|Judgment - Longden v. British Coal Corporation continued|
|(back to preceding text)|
As I have said, everyone is agreed that the plaintiff cannot recover any more than his net loss of pension. The argument is directed only to the question how that net loss is to be calculated. But it is important to appreciate the background of law against which this question must be addressed. It is accepted, following Parry v. Cleaver  A.C. 1 and Smoker v. London Fire and Civil Defence Authority  2 A.C. 502, that the plaintiff's receipts by way of incapacity pension, including the lump sum, cannot be set off against his claim for loss of earnings up to his normal retirement age. Amounts received by way of disablement or incapacity pension, unlike sick pay, must be ignored in the calculation of damages for loss of earnings. On the other hand it is clear that if a claim is made for loss of pension after the retirement age the disability or incapacity pension received after that date must be brought into account. The principle that the only recoverable loss is the net loss requires that any amounts which the plaintiff would have received by way of disability or incapacity pension after the normal retirement age must be set off against the amounts which he would have received by way of a retirement pension after that age.
This was the basis on which the award of damages in Parry v. Cleaver was calculated. The claim was made under reference to four periods. Period 1 was the period between the date of the accident and the date of the trial. Period 2 was the period from the date of the trial to the date when the plaintiff would have retired in any event from the police force. Period 3 was the period from the date when he would have retired from the police force but would still been able to work in a civilian capacity to the date when he would in any event have retired from civilian employment, during which, but for the accident, he would have had his police pension and also been able to earn what he could as a civilian. Period 4 was the period from the date of his retirement from civilian employment for the remainder of his period of life expectancy. It was held that his ill-health pension from the police pension fund must be left out of account up to the date of his normal retirement age from the police force, but that thereafter it had to be brought into account against the police pension which he would have received had he remained in the police force until the police retiring age. Lord Reid explained the decision in this way, at pp. 20-21:
Lord Wilberforce described his approach in these words, at p. 42:
At first sight it might be thought that the decision in Parry v. Cleaver had finally resolved the point which the defendants have taken in this case. The reduced pension was held to fall into the category of those collateral benefits, of which the principal examples are insurance payments as in Bradburn v. Great Western Railway Co. (1874) L.R. 10 Ex. 1 and payments made out of benevolence as in Redpath v. Belfast and County Down Railway  N.I. 167, which are not to be deducted in calculating damages. Thus the ill-health pension was brought into account only in regard to the claim for pension loss, and then only by setting off against the pension loss the receipts by way of ill-health pension during the same periods. Lord Pearce, at p. 33, saw the issue in that case as being a simple comparison of pensions:
There was no suggestion in any of the speeches that he had to give credit, not only for the smaller pension which he was to get after the date when he would have retired from the police force, but also for all the payments which he had received and would continue to receive by way of ill-health pension from the date of the accident up to that date.
In Dews v. National Coal Board  A.C. 1, 15, Lord Griffiths said that the primary importance of Parry v. Cleaver was that it established the circumstances in which a disability pension is to be disregarded in calculating damages. He then added this comment, at p. 16:
It is plain from this observation that it did not occur to Lord Griffiths that it would be open to a defendant to claim that the receipts of pension prior to the date when they were subsumed in the general retirement pension were to be brought into account also in arriving at the net loss of pension. These were receipts during a period when they were not to be taken into account is assessing damages.
These observations were relied on by Mr. McLaren as showing that the way in which disablement pensions should be treated in calculating damages was now well settled by authority. In the Court of Appeal  I.C.R. 957, 964 Roch L.J. said of what Lord Griffiths had said in Dews v. National Coal Board, at p. 15
It should be noted also that the same view has been taken, after a careful review of all the authorities, by the Law Commission in their recently issued consultation paper "Damages for Personal Injury: Collateral Benefits" (Law Commission Consultation Paper No. 147 (July 1997)). In their analysis of the present law it is stated in paragraph 2.32, pp. 20-21 that Parry v. Cleaver  A.C. 1 has settled the matter in favour of the result in Payne v. Railway Executive  1 K.B. 26 by finding that disablement pensions, whether voluntary or not, are to be ignored in the assessment of damages. In their summary at paragraph 2.92 it is stated (point (4)) that disablement pensions are ignored in the calculation of damages for loss of earnings but that after retirement age they are taken into account in the assessment of damages for loss of pension rights.
The only reported case in which the deduction sought by the defendants in this case has been contended for is Larkham v. Lynch  2 Lloyd's Rep. 544. In that case the plaintiff had sustained very serious head injuries in a road accident. One of the items in his claim for special damages was a sum for loss of pension between the age of 60, when he would have retired, and the age of 65, which was the limit of his life expectancy as a result of the accident. It was not disputed that no deduction could be made in respect of his incapacity pension receipts before his normal retirement age of 60 because of the decision in Parry v. Cleaver. But it was said that after that date the amounts which he would have received in the aggregate up to the age of 60 could then be brought into account against his claim for the loss of the pension payable to him after that age. There was no dispute that the amounts which he would have received up to the age of 60, when taken together with a lump sum which he had received in commutation of part of his pension when he was awarded the incapacity pension, were sufficient to wipe out entirely his claim for pension loss. Brabin J. rejected the defendants' argument. He said at p. 552 that it did not pay true attention to what a pension is, namely that it is the deferred payment for current work. But the main reason which he gave was that, had the amounts alleged to be deductible been in fact deductible, then the similar process would have been applied in Parry v. Cleaver. He said that it was almost beyond comprehension that, if in Parry v. Cleaver there had been a sum of money to be regarded as having remained on ice until the age when the plaintiff would have retired from the police, it would not have been deducted from his claim for loss of pension after that date.
There is, I think, much force in the argument that the deduction which the defendants seek in this case is not available to them because the decision in Parry v. Cleaver has precluded it. But I do not think that it is entirely satisfactory to leave the matter on this basis. There is inevitably an element of hindsight in the observation that their Lordships in Parry v. Cleaver would have made the deduction if such a deduction was appropriate. The fact is that the issue was not raised in that case at all. This was because of the way in which the calculations agreed upon by both parties were presented to the Court of Appeal and in this House. The plaintiff's claim was divided up into four separate periods. The defendants followed that approach in seeking a deduction from the sums received as disability pension in each of the two periods for which a loss of pension was being claimed. This was consistent with what would normally be regarded as the proper way in which to present a claim for the loss of receipts of income, whether by way of earnings or of pension, extending over a period. Prima facie the net loss is the difference between the income which the plaintiff would have received during each period but for the accident and the income which he has received and will continue to receive in the same period after bringing into account all the receipts which are attributable to the accident. It would not normally occur to one, in making a calculation of a claim of damages for loss based on net income, to consider capitalising sums which had been disallowed for one period in the calculation and bringing the capitalised sum forward as a deduction in a later period. At least this approach to the calculation of the net loss is not so obvious that one can safely assume that their Lordships must have considered the point and then rejected it.
In saying all this I should add that I have not overlooked the fact that in the 3rd edition of Kemp & Kemp, The Quantum of Damages (1967), which is the edition which was current when Parry v. Cleaver was before this House, Vol. 1, Appx. E, n. 82, pp. 726-727, the view is expressed that to set off a pension against loss of earnings would not be setting off like against like, to which this comment is then added:
The fact is however that the defendants in that case did not follow this advice. They did not raise this argument in presenting their approach to the deductions to be made in calculating the plaintiff's net loss. For this reason I do not think that it would be right to say that the possibility of approaching the matter in this way has been entirely foreclosed by what was decided in that case.
The defendants' argument as presented by Mr. Hawkesworth was that the issue had to be approached as one of principle. The plaintiff's claim was for a money award, but it was in conflict with basic principle because he was seeking to put himself into a better position than he would have been in if he had not been injured. He could only be held entitled to damages for loss of pension if he could show that overall he would be worse off under the pension scheme throughout the whole of his lifetime. It was no doubt convenient to deal with his claim of damages as a matter of arithmetic by presenting it under reference to different periods. But in the end, if one was to respect the basic principle, one had to stand back from the arithmetical approach and look at the totality of what was claimed. This was essential if one was to ensure that the plaintiff would receive no more than the amount of his net loss. The plaintiff could not recover damages unless he was able to show that he had sustained a loss overall. Mr. Hawkesworth suggested that it might have been different if the incapacity pension had not been derived from the same scheme as the retirement pension which the plaintiff claimed to have lost. But in the present case both pensions were derived from the same scheme. The one was paid in substitution for the other. It would be unreal to disregard what the plaintiff was entitled to receive by way of disability pension in assessing the net loss of pension after the retirement age.
There are, as I see it, two answers to this argument which show that it is unsound. The first relates to the nature of the plaintiff's claim for loss of pension after the normal retirement age. The second relates more directly to the principle which requires that a plaintiff can recover no more than his net loss, in the light of what was actually decided in Parry v. Cleaver  A.C. 1. I should add that, on the approach which I favour, it would make no difference whether the incapacity pension was or was not derived from the same scheme as the retirement pension which the plaintiff claims to have lost.
In regard to the first point, the issue of deductibility cannot be properly answered without a clear understanding of the nature of the loss claimed. As Windeyer J. put it in Paff v. Speed (1961) 105 C.L.R. 549, 567, in a passage which was quoted by Lord Wilberforce in Parry v. Cleaver, at p. 41: "The first consideration is what is the nature of the loss or damage which the plaintiff says he has suffered." The examples which Windeyer J. then gave to support this proposition are examples of cases where a loss claimed is contradicted by a benefit received which is of the same kind--a claim for loss of pension by proof that the plaintiff has in fact a pension; a claim for expenses for treatment or an artificial limb which is met by proof that these were provided without charge. The exercise is one which involves the comparison of like with like. The reason which Lord Wilberforce gave, at p. 42 for seeing no inconsistency between not bringing the police pension into account against the civilian wage loss and bringing the reduced police pension into account against the greater pension which he would have received if he had not been injured was that these two equations were quite different. As Lord Reid put it, at p. 20-21:
It has to be acknowledged that Lord Reid and Lord Pearce on the one hand and Lord Wilberforce on the other hand were not at one as to the nature of the reduced pension which the plaintiff had been receiving as a result of the accident. Lord Reid, at p. 16, and Lord Pearce, at p. 38, saw this as the product of a form of insurance and thus non-deductible from the claim of damages on the application of the principle established by Bradburn v. Great Western Railway Co., L.R. 10 Ex.1. Lord Wilberforce said, at p. 42 that it was not possible to argue from the non-deductibility of insurance to the non-deductibility of pension, as pensions, if insurance at all, were not insurance in the same sense as accident insurance, and that the mere use of a common word was not enough to produce a common principle. But the point which is common to all three speeches is that pensions are different from earnings. Their Lordships were all saying that the nature of each form of receipt was different, in a context where it is necessary to compare like with like. So the matter was not simply one of arithmetic.
What then is the nature of the loss claimed in respect of pension after the normal retirement age? It has, I think, two characteristics which are relevant in the context of the defendants' argument. The first is that the pension--I am still leaving aside the lump sum--was to be paid to him on a recurring basis over a period. It was to have the character of income in his hands. The second was that this loss of income was to be confined to the period after the normal retirement age. The first characteristic is one which the lost retirement pension shares with the incapacity pension which the plaintiff now receives. The incapacity pension also is paid to him on a recurring basis over a period, so it also has the character of income in his hands. But what the defendants are seeking to do is to bring into account income receipts arising in one period, which cannot as a result of Parry v. Cleaver be set against the wage loss arising in that period, in assessing the loss of income arising in another period. That seems to be in conflict with basic accounting principles. But in the legal context it is also open to objection on the ground that it is unfair.