Johnson v Le Roux Fourie

In a personal injury claim involving lost business earnings, loss of a chance must be distinguished from the assessment of quantum. Where third-party decisions form a critical link in causation, the court asks whether there was a real and substantial chance that the relevant event would occur. The chance must then be evaluated by reference to the evidence.

Highly speculative business projections should not be adopted merely because the claimant’s business would probably have grown. Where the evidence permits a reasoned assessment, future loss may be calculated using the conventional multiplier and multiplicand method rather than a broad lump-sum assessment. Future taxation should ordinarily be calculated by reference to the current tax regime, rather than speculative future changes.

The claimant brought a claim for damages arising from negligent cosmetic surgery. Liability was admitted shortly before trial, and judgment was entered for damages to be assessed.

The injuries caused permanent facial nerve damage, breast disfigurement and significant psychological harm. The principal issues concerned general damages, past and future loss of earnings from the claimant’s consultancy business, residual earning capacity, taxation, interest and the appropriate method of calculation.

The claimant advanced very substantial projections of the business’s possible turnover. The defendant accepted that the injuries had reduced the business’s prospects but challenged the projections and the proposed valuation methodology.

1. Loss of a chance. The court applied the analysis in Vasiliou Hajigeorgiou [2010] EWCA Civ 1475. The loss of a chance doctrine primarily concerns causation. It must be distinguished from factors relevant only to quantum. Because the growth of the business depended partly on decisions by third parties, the court asked whether there was a real and substantial chance that turnover would have increased.
2. Business projections. The claimant’s projections were not a sound basis for assessment. They failed to allow adequately for delegation, management capacity, the availability of suitably qualified consultants, comparisons with similar businesses and the evidence concerning actual clients. The court assessed a real and substantial chance of turnover reaching £25 million annually, discounted that figure to £20 million to reflect the risks of achieving it, and calculated net profit at 10 per cent of turnover.
3. Method of assessment. The court declined to use the lump-sum approach associated with Blamire v South Cumbria HA 1993 PIQR Q1 CA. The evidence permitted future loss to be calculated conventionally by reference to a multiplier and multiplicand.
4. Other earnings issues. The claimant’s shareholding income from BC Direct was not deducted because the loss projection concerned the consultancy business and the dividends were comparable to income from another investment. Residual earning capacity was assessed at £40,000 gross annually, heavily discounted to reflect the claimant’s psychological symptoms and uncertain prognosis.
5. Interest and taxation. Applying the principle in Jefford v Gee (1970) 2 QB 130, the court held that the conventional half-rate calculation would over-compensate the claimant because the loss increased substantially over time. Interest was therefore calculated annually by reference to the loss sustained in each period. Future tax calculations were based on the current regime. The court relied on British Transport Commission v Gurley [1956] AC 185 for the compensatory, rather than restitutive, nature of damages.
6. Disposition. Judgment was entered for the claimant in the sum of £6,190,884.92, inclusive of interest and as set out in the annexed schedule.

First-instance judgment. Liability had previously been admitted and judgment entered for damages to be assessed.