Wisely v John Fulton (Plumbers) Ltd; Wadey v Surrey County Council
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE OTTON,LORD JUSTICE SCHIEMANN,LORD JUSTICE SIMON BROWN |
| Judgment Date | 11 December 1999 |
| Judgment citation (vLex) | [1998] EWCA Civ J1211-12 |
| Docket Number | Case No: CCRTF 98/0517/2 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 December 1999 |
[1998] EWCA Civ J1211-12
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MAYOR'S AND
CITY OF LONDON COUNTY COURT
(H.H. Judge Simpson)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Simon Brown
Lord Justice Otton
and
Lord Justice Schiemann
Case No: CCRTF 98/0517/2
Mr E Bishop (instructed by Vizards, Solicitors for the Appellant)
Mr C Pugh (instructed by Lawford & Co., Solicitors for the Respondent)
On 1 April 1998 His Honour Judge Simpson in The Wandsworth County Court awarded the plaintiff damages in the sum of £224,049.81 in respect of the personal injury, loss and damage he suffered as the result of injuries sustained in the course of his employment with the defendants as a Fire Fighter.
Originally the defendants sought to impugn the Judge's findings on the issue of liability but this aspect of the case has been compromised between the parties.
The substantive issue arises on the cross appeal as to whether or not interest on a plaintiff's damages for past losses in an action for personal injuries should be calculated after deduction of all or some of the State Benefits received by the plaintiff as a result of the accident. This is an issue of considerable public and practical importance and arises out of the recent Social Security (Recovery of Benefits) Act 1997. Included in the award of £224,049.81 was the sum of £49,197.20, representing the benefits the plaintiff had received over a five-year period. In assessing the interest on special damages (of approximately £87,000) these benefits were deducted before calculation. Had they not been, the plaintiff's award would have been increased by nearly £10,000.
The Statutory Scheme
The Law Reform (Personal Injuries) Act 1948, as originally enacted provided (so far as material):
"2 …(1) In an action for damages for personal injuries (including any such action arising out of a contract), there shall in assessing these damages be taken into account, against any loss of earnings or profit which has accrued or probably will accrue to the injured person from the injuries, one half of the value of any rights which have accrued or probably will accrue to him therefrom in respect of industrial injury benefit, industrial disablement benefit or sickness benefit for the five years beginning with the time when the cause of action accrued."
Thus compensation was reduced to recover benefits already paid, but the amount deducted differed from benefit to benefit. For some benefits, 50% was deductible. For others, the full amount paid was brought into account. Recovery of some benefits could reduce compensation up to five years from the date of the accident. For other benefits, there was no time limit. This inconsistent approach tended to disadvantage some accident victims. Furthermore, the compensator (the Defendant's insurers) retained any deduction that he made on account of benefits paid.
In 1986 the National Audit Office concluded that it was wrong for public funds to be used to subsidise the negligence of third parties. It recommended that the amounts deducted from compensation should be recovered for the tax payer. After consultation, a modified compensation recovery scheme was introduced as part of the Social Security Act 1989. This was immediately amended to appear as Part IV of the Social Security Administration Act 1992 together with the Social Security (Recoupment) Regulations 1990, which as amended, provided:
"22 …(6) Except as provided by any other enactment, in the assessment of damages in respect of an accident, injury or disease the amount of any relevant benefits paid or likely to be paid shall be disregarded….
"[Sched 4 paragraph 24]. In assessing the amount of interest payable in respect of an award of damages, the amount of the award shall be treated as reduced by a sum equal to the amount of the relevant payment (if any) required to be made in connection with the payment of the damages."
The provisions relating to the deductions of benefits from the interest calculation were re-enacted in the same form by s103 of the Social Security Administration Act 1992.
A major innovation within the scheme was a procedure whereby the compensator (in practice the defendant's insurers or the Crown) was required to make a compensation payment in respect of the whole of the benefits for a five-year period to the Compensation Recovery Unit based on a certificate issued by the Unit of the Department of Social Security for this purpose. The overall effect of the 1948 Act and the 1989/90 legislation was to prevent double compensation of the victims, to ensure that the tax-payer did not lose out and that the negligent party was no longer subsidised. The compensation was reduced by the amount of benefit paid following the accident regardless of what the compensation was for. It followed that in cases where the benefit paid was more than the compensation payable for reasons other than pain and suffering, erosion of this latter element often occurred. This injustice to the plaintiff was recognised and the Social Security (Recovery of Benefits) Act 1997 abolished the compensation recovery scheme introduced in 1990 and introduced a new system designed:
a) To ensure that damages paid to a victim to compensate for pain and suffering can no longer be reduced to take account of benefit recovery (conveniently referred to in argument as "ring-fencing the general damages") and
b) To make compensators liable for their own negligence by requiring them to repay in full benefits which have been paid in respect of an accident, injury or disease.
Thus the Act changed the way in which the State would recoup benefits paid by the State to the plaintiff from the defendant but also introduced provisions to protect the plaintiff's damages, so that benefits should only be deducted from the plaintiff's damages (and paid by the defendant to the State) where they corresponded to claims made by the plaintiff for such benefits. For example, Income Support can only be deducted from a claim for damages for loss of earnings, Attendance Allowance from a claim for damages for the cost of care etc. In short, the scheme currently devised provides for the deduction of like from like. The relevant provisions are set out below:
" s 6.. 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 recoverable benefits…."
The scheme then provides for a taking into account of the benefits already paid when assessing the defendant's liability:
"s 8 …(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 17 of the 1997 Act gives guidance to the court as to the approach which it is to adopt when assessing damages:
"In assessing damages in respect of any accident, injury or disease, the amount of any listed benefits paid or likely to be paid or likely to be paid is to be disregarded."
The 1997 Act repealed the provision in the 1992 Act relating to interest (s 103) and there was no provision put in its place. The current legislation is therefore silent on the question of whether benefits should be deductible from an award of damages for the purpose of assessing interest or not.
The introduction of a new statutory scheme in 1997 once again alters the relationship between Social Security benefits, damages and interest. Thus, the question which now arises is whether the enactment of s.17 of the 1997 Act, and the repeal without replacement of s103 of the 1992 Act means that the...
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