Case study: Payment of damages for a possibility of future economic loss

As part of a personal injury claim, it is possible to seek compensation for past loss of income and future loss of earning capacity.

Although able return to their pre-injury working hours, often people who have suffered injuries as a result of a negligent act are concerned about their ability to stay in the workforce, apply for a promotion or even find a new job if their current employment ceases.

But how is this “possibility” compensated when it has not yet occurred?

In 1963, the Supreme Court of Victoria considered this question in the case of Victorian Stevedoring v Farlow and awarded Mr Farlow compensation for the possibility that he would face unemployment or lost wages as a result of his injuries.

Making a Farlow claim

Mr Farlow was involved in an industrial accident that resulted in him suffering injuries to his hands. Following the accident, Mr Farlow was able to return to work in a different capacity which resulted in no actual loss of earnings. However, Mr Farlow was worried that if his employment duties included manual labor tasks in the future, his may not be able to continue working.

Despite not being able to show a current, identifiable loss of future earning capacity, Mr Farlow was compensated for the possibility of future loss of earnings.

This decision has meant that Plaintiffs who have been able to return to their pre-injury income can claim damages for the possibility of being unable to obtain a promotion, the need to move jobs or for the risk of a period of economic loss. So how do you quantify a loss that has not yet arisen? The Supreme Court recently applied Farlow principles in the decision of Vlaming v von Marburg.

Vlaming v von Marburg [2020] VSC 340

In Vlaming v von Marburg, the Supreme Court of Victoria awarded Mr Vlaming an amount of damages (called a Farlow sum) following his successful medical negligence claim against Mr von Marburg (the Defendant), an ear, nose and throat specialist.

In 2005, the Plaintiff was diagnosed with a right ear cholesteatoma which is a benign tumor that required surgical excision. On 22 July 2005, the Plaintiff underwent surgery performed by the Defendant, to remove the cholesteatoma. Following the surgery, the cholesteatoma reoccurred, and the Plaintiff required two further surgeries that were performed by the Defendant. As a result of the final surgery, the Plaintiff suffered permanent injuries including right sided facial palsy and hearing loss.

Despite his injuries, the Plaintiff was able to return and continue to work in his full-time role in the construction industry. Although he returned to his pre-injury job and income, the Plaintiff submitted that it was likely he will lose income in the future and not be able to work past the age of 67 due to his injuries. The Plaintiff made a claim based on the principles of Farlow for the economic loss that he would suffer if this possibility eventuated.

It is important to note that the Plaintiff did not present any evidence to the Court as to the likelihood that he would encounter probable unemployment in the future.

In her decision, Judicial Registrar Clayton considered that if the Plaintiff’s employment was terminated for any reason, he would face additional hurdles in gaining further employment as a result of his injuries. As such, Judicial Registrar Clayton considered the Farlow claim and awarded $100,000.00.

Key considerations

When bringing an action for a client that has returned to work, Plaintiff lawyers should:

• consider making a Farlow claim where a risk of a reduced earning capacity can be identified – even if it is only a possibility; and
• have a good working knowledge of the quantum of Farlow awards made by the courts.

Plaintiffs who are working but concerned about future work prospects after a significant, permanent injury should seek legal advice to ascertain whether they are entitled to damages for a possible future economic loss.