Griffiths and Others v British Coal Corporation and another

On 23 January 1998 Turner J gave judgment in eight claims brought against the British Coal Corporation by miners who had contracted lung disease in the course of their employment. The cases were test cases and the Claimants succeeded. British Coal then entered into a handling agreement with all others with similar claims with a view to settling these claims on the basis of Turner J's judgment. Turner J has been monitoring this operation and we are told that some 130,000 claims are involved.

Two discrete issues of principle have arisen in relation to the assessment of damages. On 26 October 2000 Turner J gave a judgment ruling in favour of British Coal on each of these issues. He gave the Claimants permission to appeal.

The issues arise as the result of the interest of the Compensation Recovery Unit ("CRU") which was set up under the Social Security (Recovery of Benefits) Act 1997 in seeking to claw back benefits paid under Social Security legislation. The effect of the 1997 Act can be broadly summarised as follows. A party who is liable for causing accident, injury or disease to another person is required to reimburse the Secretary of State for certain benefits paid, or likely to be paid, to the victim. Having done so, that person is entitled to claim credit for those payments when discharging his liability to pay compensation to the victim. Benefits are paid in respect of different consequences of the accident, injury or disease and can only be offset against liability for the like consequences. Like must be offset against like.

The first issue

The first issue is whether reimbursements of benefits paid in respect of loss of earnings, care and loss of mobility can been offset against the liability of the compensator to pay interest on those heads of damages.

The second issue

The second issue is whether reimbursement of benefits paid in respect of care can be offset against the liability to pay compensation in respect of care which has been provided gratuitously to the victim.

These issues arise as a result of the wording of the relevant statutory provisions.

Section 1 of the 1997 Act provides as follows:

"(1) This Act applies in cases where-

(a) a person makes a payment (whether on his own behalf of not) to or in respect of any other person in consequence of any accident, injury or disease suffered by the other, and

(b) any listed benefits have been, or are likely to be, paid to or for the other during the relevant period in respect of the accident, injury or disease."

Section 3 provides:

"'The relevant period'

(1) In relation to a person ('the claimant') who has suffered any accident, injury or disease, 'the relevant period' has the meaning given by the following subsections.

(2) Subject to subsection (4), if it is a case of accident or injury, the relevant period is the period of five years immediately following the day on which the accident or injury in question occurred.

(3) Subject to subsection (4), if it is a case of disease, the relevant period is the period of five years beginning with the date on which the claimant first claims a listed benefit in consequence of the disease."

Subsection (4) has no relevance on the facts of the present case. Section 4 provides:

"(1) Before a person ('the compensator') makes a compensation payment he must apply to the Secretary of State for a certificate of recoverable benefits."

Section 5 provides:

"(1) A certificate of recoverable benefits must specify, for each recoverable benefit-

(a) the amount which has been or is likely to have been paid on or before a specified date, and

(b) if the benefit is paid or likely to be paid after the specified date, the rate and period for which, and the intervals at which, it is or is likely to be so paid."

Section 6 provides:

"(1) A person who makes a compensation payment in any case is liable to pay to the Secretary of State an amount equal to the total amount of the recoverable benefits.

(2) The liability referred to in subsection (1) arises immediately before the compensation payment or, if there is more than one, the first of them is made."

Section 8 provides:

"Reduction of compensation payment

(1) This section applies in a case where, in relation to any head of compensation listed in column 1 of Schedule 2-

(a) any of the compensation payment is attributable to that head, and

(b) any recoverable benefit is shown against that head in column 2 of the Schedule.

(2) In such a case, any claim of a person to receive the compensation payment is to be treated for all purposes as discharged if-

(a) he is paid the amount (if any) of the compensation payment calculated in accordance with this section, and

(b) if the amount of the compensation payment so calculated is nil, he is given a statement saying so by the person who (apart from this section) would have paid the gross amount of the compensation payment.

(3) For each head of compensation listed in column 1 of the Schedule for which paragraphs (a) and (b) of subsection (1) are met, so much of the gross amount of the compensation payment as is attributable to that head is to be reduced (to nil, if necessary) by deducting the amount of the recoverable benefit or, as the case may be, the aggregate amount of the recoverable benefits shown against it.

(4) Subsection (3) is to have effect as if a requirement to reduce a payment by deducting an amount which exceeds that payment were a requirement to reduce that payment to nil.

(5) The amount of the compensation payment calculated in accordance with this section is-

(a) the gross amount of the compensation payment,

less

(b) the sum of the reductions made under subsection (3),

(and, accordingly, the amount may be nil)."

Section 9(4) provides:

"For the purposes of this Act-

(a) the gross amount of the compensation payment is the amount of the compensation payment apart from section 8, and

(b) the amount of any recoverable benefit is the amount determined in accordance with the certificate of recoverable benefits."

Section 15(2) provides:

"The court must, in the case of each head of compensation listed in column 1 of Schedule 2 to which any of the compensation payment is attributable, specify in the order the amount of the compensation payment which is attributable to that head."

Section 17 provides:

"Benefits irrelevant to assessment of damages

In assessing benefits in respect of any accident, injury or disease the amount of any listed benefits paid or likely to be paid is to be disregarded."

Schedule 2 is set out as follows:

Set-off against interest

The problem arises in this way. Claimants are entitled to recover special damages in relation to loss of earnings, cost of care and disbursements to compensate for the loss of mobility. These heads of compensation appear in column 1 of Schedule 2 to the 1997 Act. Claimants are also entitled to interest on these damages by reason of the provision of section 35A(1) of the Supreme Court Act 1981 and section 69 of the County Court Act 1984.

Benefits have been paid to Claimants in respect of these losses. The benefits in question are described in column 2 of Schedule 2. Sometimes the benefits paid in respect of a particular head of loss exceed the capital sum to which a Claimant is entitled as damages in respect of that head of loss. Under section 6 of the 1997 Act British Coal has to reimburse the Secretary of State in respect of these benefits. Where the relevant benefits exceed a particular head of damage, the effect of this reimbursement is to reduce the liability of British Coal to pay compensation in respect of that head of damage to nil. In these circumstances, can British Coal also set-off the reimbursement of benefit made against the interest payable to a Claimant in respect of that head of damage, or is the Claimant entitled to be paid that interest?

It is, at first blush, surprising that a Claimant is entitled to recover interest in respect of costs which have been covered by benefit payments which fall to be clawed back under the scheme of the 1997 Act. On the face of it, any interest in respect of such costs should be recoverable by the Secretary of State. The 1997 Act does not, however, make any provision in relation to interest. The question of whether a Claimant is entitled to...