Gaca v Pirelli General Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Dyson,Lord Justice Mummery,Lord Justice Brooke |
| Judgment Date | 26 March 2004 |
| Neutral Citation | [2004] EWCA Civ 373 |
| Docket Number | Case No: B3/2003/2004 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 March 2004 |
[2004] EWCA Civ 373
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SOUTHAMPTON COUNTY COURT
(Mr Recorder Gibbons QC)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Brooke
Lord Justice Mummery and
Lord Justice Dyson
Case No: B3/2003/2004
Mr R. Moxon Browne QC and Mr Barry Cotter (instructed by Messrs Capital Law) for the Appellant
Mr John Foy QC and Mr Nicolas Hillier (instructed by Messrs Lamport Bassitt) for the Respondent
The facts
On 7 August 1998, the claimant was seriously injured in an accident at work. The defendants were his employers. As a result of the accident, he was unable to return to work. His employment was eventually terminated on 19 March 2000 on the grounds of ill health. Whilst he was off work, but before his employment was terminated, he received sick pay from the defendants. He also received payments (total £34,167.18) pursuant to a Group Personal Accident insurance policy for "Temporary Total Disablement" from Europ Assistance for the period from the accident until the termination of his employment. Following the termination of his employment, he received (i) an ill health gratuity payment of £10,000 from the defendants themselves; and (ii) £88,620 from Europ Assistance under the terms of the insurance policy for "Permanent Total Disability".
The claimant issued proceedings in June 2001. The defendants admitted liability and judgment was entered in favour of the claimant with damages to be assessed. The defendants contended that the proceeds of the insurance (£122,787.18) should be deducted from the damages awarded to the claimant. The claimant contended that they should not be deducted. A preliminary issue was ordered to be tried. In a careful judgment given on 29 August 2003, Mr Recorder Gibbons QC held that the insurance payments were not deductible. The defendants appeal against that decision with the permission of Sedley LJ. An important issue that arises on this appeal is whether the decision of this court in McCamley v Cammell Laird Shipbuilders Limited [1990] 1 WLR 963 can be properly distinguished, or whether it should no longer be followed in the light of decisions of the House of Lords.
By the terms of the insurance policy, the defendants were "participating companies" and the claimant an "insured person". The "operative times of cover" in relation to the claimant was "whilst in pursuit of normal occupational duties on behalf of the Insured or whilst travelling directly between residence (normal or temporary) and place of work". The Schedule identified the "benefit descriptions". These included: "personal accident"; "sickness"; "medical expenses"; "baggage and personal effects"; "money"; and "personal liability". In relation to "personal accident", the schedule described six "items" of benefit, including "permanent total disablement" (item 4) and "temporary total disablement" (item 5) . The "sums insured" for a person in Category B (such as the claimant) were 400% of annual salary for permanent total disablement, and 100% of annual salary for temporary total disablement. "Salary" was defined to mean "the total gross amount of remuneration paid to an Insured Person exclusive of overtime, commission and bonus payments".
The claimant's contract of employment was contained in a handbook issued by the defendants. The introduction to the handbook included:
"Welcome to Pirelli Cables Limited. The purpose of this handbook is to provide you with information about your employment with Pirelli. Section 3 sets out the main terms and conditions which, together with those in your offer letter, form your Contract of Employment with the Company. Other sections outline the benefits which are available to you as well as explaining the working arrangements which exist in the interests of fairness, safety, security and good relationships".
Section 2 of the handbook was entitled "Benefits and Facilities". Between pages 6 and 10 of the handbook there were mentioned the various benefits and facilities which were available to employees. These included under the heading "Personal Accident/Travel Insurance":
"The Company operates a Personal Accident and Travel Insurance Scheme, which covers personal injury, loss and/or damage to personal property whilst on Company business".
Section 3 of the handbook was entitled "Terms and Conditions of Employment". It stated:
"The following "Terms and Conditions of Employment" (pages 10 to 18) together with the terms and conditions in your offer letter constitute your Contract of Employment."
There was no reference in section 3 to the Personal Accident/Travel Insurance Scheme referred to in section 2. There was, however, a reference to a separate scheme for sick pay operated by the defendants themselves.
The judge held that:
"The provision of the permanent health insurance for the benefit of the defendants' employees was not a contractual entitlement under their contracts of employment, nor did the claimant and his fellow employees make any direct contribution to the premiums. The defendants' only contractual liability to a sick or injured employee was under the wholly separate scheme for sickness pay where the payments came from the defendants themselves."
There is no challenge by the defendants to the judge's finding that the provision of permanent health insurance was not a contractual entitlement.
Although the judge made no finding on the question whether the claimant was aware of the insurance policy, it is not disputed on behalf of the claimant that he must be taken to have been aware of its existence and terms. The terms of the policy were reviewed by the defendants from time to time, and documents that we have been shown indicate that their employees and representatives of the trade unions were informed about the terms of the policy whenever it was reviewed. It is not clear to what extent, if any, the terms of the policy were taken into account in negotiations between the defendants and the unions.
Introduction to the issues
It has been stated repeatedly that the fundamental principle is that a claimant is entitled to recover the full extent of his net loss, and no more. As Lord Reid pointed out in Parry v Cleaver [1970] AC 1, 13:
"Two questions can arise. First, what did the plaintiff lose as a result of the accident? What are the sums which he would have received but for the accident but which by reason of the accident he can no longer get? And secondly, what are the sums which he did in fact receive as a result of the accident but which he would not have received if there had been no accident? And then the question arises whether the latter sums must be deducted from the former in assessing the damages."
It has never been in doubt that, if the injured claimant continues to receive his wages, whether under the name of sick pay or otherwise, these sums fall to be deducted from the damages for loss of earnings: see per Lord Bridge of Harwich in Hussain v New Taplow Paper Mills [1988] AC 514, 530D. It has also been stated on a number of occasions that there are two classes of payment to a claimant as a result of an accident which are not required to be brought into account in the assessment of damages. These are often referred to as the two exceptions against the rule against double recovery of damages. They are (i) payments made gratuitously to the claimant by others as a mark of sympathy ("the benevolence exception") ; and (ii) insurance monies ("the insurance exception") .
In the court below, it was submitted on behalf of the claimant that the proceeds of the insurance policy that were received by him in the present case should not be deducted from his damages on the grounds that they came within the ambit of the benevolence exception. The judge accepted that submission. On this appeal, the claimant has served a respondent's notice and contends that the judgment should also be upheld on the grounds that the proceeds of the policy fell within the insurance exception.
The benevolence exception
Review of the authorities
In Parry v Cleaver, Lord Reid said that he knew of no better statement of the reason for the benevolence exception than that of Andrews CJ in Redpath v Belfast and County Down Railway [1947] N.I. 167, 170. In that case, the defendant company sought to bring into account sums received by the plaintiff from a distress fund to which members of the public had contributed. Andrews CJ said that the plaintiff's counsel had submitted:
"that it would be startling to the subscribers to that fund if they were to be told that their contributions were really made in ease and for the benefit of the negligent railway company. To this last submission I would only add that if the proposition contended for by the defendants is sound 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."
A number of the subsequent cases in which the scope of, and reasons for, the exception have been discussed were not benevolence exception cases. Nevertheless, they contain dicta of the highest authority. In Parry, the issue was whether a disablement pension fell to be taken into account in the assessment of the plaintiff's financial loss. At p 13H, Lord Reid said of the benevolence and insurance exceptions that "the common law has treated this matter as one depending on justice, reasonableness and public policy". After referring to the judgment of Andrews CJ, Lord Reid said...
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