Nabi v British Leyland (U.K.) Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date30 November 1979
Judgment citation (vLex)[1979] EWCA Civ J1130-5

[1979] EWCA Civ J1130-5

In The Supreme Court of Judicature

In the Court of Appeal (Civil Division)

On Appeal from The High Court of Justice

Queen's Bench Division

Manchester District Registry


Lord Justice Megaw

Lord Justice Browne


Lord Justice Brightman

Guhulam Nabi
British Leyland (U. K.) Limited

MR. T. P. RUSSELL Q. C. and MRS. J. SMITH (instructed by Brian Thompson, Esq., Quay House, Quay St, Manchester) appeared on behalf of the Plaintiff.

MR. C. ROSE Q. C. and MR. K. GODDARD (instructed by Messrs. A. W. Mawer & Co., Manchester) appeared on behalf of the Defendants.


The judgment which Lord Justice Brightman is about to give is the judgment of the Court.


This appeal raises the question whether sums received by an injured workman by way of unemployment benefit under Section 12 (1) (a) of the Social Security Act 1925 ought to be taken into account in assessing as against his negligent employers the damages to be awarded for his consequent loss of earnings. Mr. Justice Smith held that such sums should be taken into account and the damages reduced accordingly.


The plaintiff was injured by an accident which occurred during the course of his employment on 10th June 1975. The accident was held by the trial judge to be due to the fault of the employers who had left dangerous machinery unfenced in breach of their statutory duty. Damages were awarded under three heads (leaving aside interest): general damages for pain and suffering and loss of amenity; special damages in respect of loss of earnings to date; and special damages in respect of loss of future earnings. The first head of special damages was calculated as follows. The judge assessed the loss of earnings at £4724 without regard to social security. He then took into account the fact that the plaintiff had received the sum of £1062 by way of unemployment benefit, and reduced the sum of £4724 by that amount, thereby arriving at a figure of £3,662. The question at issue, as already indicated, is whether the judge correctly had regard to that sum of £1062.


The Social Security Act 1975 came into force in April of that year. The scheme of the Act, so far as relevant for present purposes, is as follows. The funds required for paying benefits are provided by means of contributions payable by employees, employers, self-employed persons and others, together with supplements paid by the Treasury. Employers and employees make what are called Class 1 Contributions; (Section. 1). A Class 1 Contribution is a percentage of the employee's earnings subject to upper and lower limits; the employer's contribution is somewhat larger thanthe employee's contribution; (Section 4). Section 12 specifies the eight contributory benefits payable. One of these is unemployment benefit. To qualify for unemployment benefit, a claimant must have made a certain minimum number of contributions; (Section 14). The duration of the benefit is confined to a year; (Section 18, the 312 days therein mentioned being the equivalent of a year). The claimant is thereafter disqualified from unemployment benefit until he has resumed employment for a certain period and thus made further Class 1 Contributions. It is evident from this brief outline of the scheme that, in relation to unemployment benefit, it bears some similarity to an insurance scheme, in that payments are made by a person which have the effect of entitling him to a benefit upon the happening of an event which may or may not occur.


As regards some of the contributory benefits described in s.12, the sort of issue which arises in the instant case has been resolved by statute. Section 2 of the Law Reform (Personal Injuries) Act 1948 (as amended by the National Insurance Act 1971) provides that in assessing damages for personal injuries, one half of sickness benefit and invalidity benefit shall be taken into account against loss of earnings. Widow's benefit and death grant are to be left wholly out of account under Section 2 of the Fatal Accidents Act 1959 (as amended by the Social Security Act 1973). Unemployment benefit and retirement pensions are however untouched by statute in this context.


In order to reach a reasoned conclusion as to whether unemployment benefit should or should not be taken into account in assessing the damages payable to a person who is unemployed in consequence of the wrongful act of another, one needs to search for the principle to be applied. Prima facie damages are compensation for net loss. If the victim of a personal injury or any other wrong is in receipt of a benefit which he would not have received had the wrongful act not been done, that benefit, in a broad sense, reduces his loss and is usually intended to do so.


As pointed out by Lord Reid in Parry v. Cleaver (1970) Appeal Cases, 1. pg. 130, there are three questions to be answered in this type of case; first, what did the plaintiff lose as a result of the accident, i.e. what are the sums which he would have received but for the accident and which by reason of the accident, he can no longer get? The answer in the present case, down to date of judgment, is £4724. Secondly, what are the sums which he did in fact receive as a result of the accident, i.e. sums which he would not have received but for the accident? It may be convenient to refer to such sums as post-accident receipts. In the instant case, the answer is £1062 so far as relevant for present purposes. Thirdly, should the latter sum be deducted from the former in assessing the damages? So analysed the problem we have to consider is not resolved by British Transport Commission v. Gourley (1956) Appeal Cases 185, which only governs the answer to question 1.


There are two large and clearly defined areas in which post-accident receipts are disregarded at common law, that is to say, the proceeds of insurance and the proceeds of benevolence. The first exception is usually considered to have been established by Bradburn v. Great Western Railway, (1874) 10 Exchequer., although, as Lord Reid pointed out in Parry's case, it was recognised in Scotland as long ago as 1818. The ratio of Baron Bramwell's decision in the Bradburn case was that - "The plaintiff is entitled to retain the benefit which he has paid for". The approach of Baron Pigott was that - "He does not receive that sum of money because of the accident, but because he has made a contract providing for the contingency; an accident must occur to entitle him to it, but it is not the accident, but his contract, which is the cause of his receiving it". There is probably no substantial distinction between the two reasons. The victim of an injury can keep for himself a benefit for which he has paid; the wrongdoer cannot appropriate it to himself by way of a reduction in his liability. For the exclusion of the proceeds of benevolence it is convenient to turn to Redpath v. Belfast and County Down Railway - (1947) Northern Ireland Reports, 167,a decision of Sir James Andrews, Lord Chief Justice. A railway company in an action by a passenger for personal injuries, sought unsuccessfully to administer interrogatories to elicit whether the plaintiff had been the recipient of benefit out of a distress fund raised locally for the victims of the accident. The decision in favour of the plaintiff was based on a number of grounds; it was not the accident but an extraneous factor, namely, the existence of the charity fund, which gave the plaintiff his advantage, echoing the approach of Baron Pigott; the circumstance relied upon in mitigation of damages arose independently of the cause of action and was not actually attributable to it; admittedly a sequence but not a consequence, it arose as a result of a novus actus interveniens.


In Parry's Case Lord Reid expressed the view (p.19, F/G) that unemployment benefit could be regarded as a combination of insurance and national benevolence. There is no sensible reason for distinguishing between public and private benevolence; so said by this Court in Daish v. Wauton - (1972) 2 Queen's Bench at p. 272, which established the non-deductibility from lost future earnings of the benefit of State maintenance under the National Health Service legislation. If both insurance payments and the fruits of public and private benevolence are to be disregarded, one may ask oneself why it is logical to take into account payments which can properly be regarded as a combination of insurance and benevolence.


So far as reported decisions are concerned, the question of deductibility of unemployment benefit against lost earnings arose in Northern Ireland about a year before the same point arose in this Country. In Fitzpatrick v. Moore - (1962) Northern Ireland Reports; pg. 152, the plaintiff had suffered personal injuries as the result of the admitted negligence of his employers. The defendants sought to deduct from damages for loss of earnings the unemployment benefits received by the plaintiff before he resumed employment. We were told by counsel that the Northern Irishlegislation under which this case was decided did not materially differ from the English legislation applicable to the appellant's case. In Fitzpatrick's Case Lord MacDermott, Lord Chief Justice, said this (at p. 159) "While the plaintiff, during the second period of his unemployment" (nothing turns on the word 'second') "was suffering a loss of earnings because of the accident, he was not receiving his unemployment benefits because of the accident. He was receiving them, while he remained in benefit by virtue of his contributions, because he was unemployed, and neither the defendants' negligence nor the accident which resulted therefrom had anything directly to do with his entitlement to those benefits. The fact that his contributions and his benefits were exacted and granted under statute...

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