Wisely v John Fulton (Plumbers) Ltd; Wadey v Surrey County Council
| Jurisdiction | England & Wales |
| Judge | LORD SLYNN OF HADLEY,LORD WOOLF M.R.,LORD HOPE OF CRAIGHEAD,LORD CLYDE,LORD MILLETT |
| Judgment Date | 06 April 2000 |
| Judgment citation (vLex) | [2000] UKHL J0406-3 |
| Date | 06 April 2000 |
| Court | House of Lords |
| Docket Number | No 5 |
[2000] UKHL J0406-3
HOUSE OF LORDS
Lord Slynn of Hadley
Lord Woolf M.R.
Lord Hope of Craighead
Lord Clyde
Lord Millett
My Lords,
I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hope of Craighead, Lord Clyde and Lord Millett. I find the arguments in these two cases very evenly balanced; there is much force in the appellants' contentions as Simon Brown L.J. also appears to have thought. However, in the end I consider that the Lord President in Wisely's case and Otton L.J. in Wadey's case cameto the right conclusion. Accordingly, I agree with my noble and learned friends that for the reasons they give the appeals in both cases should be dismissed.
My Lords,
I have had the advantage of reading in draft the speeches prepared by my noble and learned friends Lord Hope of Craighead, Lord Clyde and Lord Millett. I agree with them, and for the reasons that they give I too would dismiss both appeals.
My Lords,
These appeals, one from the Inner House of the Court of Session in Scotland and the other from the Court of Appeal, Civil Division, in England, both raise the same question. It is whether, in an action for damages for personal injuries, social security benefits received by the injured person that are disregarded in the assessment of special damages must be disregarded when interest is being calculated on those damages. All parties are agreed that this question should receive the same answer in Scotland and in England, as the Social Security (Recovery of Benefits) Act 1997 under which it is raised applies uniformly to both countries. The appeals were heard together, and - apart from a few introductory words - what I shall have to say in this speech applies equally to both of them.
The Scottish case is Wisely v. John Fulton (Plumbers) Ltd., 1998 S.C. 910. The pursuer sustained personal injuries as a result of an accident in the course of his employment with the defenders. He brought an action of damages against them in the Court of Session. The Lord Ordinary (Lord Johnston) held that he was entitled to damages. The damages for which the defenders were found liable included a sum for past loss of earnings on which interest fell to be awarded under the Interest on Damages (Scotland) Act 1958 as amended. That sum was calculated by taking the pursuer's earnings prior the accident and applying them to the period for which he was off work to the date of the award. He was in receipt of social security benefits during this period, but the amount of those benefits was disregarded in the calculation. This was because section 17 of the Act of 1997 states that in assessing damages in respect of any accident, injury or disease, the amount of any listed benefits paid or likely to be paid is to be disregarded. The Lord Ordinary was then faced with a problem about the calculation of interest. The Act of 1997 contains no provision dealing with that matter, and there were conflicting decisions on this point in the Outer House. In George v. George C. Peebles & Son, 1998 S.L.T. 685, Lord Nimmo Smith held that interest was due only on that part of the award which represents the difference between the sum awarded as damages for past wage loss and the amount of the benefits received during the relevant period. In Spence v. Wilson, 1998 S.C. 433, Lord Eassie held that interest should be awarded on the whole of the sum awarded as damages for past wage loss. The Lord Ordinary took the appropriate course of reporting the case to the Inner House under the procedure which was available to him under rule 34.1 of the Rules of the Court of Session 1994 for an authoritative decision on the matter before making his award. The First Division (the Lord President (Rodger), Lord Sutherland and Lord Caplan) held that interest on the loss of earnings during the relevant period should be calculated without deducting the amount of the benefits. Spence v. Wilson was approved and George v. George C. Peebles & Son was overruled.
The English case is Wadey v. Surrey County Council [1999] 1 W.L.R. 1614. The plaintiff had been awarded a sum of damages in Wandsworth County Court for the personal injury, loss and damage which he suffered as the result of injuries sustained in the course of his employment with the defendants as a firefighter. Included in the award of special damages was a sum for past loss of wages which had been calculated, as the Act of 1997 requires, without deducting the benefits which the plaintiff had received during the relevant period. When he assessed the interest which he should award under section 69 of the County Courts Act 1984 on the special damages the judge deducted the amount of those benefits. The defendants appealed against the judge's findings on liability, and the plaintiff cross-appealed against his decision to deduct the benefits in assessing the interest on the special damages. The defendants' appeal was later compromised, but the plaintiff proceeded with the cross-appeal. The Court of Appeal, Civil Division (Simon Brown, Otton and Schiemann L.J.J.), following Wisely v. John Fulton (Plumbers) Ltd, 1998 S.C. 910, allowed the appeal on the ground that the judge erred in deducting the benefits.
General Principles
I think that it is appropriate, before turning to consider the provisions of the statutes, to take note of the general principles with reference to which interest is ordered to be paid on sums awarded by a court as damages. In Wisely y at p. 916E-F the Lord President said that the Act of 1997 was essentially a practical compromise and that the court was best guided by looking to the terms of the Act itself rather than by trying to apply more general principles. That observation lies at the heart of the whole issue. As a general rule Parliament must be taken to have legislated against the background of the general principles of the common law. It may be found on an examination of the statute that Parliament has decided not to follow the common law. In that situation the common law must give way to the provisions of the statute. But an accurate appreciation of the relevant common law principles is nevertheless a necessary part of the exercise of construing the statute.
The general principle of the common law is that, apart from contract, a party will only be entitled to interest on money if the principal sum has been wrongfully withheld and not paid on the day when it ought to have been paid: Carmichael v. Caledonian Railway Co. (1870) 8 M. (H.L.) 119, 131; L.R. 2 H.L. Sc. 56, per Lord Westbury; Kolbin & Sons v. Kinnear & Co., 1931 S.C. (H.L.) 128, 137 per Lord Atkin. It has been recognised that interest is due where possession of land is taken before the price has been paid for it, and this rule has been applied to the acquisition of land by the purchasing authority by virtue of a compulsory purchase order made under a private or public act: Greenock Harbour Trustees v. Glasgow and South-Western Railway Co., 1909 S.C. (H.L.) 49; Birrell Ltd. v. City of Edinburgh District Council, 1982 S.C. (H.L.) 75, 110-111, per Lord Fraser of Tullybelton. In Stirling & Dunfermline Railway Co. v. Edinburgh & Glasgow Railway Co. (1857) 19 D. 598, 621 Lord Cowan said:
"It would be contrary to all equity, to allow the purchaser to possess the subjects with their fruits, without accounting for interest on the price which he has continued to hold in his hands. The interest is equivalent for the fruits, and drawing the one he must pay the other."
But a claimant had no general right under the common law to interest for being kept out of his money. This was regarded by many as unsatisfactory: see London, Chatham and Dover Railway Co. v. SouthEastern Railway Co. [1893] A.C. 429, 437, per Lord Herschell L.C.
This common law principle was applied to awardsof damages. The practice both in England and in Scotland was that interestwas not due on sums awarded as damages until the making of the award. AsLord Justice Clerk Thomson said in Macrae v. Reed & MallikLtd., 1961 S.C. 68, 72:
"It has long been our practice that where, in actions of damages, damages are awarded interest runs only from the date of the final decree. The reason is that it is then, and only then, that the illiquid claim for damages is quantified and made liquid. Once there is a final decree for a specified sum that sum is payable at the date of the final decree, and if it is not then paid, it carries interest as payment is wrongly withheld. That is in consonance with the accepted principle as laid down in Carmichael [(1870) 8 Macph. (H.L.) 119] by Lord Westbury where he said, (at p. 131): 'Interest can be demanded only in virtue of a contract, express or implied, or by virtue of the principal sum of money having been wrongfully withheld, and not paid on the day when it ought to have been paid.'"
A statutory power to award interest for periods prior to the date of the award was introduced in England by section 3(1) of the Law Reform (Miscellaneous Provisions) Act 1934. Under this power the court was enabled to award interest:
"as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment."
The current provisions regarding the awarding of interest on debts and damages are set out in section 35A(1) of the Supreme Court Act 1981 as amended by section 15(1) of and Part I of Schedule 1 to the Administration of Justice Act 1982 and in section 69(1) of the County Courts Act 1984 where the amount to bear interest exceeds £200. Section 69(1) of the Act of 1984, which in...
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