Auty v National Coal Board
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER,LORD JUSTICE OLIVER,LORD JUSTICE PURCHAS |
| Judgment Date | 27 March 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J0327-1 |
| Docket Number | 84/0051 1977 M. No. 161 1977 R. No. 349 1977 P. No. 342 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 March 1984 |
[1984] EWCA Civ J0327-1
Lord Justice Waller
Lord Justice Oliver
Lord Justice Purchas
84/0051
1977 A. No. 57
1977 M. No. 161
1977 R. No. 349
1977 P. No. 342
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (MR JUSTICE TUDOR EVANS)
Royal Courts of Justice,
MR B. MORTIMER, Q.C., and MR S. GRENFELL (instructed by Messrs. Raley & Pratt, Solicitors, Barnsley) appeared on behalf of the Appellants.
MR T.R.A. MORISON, Q.C., and MR P. GOLDSMITH (instructed by C.T. Peach, Esq., Solicitor to the National Coal Board) appeared on behalf of the Respondents.
This appeal is concerned with the assessment of damages for the loss of pension rights by the appellants when injured or killed whilst working for the defendants. Liability and the assessment of general damages has already been determined in actions tried separately, but in these four cases the assessment relating to partial loss of pension rights was reserved so that the four cases could be dealt with as test cases concerning the method of determining the injury to the appellants' rights under the Mineworkers' Pension Scheme. The amounts at stake are not very great, and in each case form a very small proportion of the total damage. The appeals have been brought so that the parties may have guidance for future cases, the appellants seeking to show that the Judge's figures were too low, and the respondents, with the exception of one item, supporting the figures fixed by the Judge. Tudor Evans J. heard evidence and argument at the Crown Court at Sheffield, and gave judgment in London on 19th June, 1981.
The Scheme was originally formed in 1952 but was amended and converted into an earnings-related scheme in 1975. These four claims all arise after 1975. Membership of the Scheme is obligatory on mineworkers employed by the National Coal Board. Contributions are at the rate of 5 1/4 per cent. of the gross weekly taxable earnings, and the employers also contribute 5 1/4 per cent. The benefits are set out in the Judge's judgment as follows:
" Members' Benefits.
(i) Pensions and a lump sum are payable at the normal retirement age of 65;
(ii) It is open to a member to defer retirement for not more than five years. If he so elects, he ceases to pay contributions but the pension and lump sum are increased if he continues in the Scheme for at least one year after the age of 65. The pension and the lump sum become payable when the member eventually retires and not later than the age of 70. The relevance of this part of the Scheme in the present cases is whether the plaintiffs (Auty, Mills and Rogers) might remain at work until they are 70 and whether the deceased might have done so.
(iii) There is a provision for voluntary early retirement (to which I shall refer as VER). A member may elect to take VER at the age of 60 but not before. If he does, his benefits will not be payable until he reaches the age of 65. I shall consider the rules relating to the calculation of the benefit in cases of VER later. An issue of fact arises in the cases of Auty, Mills and Rogers, whether any of them is likely to elect to take VER and whether the deceased might have done so.
(iv) There are provisions for incapacity retirement provided that the member is medically certified as unfit for any work with the defendants. In that event he receives an immediate retirement pension as for normal age retirement and a lump sum. There is no claim for the potential loss of this benefit.
(v) Members who are made redundant are entitled to benefits. There are detailed provisions but it is not necessary to refer to them. Later I shall have to consider whether there is any possibility of Auty, Mills and Rogers being made redundant, or whether the deceased might have been. If so, it will act as a discount against proved losses. There is also no claim in any of the cases for the loss in the value of a pension payable on redundancy.
(vi) If a member's service is terminated (other than for incapacity, redundancy or for VER) the pension and lump sum are preserved to the age of 65. The amount depends on the age and length of Scheme service of the member.
(vii) If a member leaves the Scheme and takes other work, he may transfer his pension rights to his new employers if they have an approved pension scheme. Conversely, a man joining the Scheme is able to transfer to the Scheme an approved pension from his previous employment.
(viii) Finally, in order to show the comprehensive nature of the Scheme, I mention without stating any detail that benefits are payable on the death of a member to a woman who was living with him, or who had care of his children; they are also payable to adult dependants and to the children of a deceased member up to the age of 16.
Widow's Benefits.
(i) As I have already mentioned, if a member dies in service, from whatever cause, his widow receives two-thirds of the pension which would have been payable to the member if he had retired on grounds of incapacity at the date of his death. She also receives a lump sum, which is the highest of either one year's pensionable earnings or 156 times the weekly rate of what would have been the member's incapacity pension or £300.
(ii) When a member dies after normal age retirement or after VER or as a result of incapacity or following redundancy, his widow receives a pension equal to two-thirds of his pension. Should death occur within five years of age or incapacity retirement or VER (but not redundancy) the widow receives the balance of five years' pension in a lump sum".
I also take the calculation of benefits from the learned Judge's judgment as follows:
" The Calculation of Benefits.
(i) The weekly pension on retirement is calculated by taking 1/90th. of the weekly pensionable earnings and multiplying the sum by the number of years for which the member has contributed to the Scheme. The years are counted from 6 April 1975. The pensionable earnings are the average weekly earnings taken over the best three consecutive years of the last thirteen years of membership of the Scheme".
Each of these three years is however up-dated and increased by reference to the Cost of Living Index up to the last of the thirteen years.
"Thus, on retirement at 65, the thirteen-year period begins at the age of 52. If a member elects to take VER, the period for the calculation of benefit begins at 47 and the pension and lump sum is fixed at the age of 60 but will not be payable until 65. All pensions are subject to tax on a PAYE basis. The lump sum is tax-free.
(ii) If a member elects to take VER at 60, his years of pensionable service are reduced by five. Thus, if any of the plaintiffs Auty, Mills and Rogers are likely to take VER, their pension benefits will be reduced. The same consideration applies to the deceased.
(iii) The lump sum payable on retirement is 156 times the weekly rate of pension as I have already mentioned.
(iv) In the case of a deferred pension up to the maximum age of 70 the pension and lump sum is calculated as in (i) above, but for each additional year worked after 65 the pension is increased by a further 1/90th of pensionable earnings.
(v) All other members' pensions, whether for incapacity, redundancy or if payable in any other circumstances, are calculated in accordance with the method described in (i) above".
The claims of the three appellants other than the widow Mrs Popow were all based on similar considerations, and I will first consider the appellant Auty. His claim was for the loss of rights under the Scheme which he had suffered as a consequence of his accident. His injury prevented him from doing his job as a faceworker, and consequently he suffered a loss of £35.29 per week until he reached the age of 50. Thereafter he would suffer no less because he had intended to stop face work then in any event. This loss was agreed and the effect of it would be that the pension payable at age 65 would be £633 less than if he had not had the accident. The Judge's calculation of damage can conveniently be set out as follows:
| Net annual loss of pension after tax (633–30%).. | 443 |
| Plaintiff's expectation of life beyond 65……. | 6.8 |
| 2/3rds of plaintiff's wife's expectation beyond plaintiff's (5.58 years)……. | 3.72 |
| Total years of loss……. | 10.4 |
| Appropriate multiplier applied by Judge……. | 7 |
| Pension loss at age 65… | 3101 |
| Lump sum payment at 65… | 1899 |
| 5000 | |
| Discounted at 5% to give present day value of pension payable in 31 years' time…….. | 1100 |
| LESS: | |
| Further discount to cover contingencies…… | 300 |
| 800 | |
| ADD to this for loss of death in service benefit……… | 200 |
| TOTAL… | £1000 |
………
The appellants case was:
(1) That the Judge paid insufficient attention to the effects of inflation. In particular:
(a) although he rejected the actuarial evidence, there were some parts of it to which he should have paid attention.
(b) even adopting the conventional approach, the Judge's discount should have been 2 per cent. and not 5 per cent.
(c) even if inflation should not normally be taken into account, this case was one of those exceptional cases where it should be taken into account.
(d) since the Scheme was intended to pay attention to increases in the cost of living, the Judge should have given effect to this.
(2) That the Judge had taken 7 years' purchase when it should have been higher, and that the Judge had discounted twice for risk of death and had discounted too heavily for contingencies.
(3) That the award for loss of the right to a widow's pension from death in service was too...
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