|Judgment - Longden v. British Coal Corporation continued|
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Although the incapacity pension is not an indemnity against the disabled man's wage loss, its purpose is to provide him with a source of income which he can use to support himself and his family during the period of his disability. The same may be said of the retirement pension in regard to the period after his normal retirement age. What the plaintiff is seeking in his claim for pension loss is a sum of money to recompense him for the loss of the retirement pension which would otherwise have been available to enable him to support himself and his family after his normal retirement age. It is no help to him to be told that the money to compensate him for this loss is already being paid to him and that it will continue to be paid to him during the period when he is unable to earn wages because of his disability. He cannot reasonably be expected to set aside the sums received as incapacity pension during this period in order to make good his loss of pension after his normal retirement age. I think that it would, to adopt Lord Reid's approach in Parry v. Cleaver  A.C. 1, strike the ordinary man as unjust if the plaintiff's claim for loss of pension after his normal retirement age were to be extinguished by capitalising sums paid to him before that age as an incapacity pension to assist him during his disability. On the other hand there can be no injustice in setting off the sums received by way of incapacity pension against the sums lost by way of retirement pension arising in the same period.
As for the second point, which is the point of principle, the defendants' argument has to be tested by looking once more at the rule that damages are compensatory and that the only loss which is recoverable as damages is the net loss. The defendants say that the whole amount of the disability pension should be taken into account in assessing the whole amount of the loss of retirement pension. In so far as the payments relate to the same period there is no argument. The loss of retirement pension cannot be claimed without bringing the sums received by way of incapacity pension into account over the same period. But what of the residue of the pension entitlement which is represented by the sums received by way of incapacity pension up to the normal retirement age? Prima facie, as receipts arising from the accident, they should be taken into account in the assessment of the plaintiff's claim of damages. But in Parry v. Cleaver it was held that receipts of this kind should be left out of account. This was not only because they were not of the same character as the loss of wages against which the deductions were sought to be made. It was because they were receipts of such a nature that--except in so far as they fell to be set against a loss of pension arising in the same period -they should not be considered at all in computing damages.
This seems to me to provide the complete answer to the argument which the defendants have advanced in this case. The effect of Parry v. Cleaver and Smoker v. London Fire and Civil Defence Authority  2 A.C. 502 is that incapacity and disability pensions fall outside the general rule that prima facie all receipts due to the accident must be set against losses claimed to have arisen because of the accident. It is impossible to reconcile the defendants' argument that at the end of the whole exercise one must stand back and assess the net loss, and in doing so make the deduction for which they contend, with the decision in these cases that these payments cannot be deducted against a claim for loss of income arising in the same period. The only reason why incapacity and disability pension payments received after the normal retirement age must be brought into account in computing the claim for loss of pension after that age is that the claim at this stage is for loss of pension, so one cannot properly calculate the loss of pension arising in this period without taking into account receipts of the same character arising in the same period.
In the Court of Appeal  I C.R. 957 Roch L.J., with whose opinion the other members of the court agreed, said, at p. 962 that if the plaintiff were not permitted to recover the difference between the retirement pension he would have enjoyed after the normal retirement age and the incapacity pension, the tortfeasor would enjoy an advantage, namely the saving which he would make on the calculation of the loss of earnings which left the pension contributions out of account in computing the net loss. He saw this as being necessary in order to ensure that there was no element of double recovery. I would, with respect, prefer for my part to look at the matter from the point of view of the plaintiff, rather than that of the tortfeasor. The principle is that the plaintiff must be compensated, but no more than compensated for his loss. As Dixon C.J. indicated in the High Court of Australia in National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 C.L.R. 569, 572 not much assistance is to be found in contemplating the supposed injustice to the wrongdoer. The concern of the court is to see that the victim is properly compensated. There must, of course, be no element of double recovery for the same tort. But there is no element of double recovery on the plaintiff's approach to the calculation of his loss of income, applying Parry v. Cleaver  A.C. 1 to his claim for loss of earnings, during each of the periods of his income loss.
I should for completeness add that we were referred by Mr. McLaren to the law in other jurisdictions on the question whether there should be a deduction from damages for this type of benefit. In both Scotland and Ireland this question has been resolved by statute. For Scotland section 10 of the Administration of Justice Act 1982 provides that, subject to any agreement to the contrary, in assessing the amount of damages payable to the injured person in respect of personal injuries there shall not be taken into account so as to reduce that amount any contractual pension or benefit. For Ireland section 2 of the Civil Liability (Amendment) Act 1964 (No. 17 of 1964) provides that in assessing damages in an action to recover damages in respect of a wrongful act resulting in personal injury not causing death account shall not be taken of any pension, gratuity or other like benefit payable under statute or otherwise in consequence of the injury. In Cooper v. Miller (1994) 113 D.L.R. (4th) 1 the Supreme Court of Canada held that pensions which were not in the nature of an indemnity for the loss claimed should remain non-deductible against a claim of damages. In Australia it was held in National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 C.L.R. 569 that in assessing damages to be awarded in an action for personal injuries caused by negligence the award of an invalid pension was to be disregarded: see also Redding v. Lee (1983) 151 C.L.R. 117. Thus far the position in these other jurisdictions is consistent with what was decided in Parry v. Cleaver. But it does not appear that the issue with which we are concerned in this case has been considered in any of these jurisdictions. So I do not think that we can gain any assistance from them as to what, on public policy grounds, should be done in this case.
I would therefore reject Mr. Hawkesworth's argument on the main point.
The alternative point: the lump sum
The plaintiff's primary submission was that no deduction should be made from his claim for pension loss for the lump sum of £10,185.91 which he received following his retirement on 22 August 1986. But Mr. McLaren's alternative argument--it will be recalled that the previous practice was for the whole of the lump sum to be deducted--was that it should be divided between the pre- and post-retirement periods. I have already described the calculations which he then made in arriving at the figure which he said should be deducted in order to arrive at the net loss. The question to which I now turn is the question of principle, as to whether it is right that the lump sum should be divided up in this way in order to arrive at the sum to which the plaintiff is entitled as damages for his pension loss.
Mr. McLaren was commendable frank on this point. He said that the calculations were not unduly complicated, and he assured that us that no further evidence was needed to enable them to be done. The matter was simply one of arithmetic, making use of the Ogden Tables in a way that was now quite normal in practice in making calculations of this kind. He also accepted that, if one was trying to get as far as possible to the amount of the net loss, one should allocate the lump sum and that in logic--and thus in principle--it was preferable to take this course rather than leave it wholly out of account. But he submitted that no deduction should be made in this case, as it was simply a matter of chance that the plaintiff had met with his accident on a date prior to that on which, under the rules of the scheme, the claimant would have been entitled to exercise an option whether to take his pension all as income or to accept part of it commuted to a lump sum. Mr. Hawkesworth expressed no preference either way, as his argument was that the proposal to allocate did not meet his fundamental point which was that account should be taken of all receipts prior to the normal retirement age.
The answer to the argument is to be found in an analysis of the nature and purpose of the lump sum. The scheme is quite clear on these matters. Where a lump sum is paid at the commencement of the man's retirement, its effect is to reduce the amount of the annual pension which he will thereafter receive for the whole of the period for which the pension is to be payable. It is a commutation in part of the annual pension to which the contributor is entitled under the scheme to which he has contributed. Thus the effect of the lump sum which the plaintiff actually received in this case was to reduce the amount which he has received and will continue to receive for the rest of his lifetime by way of his annual pension. The fact that things might have turned out differently if his accident had occurred at a later date is irrelevant, because the calculations to arrive at the net loss must be directed to what has actually happened as a result of the accident for which the plaintiff is claiming damages. Thus the effect of the lump sum will be felt not only during the period up to the plaintiff's retirement age but also during the period after that age when he would, but for the accident, have been receiving his retirement pension.
It is not being suggested by Mr. McLaren that the whole of the lump sum of £10,185.91 should be deducted from the lump sum of £33,242 which the plaintiff would have received had he continued to work until he reached the normal retirement age. These two lump sums represent for the most part commutations of pension payments arising in different periods. But there is clearly an element of overlap during the period after the normal retirement age. The incapacity pension which the plaintiff will receive during that period will be less than it otherwise would have been as a result of the payment to him of the lump sum. The claim is for the difference between the periodical payments reduced by the lump sum and the periodical payments which he would otherwise have received, similarly reduced by the lump sum to which he would have been entitled on reaching the normal retirement age, but without bringing anything into account to make up for the effect of his lump sum on his incapacity pension after that age.
I think that it is clear that, in order to compare like with like, the plaintiff should be required to set against his claim for the loss of the retirement pension an appropriate portion of the lump sum which he received on his retirement on the ground of incapacity. This is for the same reason as that which explains why the annual payments by way of the incapacity pension must be brought into account. These annual payments will be received as income during the same period as that to which the claim for loss of pension relates. So it is right also to bring into account that part of the lump sum which represents the commutation of a part of the annual payments which he would otherwise have received as income during the same period. The effect of the calculations which have been provided to us is to identify £1,630 as the amount which should be deducted. The plaintiff's claim for his loss of pension must therefore be reduced from the sum of £26,570 which was awarded to him in the Court of Appeal, after correcting the figure presented to the trial judge, to £24, 940.
Although I would hold that the plaintiff has succeeded on the main point contended for by Mr. Hawkesworth, I would also hold that it is necessary for the award of damages to be altered to give effect to Mr. McLaren's alternative argument relating to the treatment of the lump sum. I would therefore allow this appeal to that extent, and assess the total award of damages at £426,124.
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hope of Craighead. For the reasons he has given, I, too, would allow this appeal.
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