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The Valuation of Future Income Losses

When the part-owner of a successful company claimed against the company as a result of contracting mesothelioma, an interesting problem arose. It was not to do with the liability of the company (that was not in dispute) but the value of the claim.

The man had for some years progressively involved his sons in the running of the company and it was expected to continue to thrive after his retirement. Concerned at the effect his shortened life expectancy would have on his future income, he claimed more than £4 million in respect of the expected future loss of salary and of dividend income, which had always formed a substantial portion of his income. The company argued that his shareholding could not be equated to earned income: it was a capital asset that would survive him and pass on to others after his death.

The court looked at the man's overall income. His salary would cease on death, but on the balance of probabilities, the dividend income would increase. The court had to judge whether or not there was an overall loss when the income that would survive him was compared with his income had his life expectancy not been cut short, taking account of living expenses. On that comparison, the net financial loss was determined to be zero.

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