Regulation A12(3) of the Police Pensions Regulations 1987 SI 1987/257 required an assessment of how earning capacity had been affected, not of how it was likely to be affected. In assessing the degree of loss of earning capacity it was necessary to discount the effect of any non-qualifying injury and any other cause, but the question of apportionment should not be answered by trying to attribute a share of the loss of earning capacity to any underlying condition that on its own had not, or did not, cause a loss of earning capacity.The claimant (the police authority) applied to quash a decision of the defendant medical referee (D) that a police officer (C) had lost all earning capacity as a result of an injury received in the execution of his duty. C had a chemical imbalance in the brain, which might or might not have been work-related. That condition combined with stress at work led to him suffering from schizoaffective psychosis. It was agreed that the stress at work caused or substantially contributed to C's permanent disablement. The selected medical practitioner who assessed C for the purposes of the Police Pensions Regulations 1987 SI 1987/257 said that C's psychotic illness was the result of an injury received in the execution of duty. He found that, as at the time of his assessment, 40 per cent of C's earning capacity had been lost. On C's appeal, the police authority asked D to consider the question of apportionment. D did not do so because he had been advised by the Home Office that it was not part of his remit. He subsequently certified that C's loss of earning capacity, as a result of the injury received in the execution of his duty, was 100 per cent. The police authority submitted that (1) on the evidence accepted by D, the loss of capacity could not have been 100 per cent; (2) D had to take future possibilities into account as part of his assessment of the degree of disablement; (3) D had wrongly taken into account the attitude of employers or of the labour market towards those suffering from the type of mental illness suffered by C; (4) D should have at least considered whether or not there were two injuries.HELD: (1) D was entitled to conclude that the loss of earning capacity was 100 per cent, regardless of the extent to which the loss was caused, or contributed to, by a non-duty injury. (2) Regulation A12(3) of the Regulations required an assessment of how earning capacity had been affected, not of how it was likely to be affected. That interpretation made sense in the context of legislation that provided for reviews of both the degree of disablement and the effect of that disablement on earning capacity. (3) The task of assessing earning capacity was to assess what C was capable of doing and, thus, earning. It was not a labour market assessment or an assessment of whether somebody would actually pay him to do what he was capable of doing, whether or not in competition with other workers. D adopted the wrong approach in part, as evidenced by his conclusion that C had no prospect of job offers in the immediate future. However, D also concluded that C had no prospect of recovering fitness anyway and on that ground had no current earning capacity. As that latter conclusion was legally relevant and soundly based, D's partly erroneous approach did not lead to the quashing of the decision. (4) In assessing the degree of loss of earning capacity, it was necessary to discount the effect of any non-qualifying injury and any other cause, whether classified as an injury or not. A separate issue of causation arose at the apportionment stage because the entitlement stage could be passed on the basis of an injury that substantially contributed to, but was not the whole cause of, disablement. The question of apportionment should not be answered by trying to attribute a share of the loss of earning capacity to any underlying condition that on its own had not, or did not, cause a loss of earning capacity. The loss should be attributed wholly to the duty injury that, albeit because of the underlying condition, had directly caused the loss of earning capacity. The issue of apportionment not having been considered, D's decision had to be quashed.Application granted.

[2003] EWHC 3115 (Admin)