David Marshall assesses the impact of the Ogden Tables on deciding loss-of-earnings claims in personal injury cases


A year ago, the sixth edition of the Ogden Tables was published. The biggest change was the treatment of factors other than mortality in connection with future loss of earnings. Commentators on the sixth edition have tended to talk about perceived 'winners' and 'losers', but such a viewpoint is over-simplistic.



The purpose of the Ogden Tables is to assist courts and practitioners with data that will enable them best to calculate the amount of money needed to put the claimant as nearly as possible back into the position he would have been in, but for the injury.



Practitioners will be well aware of the old methodology in the earlier editions of the tables: 'tables A, B and C' reductions to the base loss of earnings multipliers, according to levels of economic activity, varied by sex, occupation and geographical location.



As noted in the introduction to the fifth edition, it had become clear that these employment risk reduction factors were based on historic data, which had lost relevance to the economy and workforce of the 21st century. With the changes in economic activity throughout Britain over the last 30-odd years (including a decline in heavy industry and fewer 'jobs for life') it would have been a reasonable guess that occupational and geographical factors might have changed somewhat in significance. The problem was that there were no better data to put forward as an alternative; nor was there any evidence whether the use of out-of-date statistics made a real difference to the calculation of compensation.



Regarding the latter question, research by Lewis, McNabb, Robinson and Wass (Loss of earnings following personal injury: do the courts adequately compensate injured parties? Econ J 113), published in 2003, suggested that it did. The traditional approach where there was a residual earning capacity, following a disabling injury, was to use the same multiplier for projected earnings but for the accident and for the residual earnings. The multiplicand might be reduced to reflect a different occupation or reduced working hours, but, unless there was clear evidence of likely early retirement, it was difficult to adduce evidence to support a reduced multiplier.



The increased risk of 'handicap on the labour market' by reason of the disability was catered for by an additional Smith v Manchester award, which was a matter for judicial discretion, but typically amounted to 12-18 months' net earnings. The 2003 research by Lewis et al showed that this led to widespread inaccuracy in compensation, most claimants being 'under-compensated' (especially young men with residual earning capacity) but with a quarter of claimants being 'over-compensated.' While calculating compensation will never be an exact science, such discrepancies were of great concern.



The sixth edition puts forward an entirely new approach. It draws on research on estimating working life expectancy by Butt, Haberman, Verrall and Wass. This has been presented to the Royal Statistical Society and is to be published in its journal later this year. In the meantime, a copy of their slides is available online at www.cass.city.ac.uk/ogden.



The research is primarily based on analysis of data from the Labour Force Survey (LFS), a quarterly survey of 60,000 households conducted since 1992-1993. The guidance notes to the tables state 'new research... demonstrated that the key issues affecting a person's future working life are employment status, disability status and educational attainment'. And while occupation, industrial sector and geographical regions were also analysed, 'the researchers concluded that the most significant consideration was the highest level of education achieved by the claimant and that, if this was allowed for, the effect of the other factors was relatively small. As a result, the working party decided to propose adjustment factors which allow for employment status [i.e. employed or not employed], disability status and educational attainment only'.



As far as disability status is concerned, the tables follow a similar approach to the Disability Discrimination Act 1995, so long as the disability affects either the kind or the amount of paid work they can do. Unfortunately, an error has crept into the definition by limiting it to 'illness', but correspondence in PI Focus (March 2008) clarified that this is meant to read 'disability or illness' which must have lasted for at least a year.



The key factor which makes a difference for both disabled and non-disabled employees is educational achievement. Different reduction factors are proposed for claimants with degree or equivalent, A Levels/GCSE A-C and lower grades GCSE/no qualifications.



As the researchers accept, the research and the reduction factors derived from it in the sixth edition of the tables are not the last word, but 'provide a more accurate starting point within the established broadbrush framework that is used by the courts. The intention is that the courts may deviate from this starting point subject to the particular characteristics and circumstances of individual cases'.



The reduction factors for women tend to be greater than for the equivalent qualified man. This largely reflects the effect of child care in removing women from the labour market to a greater extent than men. Furthermore, the female reduction factors assume a retirement age at 60. Such issues might give rise to grounds to vary the multiplier in individual cases (particularly for older female claimants). Care also needs to be taken with educational achievement in that claimants (particularly those in the youngest age ranges) might gain qualifications later in life. If so, again this would be grounds for arguing that the judge should adjust the multiplier.



The biggest area of potential controversy lies within the definition of disability. This is by necessity, as a result of the data source, a broad one and the LFS involves subjective assessment. There may also be different effects depending on the age when the disability was first suffered. However, the nature of the underlying data makes it impossible to drill down in more detail so again this is a matter for argument and judicial discretion in appropriate cases. However if, as has been suggested, the definition of disability has been set too low then this has allowed more people with lower levels of disability into the cohort, and the average percentage time likely to be spent in employment goes up. Hence the reduction factor is higher and the mitigation multiplier is raised.



There have now been a number of reported cases at first instance on the use of the sixth edition. If the defendant can show that the claimant was 'disabled' before the accident this will now obviously have a significant effect on the loss of earnings claim, as the disabled reduction factor would be applied to the future loss multiplier. In Garth v Grant & MIB (QBD Judge Hickinbottom 25 May 2007), before the accident the claimant was 'super-morbidly obese', weighing 28-30 stone with a body mass index of more than 50. She had worked successfully in international banking. In the road accident she suffered serious orthopaedic injuries, including a pelvic fracture which led to a significantly shortened leg. The defendant argued that she was disabled before the accident by reason of her obesity. However, the judge would have none of it: 'Even assuming that morbid obesity is a medical condition satisfying the first condition, on the evidence it is simply impossible to say that Ms Garth's weight had "a substantial adverse effect on her ability to carry out day-to day activities". It did not. In any event, it appeared to have had no significant adverse impact on the kind or amount of work she wished to do.'



Judges have also had to consider whether to vary the reduction factors set out in the sixth edition, particularly where they have to consider the degree of disability of the particular individual. In Conner v Bradman & Co Ltd [2007] EWHC 2789 (QB HHJ Coulson QC sitting as a High Court Judge), the claimant suffered a rupture of the anterior cruciate ligament, leading to instability of the knee. He had been working as a mechanic before and after the accident, but would require a knee-replacement operation that would then preclude him working as a mechanic. He would then work as a taxi driver. When considering the reduction factor for the residual earning capacity, the judge noted that the sixth edition provided a discount of 0.49, as opposed to the reduction factor for a non-disabled employee of 0.82, and applied a reduction factor of 0.655, being the midpoint. However, this leads to a very large divergence from the disabled average reduction factor. Similarly, in Leesmith v Evans [2008] EWHC 134 (QB), the claimant suffered an amputation of his left leg in a work-related accident. Cooke J noted that the disabled risk reduction factor was 0.54 and the non-disabled 0.92. He allowed 0.6. However, although the judge might have seen this as a small increase, it of course leads to a substantial increase in the residual earnings multiplier, compared to the average for a disabled person capable of work, even though the claimant was a manual worker and was now an amputee.



In Hopkinson v MOD & VT Services Limited [2008] EWHC 699 (QB), the judge varied the reduction factor for the non-disabled multiplier, increasing it from 0.81 to 0.9 because 'this would be too pessimistic a factor in the present case'. The claimant had a good work history and the judge thought that he would 'probably have continued in virtually full-time employment until he retired'. However, he then reduced the multiplicand by 10% to reflect the risk of unemployment. So far as the residual earning capacity was concerned, the judge did not use the disabled reduction factor from the tables, but seems to have used the same multiplier and reduced the residual earnings multiplicand by 50%. The methodology could perhaps be described as a little eccentric, but comes out with about the same result as a straight application of the tables would have done.



It is clear that the judiciary has no difficulty in using the sixth edition in the way it was intended - as a starting point for the application of judicial discretion in respect of the individual case. However, it does seem that the disabled reduction factor is being viewed as one extreme, and all injuries are being compared between that extreme and the non-disabled reduction factor. However, both factors are, in practice, averages. So, a severely disabled person with some residual earning capacity might in fact deserve an individualised reduction factor which is significantly lower than the average as shown in the tables, thus producing a lower multiplier to reflect his ability to mitigate loss of earnings.



It is, however, difficult to ascertain the relative degrees of disability of the sample in the LFS to know where to fit individual cases. Further guidance on how to adjust these averages for individual cases would be helpful in the next edition. However, in the meantime practitioners should note the following points. First, those who are employed at trial are likely to have a lower level of disability than those who are not. Second, rather than giving too much weight to individualised factors, the categories used by the tables (age, sex, starting employment status, disability status and educational status) will always be the most important factors. And finally, and most importantly, the disabled reduction factor is an average. The average should also be the norm. It is in the nature of averages that most results will be close to the norm and also that some will be higher and some will be lower (that is, not all of them pointing towards the non-disabled reduction factor). And, while the non-disabled reduction factor might indicate the direction of movement in an individual case, it should have no bearing on the degree of movement away from the disabled reduction factor.



David Marshall is managing partner at London-based Anthony Gold and a past president of the Association of Personal Injury Lawyers