Get Ogden-confident

Do you get an Ogden-related headache when asked to draft a schedule of loss? Are you baffled by multiplicands? How to get the best from the tables

For a surprising number of barristers, numbers make the blood run cold. The Ogden tables have been a part of many practices for decades: principally, they are the essential means of calculating future losses in personal injury claims (although they have wide application outside of that context, too). However, they are often seen as forbidding, unwieldy and inaccessible. Pupils and Bar students in particular approach the Ogden tables with trepidation.

First and foremost, the Ogden tables are simply a tool to be wielded as part of the ordinary business of barristering. Every schedule of loss is a pleading and therefore requires a clear narrative thread: it is not merely an exhaustive list of multiplicands, multipliers and reduction factors. This was put pointedly by Yip J in Edward Wright v Satellite Information Services [2018] EWHC 812 (QB) at paras 27 and 28: ‘This is, or should be, the document that draws together the presentation of the claim. It ought to be presented in an accessible and easy to follow format. […] This means that it should not simply be a series of calculations. It needs to be supported by sufficient narrative to explain the case being presented by the claimant. […] It is very important that lawyers draft the schedule in such a way that the facts to which the client is attesting are clear.’ It is therefore vital that the calculations and how the final figures are reached are comprehensible, not least because it acts as a better piece of advocacy.

Why are the tables necessary?

Understanding the tables fully involves going back to first principles. Why does a £1,000 loss each year for 20 years not (necessarily) equal £20,000? There are two reasons why not, and the tables factor in both. First, £1,000 now is not necessarily worth the same as £1,000 in one year, or ten years, or 20 years’ time: this factor is accounted for in the so-called discount rate (see below). Second, the claimant may not be around to enjoy their damages in 20 years’ time: the tables therefore incorporate Office for National Statistics mortality data to ensure that claimants are, on average, neither over- nor under-compensated by being granted lump sum damages for continuing future losses.

The large number of tables cover different settings: losses for life, losses running to (and starting from) different retirement ages, and ‘general’ tables giving discount factors without mortality data. The same basic information feeds into special tables covering, for example, continuing and recurrent losses (eg purchasing the claimant a wheelchair, servicing the chair every other year, and replacing it every ten years, for life). The tables set out the ‘multipliers’ to apply to the claimant’s loss in various circumstances, with different multiplier values according to the claimant’s age at calculation and the discount rate to be used.

Multiplier-multiplicand method

Losses – both in living personal injury, and in fatal accident cases – are calculated simply, by multiplying the multiplier given in the table by the ‘multiplicand’. The multiplicand is the annual amount of the loss, eg the decrease in post-accident annual earning capacity, or the decrease in dependency received. In loss of earnings claims, the multiplicand is typically calculated from the claimant’s payslips, but in more complex cases (eg for wealthy claimants, or those with multiple and variable sources of income) by a forensic accountant. In the case of dependency claims, Harris v Empress Motors [1983] All ER 561 sets out a method of calculating the joint household income, deducting the deceased’s assumed spending on themselves, and then working out the consequential loss of dependency to the dependants.

"Confident practitioners can produce sophisticated future earnings models using this method... impressing clients, wowing judges, and worrying opponents."

For many losses a simple multiplier-multiplicand method suffices: however, for earnings-related losses, there is a further real-world issue to factor in: how likely would the claimant have been to have kept her job and earnings potential, if the accident had not occurred? Based on actuarial data, the answer varies according to the sex, age, education level, and disability status of the claimant: tables A-D set out the ‘reduction factors’, which are conventionally applied to the relevant multiplier. The reduction factors drop precipitously once the claimant could officially be categorised as ‘disabled’: these were thoroughly argued in Billett v Ministry of Defence [2015] EWCA Civ 773, where the claimant’s non-freezing cold injury rendered him officially disabled, but ‘only just’. There was expert evidence that the disability reduction factors by design incorporated the very wide spectrum of possible disabilities and their consequent effect on future earning capacity, which, if followed through, would tend to suggest leaving those reduction factors unaltered: nevertheless the Court of Appeal considered the actuarially calculated award too high overall and, declining to interfere with the reduction factors, substituted a broad-brush Smith v Manchester general damages award for reduced capacity on the open labour market instead. This case demonstrates the limitations of the Ogden tables: they are the servant, and not the master, of the law on personal injury damages.

Sophisticated applications

Probably the most complex application of the tables results from heads of loss where the size of the multiplicand will vary in the future. Good examples are loss of earnings where the claimant reasonably expected to receive pay increments or promotions, or claims for care of dependants in fatal cases where the amount of care will change as dependants move away from home or become aged and infirm. The explanatory notes to the tables give a worked example for what is usually termed ‘splitting the multiplier’, at para 23. It is a fiddly and time-consuming process: however, once worked through (and many personal injury practitioners can gain from simply going through the worked example stage by stage), its intuitive rationale becomes clearer. Confident practitioners can produce sophisticated future earnings models using this method with great ease; impressing their clients, wowing judges, and worrying their opponents.

Our advice

There is no good substitute for rolling up one’s sleeves and working with the excellent explanatory notes to the tables. However, for those who still get an Ogden-related headache when asked to draft a schedule, we offer the following general advice:

  • Be methodical. Be clear in your mind what loss you are trying to calculate, and therefore which table you need to use.
  • Know what evidence you need to get started. Do the payslips properly evidence the reasonable level of annual income? Do you need bank statements or tax returns? Do you need the claimant to have settled a witness statement before you can get started? Do you know how the claimant’s pension scheme works?
  • Set things out clearly. Every good schedule needs a narrative; but, once the background and the reasoning is set out, numbers are often best set out in tabular form, rather than in further prose.
  • Don’t be afraid to instruct an expert. Forensic accountants, care experts, employment modelling experts and pensions experts are, in appropriate cases, essential to prove your case in relation to particular heads of loss. Even so: remember that while the expert gives evidence, it is you, not they, who are responsible for advancing your client’s case.
  • Get good at Excel (or other spreadsheet package). As you start to use the tables you will begin to see how many operations you use over and over again, schedule after schedule. Could you replace your notebook scribblings with a quicker, more accurate spreadsheet, set up to perform simple, recurring calculations with ease?

Discount rate revisited

Much ink has been spilt over the discount rate recently, but suffice to say: after almost two decades of peace and stability, it has now been the focus of legal and political controversy for nearly two years. The discount rate was always a positive number, on the basis that a claimant would be overcompensated otherwise: they could invest their up-front lump sum and gain returns that wouldn’t otherwise have been available to them. The rate was set by statute at 2.5% from 2001, based on a three-year average of index linked gilts (following Wells v Wells). But by 2017, when the rate was finally revisited, these gilts gave negative yields (once inflation was accounted for): this meant a negative discount rate of -0.75%, considerably higher awards, and a wounded insurance industry. It couldn’t last, and December’s Civil Liability Act 2018 now provides for a new calculation process. Time will tell what rate is eventually chosen, but for the time being, the official -0.75% rate continues to give the counterintuitive result that claimants receive more for their losses the further in the future they are.

‘Actuarial Tables with explanatory notes for use in Personal Injury and Fatal Accident Cases’ became known as the Ogden tables after Sir Michael Ogden QC who was the chair of the 1982 working party responsible for creating them. The Civil Evidence Act 1995 permitted their use in the UK and they were first used in Wells v Wells [1998] UKHL 27. They are prepared by the Government Actuary’s Department, and members of the working party include actuaries, lawyers, accountants, academics and statisticians.

See also Simon Levene’s worked examples in 'Calculating with Ogden'.

David Green practises in both personal injury and employment law at 12 Kings Bench Walk. His personal injury specialisms are in occupational disease and private international law.

Elizabeth Boulden is a barrister at 12 Kings Bench Walk specialising in personal injury and related claims; in particular in employer’s liability, public liability, RTA and clinical negligence settings.
Author details: 
David Green

David Green practises in both personal injury and employment law at 12 Kings Bench Walk. His personal injury specialisms are in occupational disease and private international law.

Elizabeth Boulden

Elizabeth Boulden is a barrister at 12 Kings Bench Walk specialising in personal injury and related claims; in particular in employer’s liability, public liability, RTA and clinical negligence settings.