Reduction and Cancellation of Awards

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Chapter 11

Reduction and Cancellation of Awards

ABATEMENT
Abatement in respect of third party compensation
11.1 In order to prevent duplication of benefits for the same injury, article 52(1) of the SPO 2006 allows the Secretary of State to take into account against any pension or gratuity¹‘in such manner and to such extent as the Secretary of State thinks fit’ any compensation which has been or will be paid to a war pension beneficiary, so as to extinguish or reduce the war pension benefits which would otherwise be payable. Under article 52(2), any compensation which has not been recovered because of an ‘unreasonable act or omission’ can also be taken into account. ‘Compensation’ is defined in article 52(3) as:

(a) any periodical or lump sum payment in respect of the disablement or death of any person, or in respect of any injury, disease or incapacity sustained or suffered by any person, being a payment—

(i) for which provision is made by or under any enactment, Order in Council (including this Order), Warrant, Order, scheme, ordinance, regulation or other instrument; or

(ii) which is recoverable as damages at common law; or

(b) any periodical or lump sum payment which, in the opinion of the Secretary of State, is recoverable or payable—

(i) under any enactment, scheme, ordinance, regulation or other instrument whatsoever promulgated or made in any place outside the United Kingdom, or

(ii) under the law of any such place

¹Defined in SPO 2006, art 51(1)(a).

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92 War Pensions and Armed Forces Compensation – Law and Practice

and is analogous to any payment falling within subparagraph (a) of this paragraph; or
(c) any periodical or lump sum payment made in settlement or composition of, or to avoid the making of, any claim to any payment falling within subparagraph
(a) or (b) of this paragraph, whether liability on any such claim is or is not admitted.

11.2 These provisions are used to abate the amount of war pension which would otherwise be payable to a beneficiary to take into account damages recovered in a civil claim arising out of the accident which has caused the injury in respect of which compensation is payable. However, because of the complex interaction between war pension benefits, social security benefits and common law damages, the application of the abatement provisions is often complicated and difficult.

Ministry of Defence policy
11.3 The relevant paragraphs of the former Ministry of Defence policy on abatement in respect of third party compensation are set out in the decision of Judge Rowland in AL v Secretary of State for Defence (at [10]).²

11.4 On the basis of an analysis of the relevant statutory regimes, Judge Rowland doubted in AL v Secretary of State for Defence³whether the provisions in the policy for the partial disregards of general damages and special damages for loss of earnings in fact achieved the stated aim of treating war pensioners on a par with civilian counterparts who sustained an industrial accident for which a third party was to blame and for which industrial injuries benefit was payable, and it is understood that the policy has been amended in the light of Judge Rowland’s observations. Social security law provides for the recovery of social security benefits from defendants in personal injury claims for a maximum period of 5 years,⁴and Judge Rowland accepted (at [42] and [43]) that the policy was correct in treating the amount of abatement of war pension in respect of damages for personal injury as no greater than the relevant elements of a war pension received in respect of the relevant injury over a 5-year period. The judge considered, however, that the relevant period of 5 years need not be the 5-year period since the date of the accident (since payment of a pension cannot commence until a claimant leaves service) and need not coincide with the period over which abatement is carried out, provided that the total amount of war pension recovered does not exceed the relevant amount paid in a 5-year period.

²[2014] UKUT 0524 (AAC).

³[2014] UKUT 0524 (AAC).

⁴Social Security (Recovery of Benefits) Act 1997, s 3.

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11.5 Judge Rowland held (at [45] and [46]) that the amount of abatement should be calculated by taking account of each element of war pension to the extent to which it is duplicated by the relevant part of the payment of compensation:

45. ... I would consider that [the basic disablement pension] should be taken into account against compensation for loss of earnings as under [the Social Security (Recovery of Benefits) Act 1997] and for the same reason: this approach protects awards of general damages when there is no award for loss of earnings. I agree ... that only the amount payable in respect of an assessment of 40% would be taken into account in this case. As the First-tier Tribunal decided, unemployability supplement and invalidity allowance would also be taken into account against compensation for loss of earnings, as would an allowance for lowered standard of occupation. Constant attendance allowance would be taken into account against damages in respect of care and a mobility supplement would be taken into account against damages in respect of loss of mobility. At this stage of the calculation, those elements would all be taken into account in full if they were exceeded by the amount paid under the relevant head of damages; there would be no need to protect any element equivalent to civilian social security benefit or a Motability agreement.
46. Calculation of the appropriate proportion of a payment of compensation to be allocated to each head of compensation is always likely to be difficult where a case has been settled without any agreement as to the precise basis of the settlement. However, as in this case, it will often be possible to obtain from a claimant documents sufficient to...