Law Report: Interest calculation to disregard benefits

Wadey v Surrey County Council Court of Appeal (Lord Justice Simon Brown, Lord Justice Otton and Lord Justice Schiemann) 11 December 1998

WHEN CALCULATING interest on a plaintiff's damages for past losses in personal injury actions the court should disregard state benefits received by the plaintiff.

The Court of Appeal allowed the plaintiff's cross-appeal in proceedings against the defendants in respect of personal injury, loss and damage suffered as a result of injuries sustained in the course of his employment with the defendants as a fire-fighter.

The plaintiff had been awarded damages in the sum of pounds 224,049.81. The defendants had originally sought to impugn the judge's findings on the issue of liability, but that aspect of the case had been compromised between the parties.

The issue arose on the plaintiff's cross-appeal 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.

Included in the plaintiff's award of pounds 224,049.81 was the sum of pounds 49,197.20, representing the benefits he had received over a five-year period. In assessing the interest on special damages those benefits had been deducted before calculation. Had they not been so deducted, the plaintiff's award would have been increased by nearly pounds 10,000.

Edward Bishop (Vizards) for the plaintiff; Charles Pugh (Lawford & Co) for the defendants.

Lord Justice Otton said that section 103 of the Social Security Administration Act 1992 had provided that benefits should be taken into account when assessing interest on an award of damages. The Social Security (Recovery of Benefits) Act 1997 had repealed section 103 of the 1992 Act, but had put no provision in its place.

The introduction of the new statutory scheme in 1997 had altered the relationship between social security benefits, damages and interest. Section 17 of the 1997 Act provided:

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 question which arose in the present case was whether the enactment of the 1997 Act, and the repeal without replacement of section 103 of the 1992 Act, meant that the law had reverted to the common law position as set out in, inter alia, Jefford v Gee [1970] 2 QB 130 and Hodgson v Trapp [1989] 1 AC 807, which would mean the deduction of benefits from the damages and interest calculation; or meant that it replicated the position introduced by the Social Security Act 1989 of disregarding benefits for the purposes of damages but not interest; or whether the new legislation heralded a new approach to the issue altogether.

The scheme of the Social Security (Recovery of Benefits) Act 1997 was clear and straightforward and led to only one conclusion: in the absence of a provision on interest similar to section 103 of the 1992 Act, coupled with the unambiguous direction in section 17 as to the treatment of benefits in relation to damages, not only should benefits be disregarded from the assessment of damages, but also from the assessment of interest.

The 1997 Act was not intended as a piecemeal amendment to the existing law, but had been redrafted in its entirety, fitting with Parliament's intention of setting up a new scheme. The omission of a provision such as section 103 could not, therefore, have been unintentional.

In coming to that conclusion valuable assistance could be drawn from the decision of the Scottish Court of Session (Inner House) in Wisely v John Fulton (Plumbers) Ltd [1998] SLT 1026, in which the court had had to consider exactly the same question as that presently before the court.

Taking into consideration the general principle that on points of statutory construction which extended to both countries, English and Scottish law should be uniform, there was no compelling reason not to adopt the decision arrived at by the Scottish court.