, but it did not require appellate interference with the judge’s legitimate assessment.

4. The claimant had a real reduction in earning capacity. His physical skills remained, but he had lost creative ability, speed, versatility and the capacity to undertake major work without supervision. Yet the extent of actual future loss depended upon uncertain decisions about whether he would work full-time or develop his career in a way not demonstrated before the accident.

5. Those circumstances made a fixed multiplicand of £7,500 inappropriate. This was a classic case for a Smith v Manchester-type award: a broad lump sum for future labour-market disadvantage and the lost opportunity to develop a promising creative career.

• Court of Appeal (Civil Division) — In [2003] EWCA Civ 994, allowed the defendant’s appeal in part by reducing future loss of earnings from £110,000 to £50,000; otherwise upheld the judgment.
• High Court — Leveson J, on 31 May 2002, awarded the claimant total damages of £212,620, including £53,000 for past loss of earnings and £110,000 for future loss of earnings.