PI Brief Update

Adjusting the Ogden Reduction Factors to Reflect a Spectrum of Disability - Jack Harding, 1 Chancery Lane

08/10/14. In the context of a claim for future loss of earnings, for a number of years the Courts have been grappling with the thorny issue of when it is appropriate to adjust the reduction factors (RF) in Ogden tables A to D (contingencies other than mortality) to reflect the particular circumstances of the claimant and the relative severity, or modesty, of their disability.

Dr Victoria Wass, one of the actuarial experts who played a pivotal role in creating the tables, has been critical of previous attempts by the court to depart from the figures in the tables. In an article in 2013 she wrote that:

"RFs (reduction factors) provide the best available measure of the employment prospects for a typical member of each group. They are accurate as a measure of the group average but they are not likely to be accurate for any individual within that group. Imprecision is an inevitable consequence of scheduled damages. The alternative is an individual assessment by expert in each case

[...]

Apart from the likely injustice associated with under-compensating the claimant...there is the issue of uncertainty. The purposes of the Ogden tables, the multiplier/multiplicand formula and the setting of a fixed discount rate is to provide a degree of certainty and predictability to the damages calculation and to avoid the need for expert evidence in each case. The approach of judges making routine adjustments without reference to expert evidence in relation to the size of the adjustment, means that it is now difficult to predict the outcome in a given case"

The issue arose for consideration in Billett v Ministry of Defence (2014) Lawtel (QB). The Claimant suffered a non-freezing cold injury to his hands whilst serving as a lance corporal in the British Army. After his accident he left the army and became an HGV driver,. The evidence established that he would have given up his job in the army to become an HGV driver anyway (i.e. irrespective of whether he had been injured) but that if he found himself out of work and competing with able-bodied persons in the future his injury (which prevented him from working outside for long periods) would place him at a disadvantage. However, he remained fit and abled bodied in all other respects.

It fell to the judge (Andrew Edis QC) to determine what approach to take in calculating the Claimant's loss in this regard. Responding to Dr Wass's comments he explained the rationale for making an adjustment in any given case:

"The Court is required to fix a figure for compensation in the individual case before it, and the fact that following a table will produce a figure which is known to be wrong is not answered by the observation that the error is random. This means that if the tables are applied without adjustment, the right overall figure of damages across all cases will be awarded, but no Claimant will get the correct sum in damages and no Defendant will pay the right sum"

Having concluded that the Claimant did satisfy the definition of 'disabled' for the purposes of the Ogden tables (and the Equality Act 2010) he went on to make a significant adjustment to the reduction factor on the basis of the evidence before him:

"In using the tables, I am entitled to take into account the fact that I find it hard to conceive of many people who could be classified "disabled" who are as fit and able as is this Claimant. It must be remembered that when he left the Army he was medically fully deployable. He could be deployed anywhere in the world to do anything. If I apply the RFs without deduction, he will clearly be one of those whose award will be wrong because he will be compensated as any other disabled person would be compensated when in reality his disability is, by the standards of disability, quite minor. His condition qualifies as a disability under the test I have applied, but only just"

The explanatory notes to the Ogden tables (7th edition) promise that this issue will be "discussed in detail when drafting the 8th edition and consideration will be given as to whether the explanatory notes need amendment, especially as regards the circumstances in which it might be appropriate to depart from the suggested non-mortality reduction factors and the size of any adjustments that are made". Since the explanatory notes are themselves admissible in evidence (s.10 of the Civil Evidence Act 1995) these amendments are likely to assume considerable significance when the 8th edition is produced. For the time being, the approach adopted by the Court in Billett provides some useful guidance.

Jack Harding
1 Chancery Lane

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