Head v The Culver Heating Co Ltd

In a claim for damages for the lost years, the court must identify the claimant’s real pecuniary loss. Earnings or income which continue after death are not lost and cannot form part of the claim. The relevant distinction is between income lost on death and income which survives death, rather than between salary, trading income and investment income.

The court should assess the claimant’s actual earning capacity and look to substance rather than formal ownership or tax arrangements. It may notionally attribute income held through a spouse where the evidence shows that the arrangement does not reflect the claimant’s real contribution. Living expenses are deducted from income spent on the claimant, but not from savings. A lost-years award is unavailable where surviving dividends exceed the claimant’s lost surplus income.

The claimant, who had contracted occupational mesothelioma, had obtained judgment for damages to be assessed. Liability was admitted and most heads of loss were agreed. The disputed issues were general damages for pain, suffering and loss of amenity, and a claim for loss of income during the lost years.

The claimant was the driving force behind a family-owned heating and ventilation company. He claimed that salary and dividends generated through the company represented earnings lost by his premature death. The defendant relied on Adsett v West and argued that the company’s profitability and the associated dividends would survive his death. The central issue was whether surviving dividend income extinguished the claimed lost-years loss.

1. Lost years. The principles in Pickett v British Rail Engineering Ltd and Gammell v Wilson; Furness v B & S Massey Ltd permit recovery of earnings lost during years which the claimant would otherwise have lived, subject to a deduction for living expenses. The court adopted the analysis in Adsett v West: the controlling distinction is between earnings lost on death and income which survives death.
2. Reality of earnings. Applying Ward v Newalls Insulation, the court assessed the claimant’s real earning capacity rather than the formal division of shares, salary and dividends. Ninety per cent of the company’s post-tax profits was notionally attributable to the claimant, subject to a deduction reflecting his wife’s actual contribution. Her appropriate notional salary was assessed at £12,000 per year. The existing tax-efficient allocation was also taken into account.
3. Living expenses. Under Harris v Empress Motors, the deduction concerns expenditure on the claimant’s own maintenance. Evidence displaced the conventional 50 per cent deduction. A 45 per cent deduction was applied to the relevant extracted income. Retained profits were treated as savings and were not subject to a living-expenses deduction.
4. Application and disposition. The company was likely to remain profitable after the claimant’s death. The dividends attributable to his shareholding were estimated at not less than £172,465 annually, exceeding his surplus income of about £158,000. There was therefore no lost-years loss. Unpleaded possible claims for diminution in company value, reduced profitability or replacement staffing could not be awarded, and a broad-brush award would be speculative.
5. Life expectancy but for mesothelioma was assessed at 23.8 years. General damages for pain, suffering and loss of amenity were assessed at £95,000.

This was a first-instance assessment of damages following judgment entered by order of Master Gidden dated 28 November 2018. No appeal history is stated in the judgment.