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Case No: CCRTF 99/0477/2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SWANSEA COUNTY COURT
(HH Judge Diehl QC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 29th March 2000
B e f o r e :
LORD JUSTICE THORPE
and
LORD JUSTICE BROOKE
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ROYSTON
FREDERICK WILLIAMS
|
Claimant/
Respondent
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|
-
and -
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|
BOC
GASES Ltd
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Defendants/
Appellants
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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
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Barry P Cotter (instructed by Palser Grossman Swansea for the
Appellants)
David Harris (instructed by Leo Abse & Cohen Cardiff for the
Respondent)
Ms R Tuck (instructed by both parties) attended to revise th judgment
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Judgment
As Approved by the Court
Crown Copyright ©
LORD JUSTICE BROOKE:
1. This is an appeal by the defendants BOC Gases Ltd against a judgment of
Judge Diehl QC at Swansea County Court on 19th April 1999 at the trial of a
personal injuries action when he held that a sum of £11,889.10, which was
paid by the defendants to the claimant Royston Frederick Williams on the
termination of his employment, should not be set off so as to extinguish any
liability on their part to compensate him for his personal injuries. Liability
had been conceded and the damages had been agreed at £3,000, inclusive of
interest, subject to the resolution of the issue relating to the set off.
Judgment was therefore entered for the claimant for £3,000.
2. The claimant was employed by the defendants between about 1988 and 30th
April 1996 as a goods vehicle driver. On 25th March 1996 they wrote to him in
these terms:
"Further to recent discussions we now write to confirm that the group medical
adviser has informed us that you are unfit to carry out your duties of LGV
driver, and as there is no suitable alternative work available your employment
will be terminated on 30th April 1996 on medical grounds.
We are intending to make you a payment of £15,132.25, which under
existing legislation may be paid tax-free. Included in this figure is an
amount of £3,243.15, which represents nine weeks pay in lieu of notice.
The balance of £11,889.10 is an amount to which there is no contractual
entitlement and as such is to be treated as an advance against damages that may
be awarded to you in respect of any claim you may have against the company."
3. The judge was told that this payment of £11,889.10 came from the
defendant's own fund, and not from any third party or from any insurance
scheme. It was a matter for the employers' discretion whether such a payment
was made to an employee leaving their employment. There was no contractual
obligation to pay. The sum was calculated in some way by reference to the
length of his employment and no doubt also by reference to his level of
earnings.
4. The claimant's unfitness for his duties had been determined on the basis of
a range of symptoms from which he was then suffering. These included a bad
back and a congenital condition of his hip, which he regarded as the most
serious of his complaints. At the time the letter of 25th March 1996 was
written he had not made, or indeed intimated that he would be making, the claim
against the defendants which he made in these proceedings.
5. The summons in this action was issued on 12th June 1997. The claimant
claimed damages, limited to £5,000, on the grounds that the working
practices of which he made complaint significantly aggravated his pre-existing
back condition. He had to manhandle heavy cylinders onto pallets and also to
manoeuvre them manually when delivering them to customers from his lorry, and
he relied on a number of allegations of negligence and breach of statutory duty
in support of his claim.
6. Before I set out the judge's reasons for his ruling in favour of the
claimant, I will say something about the background principles of law against
which this case fell to be decided.
7. In Parry v Cleaver [1970] AC 1 Lord Reid identified at p 13 the two
classes of cases in which the law disregards sums which a plaintiff has
received as a result of an accident but which he would not have received if
there had been no accident. He referred to the proceeds of insurance and to
sums coming to the plaintiff by reason of benevolence. He said that the common
law had treated the matter as one depending on justice, reasonableness and
public policy.
8. Of the first of these two exceptions, Lord Reid said at p 14A-D that he knew
of no better statement of the reason why benevolent payments should not be
taken into account than that of Andrews CJ who said in Redpath v Belfast and
County Down Railway [1947] NI 167, 170, that it would be startling to the
subscribers to a distress fund if they were to be told that their contributions
were really made for the benefit of the negligent railway company. Andrews CJ
added a comment to the effect that if this was the law, the inevitable
consequence in the case of future disasters of a similar character would be
that the springs of private charity would be found to be largely, if not
entirely, dried up. Lord Reid commented:
"It would be revolting to the ordinary man's sense of justice, and therefore
contrary to public policy, that the sufferer should have his damages reduced so
that he would gain nothing from the benevolence of his friends or relations or
the public at large, and that the only gainer would be the wrongdoer. We do
not have to decide in this case whether these considerations also apply to
public benevolence in the shape of various uncovenanted benefits from the
welfare state, but it may be thought that Parliament did not intend them to be
for the benefit of the wrongdoer."
9. There appear to be two principles underlying Lord Reid's approach:
(1) That it is just, reasonable and in accordance with public policy to ignore
gifts to the insured plaintiff resulting from the benevolence of others because
it is wrong that the wrongdoer should be the beneficiary of such benevolence
and because the deduction of such gifts from plaintiff's compensation from the
wrongdoer would discourage benevolent donors in future;
(2) That the intention of the donors in making their gifts was to benefit the
injured plaintiff and not to relieve the wrongdoer.
10. What Lord Reid said in Parry v Cleaver echoed the approach of
Windeyer J in the High Court of Australia in National Insurance Co of New
Zealand Ltd v Espagne CLR 569 at pp 599-600:
"In assessing damages for personal injuries, benefits that a plaintiff has
received or is to receive from any source other than the defendant are not to
be regarded as mitigating his loss if ...(b) they were given or promised to him
by way of bounty, to the intent that he should enjoy them in addition to and
not in diminution of any claim for damages ... The second description covers a
variety of public charitable aid and some forms of relief given by the state as
well as the produce of private benevolence. In both cases the decisive
question is, not whether the benefit was received in consequence of, or as a
result of the injury, but what was its character; and that is determined in the
one case by what under his contract the plaintiff had paid for, and in the
other by the intent of the person conferring the benefit. The test is by
purpose rather than by cause."
11. In Hussain v New Taplow Paper Mills Ltd [1987] 1 WLR 336, CA, a case
which reached the House of Lords in relation to the deductibility of payments
made by employers to an injured workman which the employers were able to
recover from insurers, the Court of Appeal was also invited by the defendants
to consider an alternative ground for deductibility which was based on public
policy grounds. Lloyd LJ, with whom Ralph Gibson LJ agreed, said of this
alternative argument at p 350B-G:
"Arguments based on public policy tend to be somewhat imprecise, even, at
time, emotive. The present case was no exception. Why, said [counsel for the
plaintiff[, should third party tortfeasors reap the benefit of a scheme which
was intended, not for their benefit, but for the benefit of the employee? Why
should a wrongdoer pay less than he would otherwise pay, or even nothing at
all, when it is his victim who has earned the benefit by his labour? I do not
find such arguments on either side of much assistance. But there is one
consideration of public policy which is worth mentioning, If an employee is
injured in the course of his employment, and his employers make him an
immediate ex gratia payment, as any good employer might, I see no reason why
such a payment should not be take into account in reduction of any damages for
which the employer may ultimately be held liable. Employers should be
encouraged to make ex gratia payments in such circumstances. If so, then
public policy would seem to require that such payments be brought into
account.
It could, of course, be said that an ex gratia payment is like a sum coming to
the plaintiff by way of benevolence, and should therefore be disregarded. This
is so, where it is a third party who is ultimately held liable: see
Cunningham v Harrison [1973] QB 942. But there must surely be an exception
to that general rule where the ex gratia payment comes from the tortfeasor
himself. So, if it is right that an ex gratia payment by the employer should
be brought into account where the employer is the tortfeasor, why should it
make any difference that the payment is one which he has contracted to make in
advance? So if [counsel for the defendants] is wrong in his main argument,
that payments under the scheme are in the nature of wages, and should be
brought into account on that score, there would be much to be said for his
alternative argument that such payments should in any event be brought into
account on the grounds of `justice, reasonableness and public policy'. But it
is unnecessary to decide the case on that ground, since, on the facts of the
present case, [counsel] is entitled to succeed on his first ground."
12. When the plaintiff appealed to the House of Lords [1988] 1 AC 514, it is
clear from a passage at the end of Lord Bridge's speech (with which the other
four members of the House agreed) that he shared Lloyd LJ's approach, even if
he did not expressly refer to it in his judgment.
13. In the main body of his speech Lord Bridge, making a shift of emphasis from
the approach adopted by Lord Reid in Parry v Cleaver (1970) AC 1, 13,
said at p 527E that prima facie plaintiffs were only entitled to recover their
net loss. Financial gains accruing to them which they would not have received
but for the event which constituted their cause of action were prima facie to
be taken into account in mitigation of the losses which that event caused to
them.
14. When Lord Bridge came to consider the "two well-established exceptions", he
described the second exception at p 527G as arising "when the plaintiff
receives money from the benevolence of third parties prompted by sympathy for
his misfortune". He said that in both cases the common sense of the exceptions
stared one in the face:
"It may be summed up by the rhetorical question: `Why should the tortfeasor
derive any benefit, in the one case, from the premiums which the plaintiff has
paid to insure himself against some contingency, however caused, in the other
case, from the money provided by the third party with the sole intention of
benefiting the injured plaintiff?'"
15. Lord Bridge went on to acknowledge the existence of a variety of borderline
situations where there might be no obvious answer to the question whether the
rule against double recovery or some principle derived by analogy from one of
the two classic exceptions to that rule should prevail. For the resolution of
these cases he reiterated what Lord Reid said in Parry v Cleaver about
the common law treating the matter as one depending on justice, reasonableness
and public policy.
16. At the end of his judgment Lord Bridge made it clear at p 531G - 532D that
he did not agree with a decision of the British Columbia Court of Appeal in
Chan v Butcher [1984] 4 WWR 363 which had ruled that a plaintiff was not
liable to give credit for payments by way of her full salary in accordance with
the terms of her contract of employment in pursuance of a "short term
disability program" established and funded by her employer. The Canadian Court
had been influenced by the consideration that the benefits were intended to
insure the employee against the risk of unemployment caused by illness or
accident, and not for the advantage of the wrongdoer who caused the employee to
become unemployable. From the point of view of justice, reasonableness and
public policy, Lord Bridge said at p 532C-D:
"It positively offends my sense of justice that a plaintiff, who has certainly
paid no insurance premiums as such, should receive full wages during a period
of incapacity from two different sources, his employer and the tortfeasor. It
would seem to me still more unjust and anomalous where, as here, the employer
and the tortfeasor are one and the same."
17. It appears to me that the effect of the decision in Hussain, both in
the Court of Appeal and in the House of Lords, is to endorse the two principles
identified by Lord Reid in Parry v Cleaver, and to add the following
glosses:
(1) The starting point is the plaintiff's net loss;
(2) Gifts accruing from the benevolence of people other than the tortfeasor
are then to be credited to the plaintiff when calculating the amount of
compensation payable by the tortfeasor: payments accruing from the benevolence
of the tortfeasor himself do not fall within this exception.
18. Lord Bridge repeated the first of these glosses in even more emphatic terms
in Hodgson v Trapp [1989] 1 AC 807, 819E-H. He restated the basic rule
that it was the net consequential loss and expense which the court must
measure, while accepting that there were "certain well-established, though not
always precisely defined and delineated, exceptions". He added at p 819G:
"But the courts are, I think, sometimes in danger, in seeking to explore the
rationale of the exceptions, of forgetting that they are exceptions. It is the
rule which is fundamental and axiomatic and the exceptions to it which are only
to be admitted on ground which clearly justify their treatment as such."
19. In Hodgson v Trapp the House of Lords broke away from the idea,
suggested by Lord Reid in Parry v Cleaver, that it was useful, when
considering issues relating to the deductibility of statutory benefits, to
inquire into Parliament's intentions when making them available at the
taxpayers' expense. Instead, they held on grounds of public policy that
attendance and mobility allowances should be regarded as being available to
meet the cost of the plaintiff's care following her injury so as to preclude
the possibility of double recovery (see Lord Bridge at p 823A-F).
20. I turn, finally, to what commentators have called "the difficult case" of
McCamley v Cammell Laird Shipbuilders Ltd [1990] 1 WLR 963: for this
description, see McGregor on Damages (16 Edition 1997) at para 1626
and the Law Commission, Damages for Personal Injury: Medical, Nursing and
Other Expenses; Collateral Benefits (1999) Law Com No 262, pp 106-7.
21. Mr McCamley suffered serious personal injuries during the course of his
employment. He received £46,630 under an insurance policy taken out on
behalf of the defendant employers by their parent company for the benefit of
employees who were injured at work. Giving the judgment of this court
(prepared jointly by Croom-Johnson LJ and himself) O'Connor LJ described the
details of the scheme at pp 968A - 969A. Money was payable under the policy if
a person insured under the scheme suffered accidental bodily injury which
independently of any other cause resulted within 24 months in death,
disablement, or the incurring of medical expenses. O'Connor LJ commented that
the compensation payable under the policy, whose existence was unknown to both
the plaintiff and is trade union, followed the ordinary pattern of an
accidental injury insurance policy. When the plaintiff's accident occurred,
the insurers paid the sum of £46,630 to the defendants, who paid it to the
plaintiff's solicitors, indicating that it ought to be credited to the eventual
award of damages. The plaintiff's solicitors accepted it not on those terms,
but on the understanding that the judge would have to decide the point.
22. At p 969B-D O'Connor LJ identified four features of the policy. First,
that it was an ordinary personal accident policy whereby payment of the sums
insured was independent of any fault by anybody. Secondly, although the
different sections of the policy differentiated between what the various
employees were earning, an employee got the benefit of the policy even though
he had only been in the relevant employment for a short while. Thirdly, the
benefit under the policy was always paid as a lump sum: it was not paid in
substitution for loss of wages resulting from the accident, and fourthly, the
plaintiff made no contribution of any kind to the policy or its premiums.
23. In upholding the judge's description that the policy payment should not be
deducted because it was received from an act of benevolence, O'Connor LJ said
at p 971D-H:
"The reason why the judge came to the correct decision on this matter is that
the payment to the plaintiff was a payment by way of benevolence, even though
the mechanics required the use of an insurance policy. The payment was not an
ex gratia act where the accident had already happened, but the whole idea of
the policy, covering all the many employees of British Shipbuilders and its
subsidiary companies, was clearly to make the benefit payable as an act of
benevolence whenever a qualifying injury took place. It was a lump sum payable
regardless of fault or whether the employers or anyone else were liable, and it
was not a method of advancing sick pay covered by a contractual scheme such as
existed in Hussain's case [1988] AC 514. It was paid in circumstances
quite different from those covered by Lloyd LJ's comment on public policy:
[1987] 1 WLR 336, 350. That the arrangement was made before the accident is
immaterial. The act of benevolence was to happen contingently on an event and
was prepared for in advance. To refer to Lord Bridge's speech in
Hussain's case [1988] AC 514, 528, this payment was one analogous to "one
of the two classic exceptions" to the rule that there should be no double
recovery. The point was well made on behalf of the plaintiff that this sum was
not to be payable in respect of any particular head of damage suffered by him
and was not an advance in respect of anything at all. To say that does not
mean that in an appropriate case there may not be a general payment or an
advance to cover a number of different heads of damage. The importance in the
present case is that the sum was quantified before there had been an accident
at all and when it could not have been foreseen what damages might be sustained
when one did take place."
24. In the judgment under appeal Judge Diehl QC said that he found this passage
to be helpful. He bore in mind, however, that this case was not on all fours
with McCamley's case in the sense that Mr Williams had sustained the
relevant injury over a period of time, and certainly before the letter of 25th
March 1996 was written.
25. The judge directed himself, correctly, that it was for the claimant to
establish an exception to the general rule of deduction. He went on to find
that he was satisfied on the balance of probabilities that the payment did not
fall within the general rule. He gave his reasons in these terms:
"It was not a payment made referable to an anticipated or intimated claim, and
was an ex gratia payment made on termination of the plaintiff's employment on
medical grounds, and I quote those words "medical grounds" from the letter
itself. It does not come within the principles stated, in my judgment, by the
Court of Appeal in Hussain as an ex gratia payment referable to an
injury at work for which the plaintiff might make a claim.
With regard to McCamley, by a parity of reasoning here there appears to
have been a policy to make a discretionary payment to an employee whose
employment terminated on medical grounds, regardless of what that ground was or
the cause, or claimed cause, of it. There is, in my judgment, force in the
submission that this payment was clearly not conditional upon a claim being
made against the company. The last sentence of that second paragraph of the
letter does not restrict the basis upon which the payment is made. If it did,
then there would be substance in the defendant's argument, but it plainly does
not. By way of simple example (others were mentioned in argument), the sum was
not repayable if in the event, whether within the stated period or whatever
time the defendant considered appropriate, no claim against the employer later
materialised.
Whether that sentence was deliberately inserted or not it can be said, with
some force in my view, that it had the effect of an attempt or device to give
comfort to the defendants in the event of a later claim, and/or to discourage
any such claim, but was not so restricted, and in those circumstances in my
judgment there should be no deduction."
26. In my judgment, the judge was over-influenced by the decision of this court
in McCamley which should be treated, until it receives the consideration
of the House of Lords, as a case turning on its own particular facts: in other
words, for what the members of that court, deciding the issue as a jury
question, thought was just, reasonable and in accordance with public policy on
the facts of that case.
27. Since the decision in McCamley, Lord Bridge has restated the
principles which militate against double recovery from a tortfeasor in Hunt
v Severs [1994] 2 AC 350 at p 357H, a decision to which the judge was not
referred:
"The starting point for any inquiry into the measure of damages which an
injured plaintiff is entitled to recover is the recognition that damages in the
tort of negligence are purely compensatory. He should recover from the
tortfeasor no more and no less than he has lost. Difficult questions may arise
when the plaintiff's injuries attract benefits from third parties."
28. Lord Bridge then referred again to the two well-established categories of
receipt which are to be ignored in assessing damages, and again identified the
second as "the fruits of benevolence of third parties motivated by sympathy for
the plaintiff's misfortune". After referring to the policy considerations
which underlay these two apparent exceptions to the rule against double
recovery, Lord Bridge said:
"But I find it difficult to see what considerations of public policy can
justify a requirement that the tortfeasor himself should compensate the
plaintiff twice over for the self-same loss."
29. Mr Harris argued that we ought not to interpret the payment made by the
employers in this case as referable to compensation (however calculated) for
personal injuries. He said that when they wrote that the balance of
£11,889.10 was to be treated as an advance against any damages that might
be awarded to Mr Williams in respect of any claim he might have against them,
the employers might just as easily have been referring to claims he might have
under employment legislation.
30. He was unable, however, to identify what claims under employment law might
be available to someone whose services were terminated when he was no longer
able to work on medical grounds, and in any event the use of the word "damages"
refers much more naturally to an award of common law damages for personal
injuries (for negligence or breach of statutory duty) than to an award of
statutory compensation under employment law.
31. Mr Harris then argued that this sum was paid to his client whether or not
he had a good claim for damages against his employers and that its amount was
calculated in accordance with a formula which bore no relation to any formula
appropriate for compensating him for loss arising from injuries caused by
actionable negligence.
32. In my judgment, these arguments are not strong enough to resist the force
of the principles reiterated by Lord Bridge in his three speeches in the House
of Lords to which I have referred. The "benevolence" exception is limited in
terms to gifts arising from the benevolence of third parties, and does not
cover benevolent gifts made by the wrongdoer himself, for which allowance ought
prima facie to be made against any compensation he might have to pay. Neither
of the justifications for the benevolence exception apply to the tortfeasor.
Deductibility will encourage him to make benevolent payments in future to
injured employees, rather than the reverse. And it certainly cannot be said
that in making the gift, his intention was to benefit the plaintiff rather than
to relieve himself of liability pro tanto: he would have been happy to
achieve both purposes at once. A fortiori in a case in which he
said in terms, at the time he made the gift, that it was to be treated as an
advance against any damages he might have to pay.
33. I can see nothing unjust in the fact that on this approach Mr Williams will
not be able to recover more money from his employers because he can prove that
some of the ailments from which he was suffering when he retired on medical
grounds were caused by his employers' negligence. As a matter of public policy
employers ought to be encouraged to make payments of this kind to their
employees who retire on medical grounds, and there is no principle of public
policy known to me which should tend to encourage employees to sue their
employers if they have already received sums attributable to their injuries
which exceed what their employers might otherwise be liable to pay.
34. The editor of J Fleming, The Law of Torts (8th Edition) said at p
249:
"The case for crediting the tortfeasor for benefits with which he has himself
furnished the plaintiff is perhaps strongest: here there is no room for the
argument that it would subsidise the tortfeasor at someone else's expense;
moreover, it encourages voluntary aid by those who are often in the best
position to offer it to their victims when it is most needed."
35. I agree.
36. For these reasons I would allow this appeal, set aside the judge's order
and direct that judgment be entered for the defendants.
LORD JUSTICE THORPE: I agree.
Order: Order by consent:-
1. The Defendants appeal to be allowed and the judge's order of 19 April
1999 to be set aside and judgment be entered for the defendants.
2. The Defendants to pay the Claimant's costs on Scale 1 to 14 April
1999.
3. The Claimant to pay the Defendants costs, to include the costs of appeal,
from 15 April 1999, such costs to be subject to a detailed assessment in
default of the agreement.
(Order does not form part of the Approved Judgment)
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