Reclaiming the Lost Years

Article, Solicitors JournalNovember 2005

Legal / Liability / Casualty

In this article, first published in Solicitor's Journal, James Stanbury and Amanda Fyffe examine the rationale and mechanics of “lost years” claims.

The law pertaining to asbestosis-related diseases (and in particular mesothelioma claims) has been the subject of intense examination over the last few years – the landmark decision by the House of Lords in Fairchild[1] and the subsequent extension of its principles in Barker[2] last year (which is set to be appealed in the House of Lords in early 2006). A cornerstone in quantifying damages in such claims is the evaluation of “lost years”, which we examine below.

The claim for lost years arises from the shortening of a claimant’s working life – a claimant who is alive at the date of trial may claim for the present value of his or her earnings that would have been generated in that shortened period less “living expenses”, the computation of which we discuss below. However, it is perhaps surprising to consider that this was not always so.

History

Until 1979, English law was such that no sums could be recovered by or on behalf of living claimants for the prospective loss of earnings in those lost years. The decision in Pickett[3] in 1980 changed the law after which the right to claim for loss of earnings was vested in the estate of the deceased. This right was abolished by law[4] in 1982, thereby relieving defendants of the possibility of paying damages twice where the beneficiaries of the estate were different to the dependants who could claim under the Fatal Accidents Act 1976.

Deduction for living expenses

One of the key elements of the lost years’ calculation is that a deduction for “living expenses” has to be made. It was in Harris[5] that the Court of Appeal generically defined living expenses to be “the proportion of the victim’s net earnings that he spends to maintain himself at the standard of living appropriate to the case”. The rationale for this approach is that the costs of maintaining the victim will not be required when he or she is not alive.

Prior to Harris, the Courts had interpreted the estimation of such living expenses in 3 ways, namely to:

  • follow the method found in Fatal Accident cases 
  • restrict the loss of earnings claimed to the sums saved by the victim in the lost years 
  • deduct the cost of maintaining a victim’s station in life, thereby leaving a “surplus” of earnings.

However, the Court of Appeal in Harris declined to give guidance on what proportion of the earnings should be deducted, given that this depended on (a) the level of joint expenditure and (b) the number of people between whom it was to be divided.

Through Harris, the basic principle emerges that sums spent to maintain the victim at the appropriate standard of living are to be deducted, subject to the qualification that expenditure incurred for the joint benefit of others should be deducted to the extent of their share of those sums.

The practical approach

In practice, the court may adopt the following general guidelines:

Unmarried person

In the case of a young person (an unlikely scenario for a mesothelioma victim), the court has to rule on various imponderables – for example, whether the victim will marry, save or support anyone, all of which would result in a lower deduction for living expenses from what would generally be a high percentage. The deduction for a claimant living at home may be taken as 67% whereas upon leaving home and moving into, say, a flat, this deduction may rise to 75%.

Married person with no children

For a married man, a deduction of 50% for living expenses is usually deducted - the rationale being that the victim spends 1/3rd (33.3%) of the net income on himself and his share of the joint living expenses will be half thereof (1/2 of 33.3%, being 16.7%), creating a total of 50%

Married person with children

As can be seen above, the percentage deducted reduces where the number of dependants increases. Where a person is married with multiple children, the percentage deductions (following the rationale described above) may be calculated as follows:

Married with one child - person’s own expenses (now 25% instead of 33.3% above) together with their share of the joint expenses (1/3rd of 33.3%, being 11.1%) creating a total of 36.1%. It is generally assumed that the level of joint expenditure would not significantly increase with the increased size of the family unit and therefore the starting point remains at 33.3%.

Married with two children – person’s own expenses (25%) together with their share of joint expenses (1/4 of 33.3%, being 8.3%), creating a total of 33.3%.

Married with three children – person’s own expenses (25%) together with their share of joint expenses (1/5 of 33.3%, being 6.7%), creating a total of 31.7%.

Of course, these are only guidelines and each case will always be assessed on the basis of its own facts. The victim may, for example, be able to provide a detailed analysis of household expenditure to demonstrate what proportion of his current expenditure he spends exclusively on himself. We have only ever had one case where the claimant had already prepared such an analysis (and did so on a monthly basis) – and it helped him to demonstrate that the presumed deduction was too great. Cost considerations and a lack of adequate records usually dictates against such a specific approach but a practitioner should always consider the possibility.

With research (Source : www.hse.gov.uk) showing that the number of asbestosis-related deaths forecast to peak in Great Britain to a level of between 1,950 and 2,450 in the period 2011-2015, the incidence of these types of claim – where the highest risk claimants are said to be metal plate workers, vehicle body builders, plumbers, gas fitters and electricians - will sadly progress.

Case references

1. Fairchild v Glenhaven Funeral Services [2003] 1 AC 32 
2. Barker v Saint Gobain Pipelines plc [2004] EWCA Civ 545 
3. Pickett v British Railway Engineering Ltd [1980] AC 136 
4. S4 Administration of Justice Act 1982 
5. Harris v Empress Motors Ltd [1983] 3 All ER 561

 

As appeared in Solicitors Journal, November 2005.

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