Morgan v UPS Ltd

Damages for future loss must reflect the claimant’s particular circumstances and represent the current value of the earnings likely to be lost because of the injury. Where a claimant is pursuing self-employment, the assessment may include reduced prospective earnings and disadvantage if the venture fails and alternative work is needed. Labour-market disadvantage is not automatically a separate Smith v Manchester head of damage. Separately labelling the same disadvantage risks double counting. The court may uphold a generous award where, despite imperfect reasoning or terminology, the overall assessment is sustainable on the evidence.

Mr Morgan appealed against damages awarded by Mr Recorder Barrie in the Southampton County Court for a wrist injury sustained while employed by UPS Ltd. Liability was admitted. The challenge concerned £22,800 awarded for future earning-related loss: £12,800 for impairment of future earning capacity and £10,000 described as Smith v Manchester damages.

Mr Morgan had left UPS voluntarily and intended to establish a business as a self-employed mechanic. The defendants argued that the future-loss case had not been properly pleaded and that the two awards duplicated the same loss. The central issues were whether the judge could consider the alternative earning-capacity case and whether the total award was legally sustainable.

1. Appeal dismissed. The pleading objection failed. Loss of earning capacity appeared in both parties’ schedules, and the evidence kept that possibility open. Although the alternative case should have been pleaded more fully, it was too strict to confine the claimant to the particular formulation of future loss advanced before trial.
2. The assessment of future loss must be adapted to the claimant’s circumstances. For a claimant pursuing a new self-employed venture, the court must assess the current value of likely earnings compared with earnings absent the injury. The assessment may consider the venture’s prospects, the effect of the disability, and the disadvantage suffered on the labour market if the venture fails. A multiplier and multiplicand need not be used.
3. Future loss may contain distinct elements: reduced prospective earnings attributable to the disability and the capitalised risk of greater difficulty obtaining equally remunerated alternative employment. The court must avoid double counting, and the terminology used for the elements is not determinative.
4. Smith v Manchester damages are principally associated with the risk faced by a partially disabled claimant in regular employment who may later lose that employment and suffer labour-market disadvantage. The analysis in Moeliker v A Reyrolle & Co Ltd described a two-stage assessment of that risk.
5. Lord Justice Pill considered that the Smith v Manchester label should generally be confined to the classic regular-employment situation. Lord Justice Sedley and Sir Peter Gibson considered that the Recorder had in substance compensated two distinct losses and that the principle was not confined in that way. The total award was generous but tenable and not so excessive that the appellate court should interfere.

• Court of Appeal (Civil Division): [2008] EWCA Civ 375. Appeal dismissed.
• Southampton County Court: Mr Recorder Barrie awarded the claimant £44,329.12, including £22,800 for future earning-related loss.