Hussain v New Taplow Paper Mills Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LLOYD,LORD JUSTICE RALPH GIBSON,LORD JUSTICE KERR |
| Judgment Date | 31 July 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J0731-12 |
| Docket Number | 86/0756 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 July 1986 |
[1986] EWCA Civ J0731-12
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE HARRIS, SITTING
AS A DEPUTY HIGH COURT JUDGE)
Royal Courts of Justice
Lord Justice Kerr
Lord Justice Lloyd
and
Lord Justice Ralph Gibson
86/0756
1983 H No. 1699A
MR. MICHAEL HARVEY QC and MR. ROGER TER HAAR (instructed by Messrs. Wm. A. Merrick & Co., Solicitors, Maidstone, Kent ME16 8SF) appeared on behalf of the Defendants (Appellants)
MR. GARY FLATHER QC and MR. JUSTIN FENWICK (instructed by Messrs. Hubbard, Wilton & Co, Solicitors, Reading, Berkshire RG1 1DB) appeared on behalf of the Plaintiff (Respondent)
On 17th March 1983, the plaintiff, Mr. Akhtar Hussain, met with an accident at work, when his left arm became trapped between rollers in a paper drying machine. The injury was very severe, necessitating an amputation through the middle of the forearm. The plaintiff brought an action against his employers, New Taplow Paper Mills Ltd, claiming damages for negligence and breach of statutory duty. His Honour Judge Harris Q.C., sitting as a deputy judge of the High Court, had a most difficult task in determining liability. After a hearing lasting six days, he found that the plaintiff had established liability under both heads. But he found that the plaintiff was himself one-third to blame for the accident. The damages which he awarded were reduced accordingly.
In addition to the difficult question on liability, there were difficult questions on damages. Under the heading of general damages, the judge awarded £27,500 on full liability basis, for pain and suffering. For loss of earnings to the date of the trial he awarded £9,568. For loss of future earnings he awarded £49,682. I will return to the make-up of these figures later. For loss of earning capacity, commonly referred to as Smith v. Manchester damages he awarded £5,000. For loss of pension rights he awarded £2,380. Finally, as special damages, he awarded £2,740, including £1,100 for prescription charges and the cost of replacing the glove on the plaintiff's prosthesis from time to time as needed for the rest of the plaintiff's life. Thus total damages, on a full liability basis came to £96,870.
Both parties appealed. Happily they came to terms on liability shortly before the appeal came on for hearing. That left only the defendant's appeal on damages. There is no appeal against the award of general damages for pain and suffering, or against the damages for loss of pension rights; and the appeal against the Smith and Manchester damages was not pursued.
Thus almost the whole of the argument before us was taken up with damages for loss of earnings, and in particular with the question whether sums payable under the defendants' Permanent Health Insurance Scheme should be taken into account in calculating the plaintiff's loss. The judge took the view that those payments should not be taken into account. On that basis, he arrived at a total of £59,250, on the agreed figures, for loss of earnings past and future. The payments left out of account amounted to £34,688. If, as the defendants submit, the judge was wrong to leave those payments out of account, the damages for loss of earnings would fall to be reduced by that amount.
There is thus a considerable sum involved in the outcome of this appeal on damages. In addition there is an important, and not altogether easy, question of principle to be resolved, which has required us to consider closely the decision of the House of Lords in Parry v. Cleaver [1970] Appeal Cases 1.
Before coming to the arguments advanced on either side, it is first necessary to set out in some detail the terms of the plaintiff's contract of employment, and the provisions of the Permanent Health Insurance Scheme, so far as relevant.
The contract of employment current at the time of the accident is dated June 1981. It provides for the plaintiff's employment as a machineman at a rate of remuneration of £2.195 per hour. Against the heading "Incapacity for work due to illness or injury" there appear the words "See Works Rules under Sick Pay". The Works Rules are contained in a booklet. I need only refer to paragraphs 5, 6 and 8:
"5. SICK PAY. HOURLY RATED EMPLOYEES
SICK PAY
PERMANENT HEALTH INSURANCE PAY
N H I SICKNESS BENEFIT
4 days
2 weeks
13 weeks
a) Sick pay is not paid for the first two weeks of absence. NHI Sickness Benefit must be claimed by the employee. After 2 weeks' absence sick pay is paid at one half of the previous calendar year's earnings for a further 11 weeks. At 13 weeks absence the Company Permanent Health Insurance Scheme takes over and pays the same amount.
"6. INJURY PAY. HOURLY RATED EMPLOYEES
If an employee is incapacitated for work as the result of an accident or illness arising out of and in the course of his employment, payments will be made as follows.
a) Injury pay will be paid at the rate of 100% of the previous calendar year's weekly earnings for a period of 13 weeks from the date of the injury, after which sick pay will apply except at the Company's discretion. NHI Industrial Injury or Sickness Benefit must be claimed by the employee and refunded to the Company.
Employees are eligible for Injury Pay upon joining the Company, but eligibility for sick pay is unaltered by payment of Injury Pay, the higher of which will be paid.
b) A medical certificate must be in the Company's hands no later than the third day of absence and where necessary, further medical certificates must be delivered regularly to the Company throughout the total period of absence.
"8. LONG TERM SICKNESS
Any long term sickness is covered by an Insurance Scheme run by the Company, the conditions and payments through this Scheme are detailed in a separate book, issued with this book.
Benefits under this scheme are subject to periodic check and/or medical examination. Abuse of the scheme will render the employee liable to disciplinary action".
I need not refer to paragraph 7, which deals with Sick or Injury Pay for monthly paid employees.
It will have been noticed that paragraphs 5 (a) and 8 both refer to the Company Permanent Health Insurance Scheme. The scheme is described in a second booklet, which is issued to each employee. The booklet makes clear that the scheme is governed by Rules and a Policy.
The Rules, as revised in 1981, are headed "Revised Rules of the New Taplow Paper Mills Ltd. Permanent Health Insurance Scheme". They contain the following definitions:
"(a) 'Insurer' means N.E.L. Permanent Health Insurances Limited.
(b) 'Company' means The New Taplow Paper Mills Ltd.
(e) 'Employer' means the Company or any associated or subsidiary company which has with the consent of the Insurer been included in the Scheme…..
(f) 'Employee' means a person in the permanent full-time service of the Employer.
(g) 'Member' means an Employee who has been admitted to membership of the Scheme and remains in membership under the Rules.
(k) 'Deferred Period' means the first 13 weeks of any continuous period of Incapacity".
The following are the most relevant provisions of the Rules:
"3. BENEFIT
(a) Full Benefit
A full benefit of 50% of Salary shall be payable to a Member within the provisions of these Rules following the Deferred Period and during such time before Terminal Date as Incapacity is admitted by the Employer and the Insurer.
(b) Reduced Benefit
A proportionately reduced benefit shall be payable where full benefit would have been paid but for the adoption by the Member of a different and less well paid occupation or the Member returning to his Occupation on a part-time basis with medical consent".
The reduced benefit will be that proportion of the full benefit that loss of earnings calculated on the total earned income after Incapacity bears to Salary immediately before Incapacity.
"4. LIMITS OF BENEFIT
(1) The maximum benefit payable under the Scheme in respect of each Member is subject to a normal maximum as provided below. The Insurer may agree to insure a benefit at a different level beyond the normal maximum for any Member subject to an overall maximum as provided below…..
"5. INCAPACITY
Incapacity shall mean a Member being totally incapacitated through illness or injury from following his Occupation and not following any other occupation except as provided under the proportionate benefit provisions of Rule 3.
"6. EVIDENCE OF HEALTH
The Employer's liability under the Scheme is insured with the Insurer and a Member's entitlement to benefit shall be that under Rule 3 provided insurance has been arranged. Any restriction on entitlement will be notified to the Member by the Employer.
Before granting insurance on entry into the Scheme or any increase in benefit the Insurer may require evidence of good health.
"7. THE COST
The whole cost of the Scheme will be borne by the Employer.
"8. INCOME TAX
Payments made under this Scheme are a continuance of salary. They will, therefore, under present Inland Revenue practice, be taxed as earned income.
"9. CESSATION OF MEMBERSHIP
An Employee will cease to be a Member:—
(a) on reaching the Terminal Date, or
(b) on leaving Service, or
(c) on death.
"10. OPTION ON LEAVING SERVICE
If a Member leaves the service of the Employer more than one year before Terminal Date and engages in a new employment within 31 days of leaving service he will have the right upon written notice to the Insurer within the 31 day period to obtain without medical...
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