£4.7 million for a broken leg?

Ben Collett is currently a student at Leeds University with a long term ambition of becoming a journalist. Yesterday, the Court of Appeal upheld his £4.7m damages award obtained against Middlesboro Football Club and one of their players, Gary Smith, last August.  As Middlesboro were relegated last season, in the absence of insurance cover, this judgement will no doubt add to their forthcoming financial woes. But before students across the land get too excited, it is worth noting that Collett is no ‘ordinary’ student. At the age of 9 he was spotted by a Manchester United scout and was recruited to the Red Devils’ Youth Academy. In the 2002/03 season, he played for Manchester United in the FA Youth Cup scoring a goal in the first leg of the final they went on to win. It is of passing interest that that team beat Middlesboro in the semi-final to progress. That season he also won the Jimmy Murphy award for Young Player of the Season. Previous incumbents include Ryan Giggs, Paul Scholes, Phil Neville and Wes Brown (twice). In Collett’s first game for the Manchester United Reserves in May 2003, he suffered a serious leg-break after an ‘over-the-ball’ tackle by Smith. The leg has healed but Collett no longer plays football professionally. Liability for the injury was admitted and the agreed damages for the broken leg were £35,000. At trial, the main issue revolved around Collett’s prospective loss of earnings (his pension loss remains to be agreed or assessed). Clearly, Middlesboro thought the £4.7m awarded by Swift J in the High Court was excessive and they appealed. Their appeal was dismissed. And for those who thought that football was ‘just for the boys’, it may be of interest to learn that both Swift J and Smith LJ (who gave the lead judgment in the Court of Appeal) are both women.

The surprising aspect of these decisions is not in fact the level of the award. Rather it is the fact that Middleboro chose to appeal the decision in the first place. If anything, Swift J had been very conservative in her assessment of damages. To understand why, it is necessary to consider, as Smith LJ did, the entirety of Swift J’s judgement (which runs to 35 pages). That judgement provides a good example of the approach taken by judges to the assessment of damages following injury in any case involving future loss of earnings where such losses are characterised as a ‘lost chance’. Students of tort may well raise an eye-brow of surprise at mention of the words ‘lost chance’ in the light of seminal cases such as Gregg v Scott  and Hotson v East Berkshire Health Authority  which suggest that such claims cannot be made at law. However, tort law has never in modern times prevented Claimants from claiming financial losses based on ‘lost chances’ provided such losses are not speculative. A claim becomes increasingly speculative in direct proportion to the paucity of evidence provided in support of the claim. So, for example, in this case a claim for loss of earnings based on the lost chance of Collett one day becoming a coach or a manager was dismissed as being speculative whereas the claim for lost earnings was entertained because the evidence in support of that claim was very good.

The case is a fine example of how to prepare a case for trial and how the evidence marshalled at trial can dictate the outcome. The sheer weight of evidence in support of Collett’s claim was impressive. Quite apart from the judge describing the Claimant as “a most impressive young man,”  oral evidence was given on his behalf by Sir Alex Ferguson, Gary Neville (Manchester United captain), Paddy Crerand (former player, youth coach, Assistant Manager and now commentator for Manchester United Television), Paul McGuinness (former player, now Under 18s coach, Assistant Youth Academy manager who had coached Collett between the ages of 9 and 16), Brian McClair (former player and coach and now manager of the Youth Academy and who had coached Collett during his Youth Cup spell). In addition, there were written statements from Collett’s contemporaries who now play elsewhere: David Jones (Wolves), Chris Eagles (Burnley FC), Sylvan Ebanks-Blake (Wolves) and Kieran Richardson (Sunderland). Evidence about two other contemporaries, Phil Bardsley (Sunderland) and Paul McShane (Hull)  was also put before the judge. Furthermore, Richard Sbragia (last season’s Sunderland manager) who had been Reserves Manager coach also gave evidence in support. On top of this Collett had expert evidence from Howard Wilkinson (amongst other previous jobs, former manager of Leeds United and Technical Director of the Football Association) as well as Melvyn Stein a former solicitor in sports law and now a consultant for a sports management company responsible for setting up the Association of Football Agents.

As against this impressive list of witnesses, the Defendants relied on Nigel Spackman who after finishing his playing career at the age of 37 now works primarily as a football commentator. He had only ever seen Collett play on DVDs and in cross-examination “indicated that he would defer to those witnesses who were familiar with his game.”  Secondly, the Defendants relied on Dr Bill Gerrard “Professor of Sports Management and Finance at the Leeds University Business School, and has particular expertise in the economics, finance and management of professional team sports.”  Despite providing a lot of highly detailed analysis about the likely career progression of young footballers, “no account of the claimant’s personal attributes and achievements, nor the opinion of his prospects held by others. Dr Gerrard readily acknowledged this.”  In short, both witnesses agreed that their evidence was significantly hampered by the fact that they had no direct knowledge of the Claimant.

Finally, the judge had the benefit of ‘independent’ evidence taken from two surveys undertaken by The Independent in 2002 and 2005 and the Deloitte Annual Reviews (up to the 2007/08 season) relating to players’ wages and football finance.

In determining Collett’s claim for future lost earnings, the judge at first instance had to decide at what level he would have played but for the accident, what he would have earned and over what period. The Claimant’s case was that he would have played for a ‘yo-yo’ club: namely one of the teams at the top of the Championship who might well obtain promotion (whether the teams would agree, such clubs might include teams like West Brom, Wolves, Sunderland, Burnley, Derby, Stoke). The independent evidence also showed that such clubs tended to pay their players significantly more than other teams in the Championship. Needless to say, the evidence given on behalf of Collett all supported this argument (and it is to be noted that many of his contemporaries now play for ‘yo-yo’ clubs). Smith LJ noted that “the appellants tested the evidence of the Manchester United witnesses in cross-examination but called no evidence from any witness who had seen the respondent play.”  Swift J unsurprisingly accepted much of the evidence given by the Claimant’s camp and noted that Dr Gerrard had not taken into account these “golden opinions’ in his assessment of Collett’s future.

In short, there was here some very good evidence about Collett and therefore he had established that he could make a claim for his lost chance of earning money as a professional footballer. As is standard practice when assessing damages for lost earnings, the court had to distinguish between losses up to the date of trial and future losses. The reason for this is that past losses have the benefit of better evidence: there is usually data available about what someone would have earned in the past whereas the future is inherently speculative. Past losses are also for a definite period whereas future losses are indefinite. The standard approach is therefore to calculate past losses annually taking into account inflation, whereas future losses are calculated using the multiplicand x multiplier approach. Put simply, the multiplicand is the notional annual earnings as at the date of trial and the multiplier reflects the amount of future years of that loss discounted according to the Ogden Tables.

Past Losses

Swift J found that Collett would probably have played for the Manchester United Reserves for one year had the accident not occurred. Thereafter he would probably have been loaned out to another club because he would, as a gifted left-footed winger, have been in competition with Ryan Giggs. It would therefore have been unlikely that he would have broken into the first team. The following year he would probably have been sold to an ‘aspiring’ Championship side and he would have played at such a club until the date of trial. There were figures available in respect of contemporaries for the first two years (Reserve and loan periods) and on the basis of the various independent surveys, the average annual earnings for a Championship player in the 2007/08 season was in the region of £236,000. Of course, even though we are dealing with ‘past losses’ here, there can be no certainty that this is what would have happened. Ordinarily, some thought must be given to applying a discount for ‘contingencies’ ie the possibility that this would not in fact have happened. Swift J applied no discount to the first three years post accident because in her opinion, not only is this what would have happened, but even if say, he had become injured in those 3 years, he would still have been paid as he would have been under contract. She did, however, apply a 5% discount to the final two years to take account of the possibility that something may have intervened to curtail his ability to play football.

Post-trial (future) Losses

Swift J had accepted Howard Wilkinson’s evidence that the “worst case” scenario was that Collett would have spent his entire playing career at Championship level.  She also accepted his evidence relating to Collett’s chances of spending some of playing career in the Premier League at 60%. This evidence was accepted at face value. It therefore became necessary to calculate what a player in the Championship and at Premier League level would earn during their playing careers. These earnings were derived by reference to the independent surveys, what Collett’s contemporaries were now earning and the evidence provided on this issue by Stein.

The Independent surveys evidence showed that basic wages for Premier League players in the 2002 season was £675,000 per annum and at Championship level £196,000. Between 2000 and 2005 Premier League wages rose by 65% and in the Championship by 53%. In addition to basic wages, players could earn bonuses of between 60% and 100% of basic wages less agents’ fees of 4% (it may be of passing interest to compare this figure with the agent fee charged in Jack reported elsewhere on this blog where the agent charged 10%). The Deloitte reports covered the seasons up until 2006/07 and showed Premier League wages increasing by 13% that season and Championship wages by 14%. They predicted annual increases of 18-22% in the Premier League during the 2007/08 season and also showed that the top Championship league sides paid significantly higher wages than lower clubs. This was also consistent with Stein’s evidence. The significance of the dates, of course, is that the trial took place in the summer of 2008; and it will be noted that the evidence was incomplete.

Swift J’s approach was to take the average Championship wage for the 2006/07 season, add 14% inflation for the 2006/07 season (as per the Deliotte report) and then add 15% for the 2007/08 season and a further 15% for the 2008/09 season. These figures were then also ‘uplifted’ by 25% to reflect the fact that the evidence suggested that Collett would play for the yo-yo clubs who paid more. On this basis, she arrived at a figure of £368,809 as representing the basic annual wage of a top level Championship player at the beginning of the 2008/09 season. Note here, of course, that there is no further inflationary increase added for any future losses despite the fact that the annual figure will probably increase. She cross-referred this figure to what David Jones was earning at Derby and felt it matched closely enough. Finally, on top of this, she added 60% to reflect bonuses thus arriving at a figure of £590,000 odd gross or £354,000 net of tax and national insurance. Finally she deducted the 4% agents’ fees to arrive at a net figure of about £339,000. This represented the multiplicand (the annual loss).

Next she had to decide over what period this loss would be suffered. Based on the evidence, she was of the view that Collett would have played professional football until the age of 35. At the date of trial he was 23, approaching 24 – thus an 11 year period of loss. Tort law never permits a ‘full loss’ claim based on the actual years and habitually uses actuarial evidence derived from the Ogden Tables to reach the multiplier. According to those tables, the appropriate multiplier here would be 9.63. So multiplying the multiplicand (£339,000) by the multiplier (9.63) she arrived at a future loss of £3,261,055. This figure only represented future losses in the Championship. She therefore had to consider what a Premier League player would earn. Using a similar approach she arrived at a multiplicand of just over £1 million. The difference between the two multiplicands was about £728,000. But she still had to decide over what period he might have played in the Premier League and she held that he would have spent about a third of his playing career in that League. She did not explain where she got that figure of a third from.  The multiplier for one third of his remaining 11 or so years is 3.21 which meant £728,000 x 3.21 x 60% leading to an additional loss of earnings of about £1.4 million.

The combined loss was therefore about £4.7 million for future loss of earnings. At this point, Swift J should have applied a discount but she deducted his prospective earnings as a journalist over the same period first (the Claimant did not dispute this point). That figure was £128,000 odd (over 11 years!). She then applied a discount of 15% to reflect the risk that the career path would not have taken the course she had assumed. This resulted in a figure of about £3.9 million.

The Grounds of Appeal

1.    The judge should have applied a greater than 15% discount (‘the Discount’)
2.    The multiplicand adopted in relation to average ‘Championship earnings’ was too high (‘Average Championship earnings’).
3.    The 25% uplift on ‘Championship earnings’ was too high (‘the Uplift’).

The Discount

A defendant cannot simply disagree with a judge’s assessment without explaining why it is ‘wrong’. In this case, Smith LJ had been the judge who gave permission to appeal in the first place, and she candidly admitted that it was the discount of 15%, which seemed to her at first blush to be too low, that had persuaded her to give permission to appeal in the first place.

The Defendants raised two arguments. First, they submitted that the discount should have been much higher because, they argued, the judge had treated Collett’s chances of playing at Championship level as a ‘virtual certainty’.  She should, they argued, have taken into account the fact that he might not have played at Championship level at all whereas her assessment of the discount only took into account the fact that his career might have come to an early end (by reason of injury or some other contingency). This was particularly so given that Collett’s star witness (Sir Alex) had agreed that it was impossible to predict the career course of a professional footballer.

Smith LJ accepted the Respondent’s submission countering this to the effect that the evidence was “all one way” and that the judge had accepted Wilkinson’s evidence that the “worst case scenario” was that Collett would have spent his entire career in the Championship. So even though this was a ‘lost chance’ claim, the judge had correctly concluded that there was no ‘real risk’ that Collett would not play at Championship level. The only uncertainty was ‘how much further he would have gone’. In other words, the evidence was so strong in support of the contention that Collett would have played his entire career at Championship level that it would not justify taking into account the contingency that he might have played at a lower level.

The second argument directed at the discount of 15% was that even if the setting of the discount was a “matter of judgement” (in other words, very difficult to appeal), its setting at 15% was simply “manifestly wrong” (for reasons not explicitly set out in the judgment). Again Smith LJ accepted the Respondent’s submission here. Collett argued that he might in fact have done much better than spend his entire career at Championship level. If, as the judge found, he had a 60% chance of playing a third of his career in the Premier League, then he had a 20% chance of playing his whole career in the Premier League, and because earnings were significantly higher in the Premier League, a 1% chance of playing in the Premier League equated to a 4% chance of not playing in that league. Looked at from this light, the 15% discount was not manifestly wrong as submitted by the Appellants.

Average Championship earnings

The next line of attack related to the multiplicand adopted by Swift J. There were two submissions although the first was dropped. The first was that the judge was wrong to apply a 15% inflationary uplift to earnings for the 2008/09 season because that would be to apply an inflationary uplift to a future loss (as noted above, the multiplicand has to be set by reference to the date of the trial). However, once it was appreciated that players earnings start on 1st July, and that the last day of this trial was the 4th July, that submission was dropped. Yet, the Appellants also contended that there was in fact no evidence available relating to the 2008/09 season and therefore the judge was wrong to apply a 15% uplift in any event. The only evidence available was from the Deloitte report which predicted an inflationary increase of between 18 and 22% for the Premier League that season. Smith LJ gave this submission short shrift: she said that the Respondent’s expert. Stein, had given evidence that the gap between the bottom of the Premier League and the top of the Championship in terms of earnings was narrowing and as expert evidence, the judge was entitled to accept it. In other words, the 15% inflationary increase was not unreasonably out of line with the 18-22% increase predicted for the Premier League.

The Uplift

Finally, the Appellants argued that Swift J had been wrong to uplift Collett’s claim by 25% to reflect the fact that he would have been playing for a top tier Championship side. Smith LJ noted that at trial, Collett had in fact been arguing for a 33% uplift because the independent evidence showed that the top six Championship clubs in fact paid their players 50% more (in terms of the whole wage costs of the clubs). Again, the Appellants’ submission was given short shrift as Smith LJ held that although the evidence was far from perfect in this regard, Swift had cross-referred her calculation by reference to David Jones’ earnings at Derby which showed that her approach was not out of line with what a top Championship player might earn.

The Appellants therefore lost on all three grounds and it turned out to be an expensive day out in the Court of Appeal given the additional costs (a couple of QCs, their juniors and two respected firms of solicitors costs to pay for). What the case demonstrates, of course, is that it can be very difficult to predict what will happen in the lottery of assessment of damages. The word lottery is used here not so much because of the huge sums of money involved. Rather it refers to the fact that so much of the assessment exercise is a “matter of judgement”. There is no book or rule that says the discount should have been 15% in this case; nothing to really guide a judge when assessing the chances of certain eventualities coming to pass and so forth. Yes, the judge had benefit of Howard Wilkinson’s evidence that Collett stood a 60% chance of playing in the Premier League, but that too was a “matter of judgement” which may or may not have been accepted at trial. The finding that Collett would have spent a third of his playing career in the Premier League is equally arbitrary. And, of course, there was nothing particularly scientific about the assessment of the 25% uplift on average Championship wages beyond a cross-reference to David Jones, probably the least well-known of Collett’s contemporaries. Following Wolves promotion to the Premier League and given Ebanks-Blake’s accolade as top scorer last season (and the fact that David Jones is also now at Wolves), and Burnely’s promotion to the Premier League courtesy in part to Chris Eagles, the fact that Sunderland (Kieran Richardson is still there) and Hull (McShane is there) appear to have escaped their nomenclatures as ‘yo-yo’ teams – at least for now – one can but speculate whether those players will be rewarded significantly as a result; and one may further speculate whether had the trial taken a year longer than it did (5 years is quite long enough), Collett’s claim would have been even more valuable. One will never know whether Collett would in fact have ‘made it’, but one thing is for sure, his damages do not reflect an assumption that he would. Not by a long way.


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