Smith v Manchester Awards: Part 1 – when are they appropriate?

Many Industrial Disease cases contain a claim for a Smith v Manchester award on the Schedule.  It is perhaps most likely to be seen in vibration-induced injury, or occupational asthma cases. However, it could be a part of NIHL cases (as will be seen below) or others.

What actually is a Smith v Manchester award?

It is important for practitioners to consider what exactly the award seeks to achieve.  In Smith v Manchester [1974] EWCA Civ 6, Scarman LJ set out the task of assessing losses to future earnings/ earning capacity:

Loss of future earnings or future earning capacity is usually compounded of two elements. The first is when a victim of an accident finds that he or she can, as a result of the accident, no longer earn his or her pre-accident rate of earnings. In such a case there is an existing reduction in earning capacity which can be calculated as an annual sum…

The second element in this type of loss is the weakening of the plaintiff’s competitive position in the open labour market: that is to say, should the plaintiff lose her current employment, what are her chances of obtaining comparable employment in the open labour market? …

This second element is what a Smith v Manchester award seeks to compensate.  In Smith the Claimant continued to be employed by Manchester Corporation. This was at the same rate of pay as before and so there was no loss for the first element.

In Moeliker v A. Reyrolle & Co. Ltd [1977] 1WLR 132 , Browne LJ said that a plaintiff’s loss of earning capacity arises where ‘as a result of his injury his chances in the future of getting in the labour market work (or work as well paid as before the accident) have been diminished by his injury’. The risk had to be real or substantial.

As an aside, it seems that the terms ‘loss of earnings’ and ‘loss of earning capacity’ have been used inconsistently. Sometimes the terms are used interchangeably, though occasionally attempts to separate the two have been made.  The concept of what is trying to be be achieved is the important element.

Smith v Manchester post-Ogden 6

However, Smith v Manchester was decided long before publication of Ogden 6 (in 2007). Reduction factors for disabled and non-disabled claimants are set out at Tables A – D (and now in Ogden 7, 2011).  These Tables take account of contingencies other than mortality.  On their introduction there was discussion as to whether the Smith v Manchester awards were even required. However, their use remains in some circumstances.

Inglis v MoD [2019] EWHC 1153 (QB) was a NIHL case brought by a Royal Marine whose service had been cut short through his injury.  Peter Marquand (sitting as a Deputy High Court Judge) set out the different ways that a court now may seek to compensate a claimant for future loss of earnings [at 164]:

  • First, the net annual loss is established to provide the multiplicand and it is multiplied by the multiplier to provide a lump sum award covering the loss of earnings over the claimant’s working life. 
  • Secondly, a lump sum may be awarded for a handicap in the labour market and therefore a claimant may take longer to obtain employment in the event that they become unemployed (called a Smith v Manchester award after the case of that name citation: (1974) 17 KIR 1). 
  • Thirdly, where the matter is so uncertain that a broad-brush approach is adopted and a lump sum is awarded (known as a Blamire award after the case Blamire v South Cumbria Health Authority [1993] PI QR 1). 
  • Fourthly, if the annual loss is established it may be paid by way of annual payments rather than a lump sum (a periodical payment). 

The Judge found that he was able to use the multiplier/ multiplicand approach and not use a Smith v Manchester award.

Avoid Duplication

However, courts (and Schedules/ Counter-Schedules) must be cautious of overlap. In Ronan v Sainsbury’s Supermarkets Limited [2006] EWCA Civ 1074, the differences and so the basis for the different awards was not made sufficiently clear.  Hughes LJ set out the difference between a Blamire award and a Smith v Manchester award, for example, as follows:

“A Blamire award and a Smith v Manchester award may be combined but they are quite distinct. The former is appropriate where the evidence shows that there is a continuing loss of earnings, but there are too many uncertainties to adopt the conventional multiplier and multiplicand approach to its quantification. The latter is nothing to do with a continuing loss. It is an award for a contingent future loss, in the event of the claimant losing his current job, where, as a result of the accident, he would then be at a handicap on the labour market at which he would not have been but for the accident.”

Smith v Manchester or multiplier/ multiplicand – Billett v MoD

So having established that a claimant might have a disadvantage on the open labour market, practitioners will need to consider the appropriate approach. Should the loss should be calculated by way of multiplier/ multiplicand as per Ogden?

The case which practitioners are likely to turn to in order to make this assessment is Billett v MoD [2015] EWCA Civ 773.  At first instance the Judge had assessed damages for loss on the open labour market by way of the multiplier/ multiplicand approach. However, this which was overturned on appeal and replaced with a ‘classic’ Smith v Manchester award.

The Claimant had had to leave the Army as a result of his exposure to extreme cold in unsuitable boots.  He suffered a non-freezing cold weather injury.  He would be permanently affected by cold weather and needed to guard his feet in particular.  

The Claimant had been a driver in the Army. He had already obtained work as a HGV driver as a civilian at the same rate of pay as in the Army.  As a HGV driver his injury, perhaps unusually, had less of an impact than on his leisure activities.  He was able to keep his HGV cab warm and regulated, thus reducing the worst effects of his injury.

It was accepted, however, that the Claimant would be disadvantaged in finding new employment if he lost his current job.  There were some roles which were no longer available to him as a result of his injury.

At first instance, the Claimant was found to be disabled, “but only just”.  The Judge used a multiplier/ multiplicand approach, but adjusted the reduction factors in Tables A and B. This was to recognise that the Claimant was “only just” disabled. 

Billett – Judgment on Appeal 

The finding that the claimant was disabled was upheld.  However, on appeal, the Court of Appeal, per Jackson LJ, noted that:

  1. The Ogden tables should be the starting point. A judge should not depart from them on impressionistic grounds or by reference to the multipliers used in comparable cases.
  2. However, the bands of disability within Tables A – D are ‘extremely wide’.  In this case the claimant would fit at the lowest end of the range.
  3. If no adjustment were made to the reduction factors within Table B, then a sum of £200,000 would be awarded. The Claimant continuing to work as a lorry driver with ‘virtually no hinderance’ from his injury.
  4. Courts may seek to adjust Table B reduction factors. However, this would not be any more of a scientific exercise than applying a broad-brush Smith v Manchester award.  There was no rational basis for determining the same in this case.
  5. In many cases, Table A – D will be a valuable aid to valuing loss of earning capacity.
  6. This appeared to be one of the classic examples of when a Smith v Manchester award remained appropriate. Such cases were anticipated by the Ogden Working Party in their Explanatory Notes.
  7. The ‘best that the court can do is to make a broad assessment of the present value of the Claimant’s likely future loss as a result of handicap on the labour market.’

The calculated original award for loss of future earning capacity, £99,062.04, was reduced. It was replaced with an award “in the region of two years’ loss of earnings” and so £45,000.

When assessing whether a Smith v Manchester award should be made, in Kennedy v London Ambulance Service NHS Trust [2016] EWHC 3145 (QB), HHJ Peter Hughes QC interpreted Billett to say that the multiplier/ multiplicand approach should be used unless it resulted in an ‘obviously unreal result’.

Practitioners may wish to consider:

  1. Firstly, whether a particular case is more suited to a Smith v Manchester approach than a multiplier/ multiplicand approach.
  2. Practitioners are likely to consider the degree of injury. Would an unadjusted Table B or D figure would result in a ‘obviously unreal result’?
  3. Smith award may be more likely in cases where the disability is at the lower end of the scale.
  4. Smith award may be more likely when work activities are only mildly affected.
  5. If the reduction factor is going to require adjustment, then is there is an evidential basis for the same? Otherwise, is the result going to be any more scientific than a Smith v Manchester award?
  6. Smith v Manchester award (possibly in conjunction with a Blamire award) is more likely when there is no (or no rational) basis for a multiplier/ multiplicand calculation.

To follow:

Smith v Manchester awards: Part Two – Assessing an award. I will set out factors that practitioners may find relevant in assessing the value of a Smith v Manchester award.

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