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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Morgan v UPS Ltd  EWCA Civ 375 (17 April 2008)
Cite as:  EWCA Civ 375
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SOUTHAMPTON COUNTY COURT
MR RECORDER BARRIE
Claim No. 4SO06480
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE SEDLEY
SIR PETER GIBSON
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Mr Grahame Aldous QC (instructed by Messrs Simpkins & Co) for the Respondent
Hearing date : 15 February 2008
Crown Copyright ©
Lord Justice Pill :
"We agree based on our experience of many similar injuries that we have dealt with that a full return to work is usual, with avoidance of heavy manual labour or repetitive tasks in a factory setting. We can see no reason why Mr Morgan should have any significant loss of function for all normal every day activities. We agree that in the long term Mr Morgan is at risk from developing a post-traumatic arthritis as a result of his injury since the joint lining was injured. We agree that on the basis of our own clinical examination and the radiographs taken that that risk is between 5% and 10%. We agree that the time that any arthritis develops is not likely to occur for 10 to 15 years from the date of this discussion. We agree that in the event of Mr Morgan requiring surgical treatment this would probably affect his ability to work for approximately six months. He will improve no further and deterioration is unlikely. We agree that Mr Morgan is fit to work full time as a mechanic. We agree that he is likely to require assistance in heavy tasks. We agree Mr Morgan is not fit to undertake heavy manual work nor to work in an environment requiring repetitive use of the hands and wrists, e.g. in a food processing plant. We agree he is able to work full time in a driving job which may involve lifting. He is able to carry out lighter manual work and clerical work on a full time basis."
"I am very unsure about it being a realistic intent . . . He does not strike me as a natural entrepreneur or business man. He does not strike me as a person with a burning ambition to succeed and to earn as much money as he can . . . I have no reason to think that he really understands the complexities of what would be involved in setting up a business, having to deal with things on the basis that there is paperwork, invoices, accounts, premises, maybe employees. There is nothing to show to me that the extra income from having more jobs that he might achieve if he set himself up as it were properly and formally in business would exceed the extra costs that he would have to incur in premises and tools . . ."
"44. So I turn to the question of future loss, and as I say the claim that Mr Morgan puts forward is first of all for 12 months continuing loss and net loss after taking account of what he will earn from Mr Carter, but on the basis that he will then have established a successful business with Mr Archer. The Defendant denies that any claim of that kind can be made out, but agrees that in principle the injury that Mr Morgan has suffered merits a Smith v Manchester award. I agree that the injury that Mr Morgan has suffered merits a Smith v Manchester award. The true kind of claim that this piece of legal jargon means is a claim which arises when an injured person is still in secure permanent employment, like Mrs Smith who worked as a cleaner in a local authority home in Manchester. She I think also had a wrist injury, and the court was told by her employer that they would keep her as long as they could, having caused her to injure her wrist. The court accepted that there was a risk because no job is wholly secure – a risk that if she lost her job for any reason she might find it more difficult to get another cleaning job at the same rate of pay, difficulties that would be made greater by the effects of her continuing symptoms. There is a Smith v Manchester element to this case, although Mr Morgan's hope is that he will be self-employed so some of the risks of being made redundant and businesses going bust and so on might be a bit less for him.
45. I also think there are other employment related disadvantages for the future which do not have the same area of uncertainty as the true Smith v Manchester award. I think the accident injury to his dominant wrist will make it more difficult for Mr Morgan to get established in a proper mechanic's business or to expand his existing rather informal business. I hope he is right that he and Wayne Archer will make a cracking go of a business where Mr Archer can do the heavy work. But it is very early days and who knows what may happen. He will certainly need a tolerant and well matched partner to do some of the physical work of a mechanic or he will need to incur the cost of having an employee to do the heavy physical work, which makes it more of a challenge to set up a successful business from the start. It means a need for much more turnover to cover those costs. Or he might need to spend more than he otherwise would have done on hoists and power tools that will help. At a cost there are lots of ways of assisting with manual handling tasks which a mechanic starting up in a business usually would not bother with. Secondly, or perhaps alternatively, if he does not incur those costs Mr Morgan continues to be quite restricted in the scope of the work that he can offer to do for his friends and family and contacts, because he cannot do the big jobs if they involve really heavy lifting. Thirdly, there is a risk of arthritis in future. If he is self-employed there is nobody to pay him sick pay while he has treatment, and he may have further restrictions on the scope of the work that he can do. So those are a range of earning related problems for the future which in my judgment genuinely affect this Claimant and will for the rest of his working life time have an impact on his earning capacity, a fairly modest impact but a discernible one nonetheless.
46. I have been troubled by the fact that none of these problems is identified in the schedule of the claim, and I have wondered to myself therefore whether it would be right for me to make any award in respect of them in a case where contention has run so high. But all of these matters that are identified arise from the evidence which certainly has been available to everybody throughout. But I do think that I should give weight to the schedule in terms of limiting any claim of this character to the amount that is claimed in the schedule. I do not think I would have awarded significantly more in any case, but I do start with a figure slightly more. The upshot of that is this, that I am prepared to make an award to Mr Morgan for impairment of his future earning capacity of £12,800 which covers the range of difficulties that I have identified. I do that even though I reject the claim for future loss of earnings on the basis on which it is put forward in the schedule. I also think as I have said that there is a genuine Smith v Manchester claim to be made here. This is always a head of damage that has to be addressed by feel rather than by mathematics. In his chosen field of work of vehicle mechanics I think that Mr Morgan has a minor but lasting problem that he would have to declare if he ever decided to go for the security of employment, and it would make it more difficult for him to find work. He may be thrown on the labour market for any number of reasons. I am also aware of the potential reduction in his capacity that may come with arthritis in 15 years or so time. I take a broad view of the sort of level of earnings that I think he might achieve, and the upshot of that is that I make an award of Smith v Manchester damages of £10,000."
a) self-employed as a mechanic in regular employment;
b) earning less because of his injury; and
c) entitled to a further sum to protect against an unsuccessful business
I assume that by Smith v Manchester the Recorder did mean disadvantage on the labour market if the claimant's business did not succeed. There was no need to label it Smith v Manchester, a label appropriate to different facts, but if it is merely a question of labelling, there need be no problem.
"This head of damage generally only arises where a plaintiff is at the time of the trial in employment, but there is a risk that he may lose this employment at some time in the future, and may then, as a result of his injury, be at a disadvantage in getting another job or equally well paid job."
"Where a plaintiff is in work at the date of the trial, the first question on this head of damage is: What is the risk that he will at some time before the end of his working life lose that job and be thrown on the labour market?"
Browne LJ cited Davis v Taylor  A.C. 207, Chaplin v Hicks  2 KB 786, Otter v Church, Adams, Tatham & Co  Ch. 280 as well as Smith. Browne LJ analysed the situation and stated, at page 263 E:
"I do not think one can say more by way of principle than this. The consideration of this head of damages should be made in two stages. 1. Is there a "substantial" or "real" risk that a plaintiff will lose his present job at some time before the estimated end of his working life? 2. If there is (but not otherwise), the court must assess and quantify the present value of the risk of the financial damage which the plaintiff will suffer if that risk materialises, having regard to the degree of the risk, the time when it may materialise, and the factors, both favourable and unfavourable, which in a particular case will, or may, affect the plaintiff's chances of getting a job at all, or an equally well paid job."
"The Smith v Manchester element is designed to compensate a plaintiff who is in employment for handicap in getting a new job if he loses his present one and for longer than normal periods out of work between jobs because of his disability. It is not as a rule awarded to cover continuing partial loss of earnings."
"There seems to be a corresponding lack of uniformity in the use of the shorthand expression Smith v Manchester damages. It may be used, and it is arguably most aptly used, for the situation described by Browne LJ in Moeliker where the plaintiff had been able to resume his previous job at the same remuneration but possibly with diminished prospects of promotion, and certainly with diminished prospects of ready and satisfactory alternative employment if, for whatever reason, his current employment comes to an end."
Robert Walker LJ described that as the "classic" Smith v Manchester situation. It was "basically a matter of choice of terminology".
"This appeal, although nothing like so clear cut as the case of permanent incapacitation which I have mentioned, can only be called a Smith v Manchester case if that expression is used, and some would say misused, in a wide sense. It seems to me that in this case the judge, having unsurprisingly preferred the accountancy evidence put forward by the defendant to that put forward by the plaintiff, moved too abruptly, in the judge's words:
". . . to the conclusion that the only safe way in which to deal with the loss of future earnings is to compensate the plaintiff with a Smith v Manchester award."
The judge seems, with respect, not to have sufficiently considered what he meant by that or how he was to go about the process of assessment in what was certainly not a classic Smith v Manchester situation."
Lord Justice Sedley :
Sir Peter Gibson :