Future lossesRecoverable future losses

In assessing future losses the court will award the claimant a lump sum which will take into account the general contingencies of life and the accelerated receipt of a sum which is available for investment. To achieve this the court will calculate a multiplicand and apply a multiplier. The principle heads of future loss are for earnings, pension, accommodation, the cost of care and services and other future medical and transport aids. The court is also under a duty to consider whether a claim is suitable for a periodical payments award.

The multiplicand and the multiplier

The multiplicand is the claimant's net annual loss, in the case of losses, or annual cost, in the case of services or expenses, as at the date of trial. Evidence should be obtained if there is likely to be a change in the claimant's situation during the period of loss. Evidence should also be obtained if the annual cost of the provision of services is likely to increase at a certain point.

The multiplier is based on the period of loss and should be selected from the Government's actuarial tables (The Ogden tables). The multiplier should be selected from the 2.5% discount column and can be subject to further discounting (special considerations apply to claims for loss of earnings).

Loss of earnings

To assess the claimant's claim for future loss of earnings the claimant's net annual earnings must first be calculated. This figure will act as the multiplicand and the starting point for the calculation for what the claimant would have earned for the period of loss. Evidence may need to be adduced from the claimant, fellow employees, the claimant's employer and often an employment consultant on the likelihood of any future promotions and pay increases, alternative employment, overtime and the general state of the job market. In self employed cases tax returns are essential and an accountant's report and profit and loss accounts for the preceding years may need to be adduced. Once all the evidence is to hand a standard multiplier and multiplicand approach is used subject to any further discounts for imponderables. In many cases this calculation will be based on the claimant's residual earning capacity, eg the difference between what the claimant would have earned but for the accident as against his future earning capacity as a result of the injury.

Loss of pension

A claimant is entitled to loss of pension rights if he is forced to retire earlier than usual due to his injuries. For the period when the claimant is not working neither he nor his employer will be able contribute towards his pension which will as a consequence be worth less on retirement.

There are two types of pension: money purchase / defined contribution schemes and final salary / defined benefits schemes. A method for calculating the pension rights loss under the first scheme is to take the annual gross contribution and treat it as a net loss and then to add an estimate of around 5% for the tax benefits. Damages under this head of loss have become less common since the introduction of stakeholder pensions which provide individuals with an annual tax allowance. Calculating pension loss under a final salary pension is more complicated. As a starting point you need to calculate the net annual pension loss and net lump sum pension loss at age of retirement. Once this figure has been calculated it needs to be discounted to take account of early receipt and other contingencies.

The claimant's pension provider can normally provide projected pension figures.

Claim for lost years

A claimant it entitled to recover any financial losses he will suffer after his death if the index accident has resulted in a shortened life expectancy. Claims for 'lost years' commonly cover loss of earnings and loss of pension although claims can be brought for all forms of lost pecuniary benefits. When assessing the claim the court will attempt to put the claimant back into the position he would have been but for the material accident and will consequently make appropriate deductions for living expenses.

Cost of care

In the case of a serious injury there will often be a significant claim for gratuitous care and professional care. The former of these two can usually be calculated on a standard multiplier / multiplicand basis adopting discounted commercial care rates whilst the latter can be prove problematic if there is likely to be a change in the claimant's needs. Expert evidence must be obtained to assess when any changes will take effect and different multiplicands will apply for each period of time with the multiplier split over the total period.

Cost of accommodation

In some cases it will be necessary for the claimant's accommodation to be modified or for special accommodation to be purchased. When the cost of the modifications, eg a chair lift, do not increase the cost of the property the claimant will recover the cost of the product and installation. Where the modifications increase the value of the property the claimant is only entitled to recover the cost of having the modifications over and above any increase in the value of the property.

Where the claimant needs to purchase a new and more expensive property there is a special means of calculating the loss : the annual loss for the purposes of a multiplier / multiplicand calculation is 2.5% of the difference between the capitol cost of the new accommodation and the net proceeds from the sale of the claimant's previous property.

Other heads of future loss

The claimant may also be able to claim the cost of:

Collateral benefits

Collateral benefits can include:

In the ordinary course of events most of these benefits will be disregarded although each benefit needs to be assessed individually.

Mitigating loss

The claimant is under an obligation to mitigate any losses sustained as a result of his injuries and any failure by the claimant to act reasonably will provide the defendant with a possible defence to certain heads of loss. It is for the defendant to prove a failure to mitigate and the court will only expect the claimant to act reasonably given the circumstances of the case.