Injured At Work Claim

Pirelli General Plc & Ors V Jan Gaca (2004)

Where neither of the exceptions to the rule against double recovery of damages applied, insurance payments were deductible from damages awarded to an employee injured at work and McCamley v Cammell Laird Shipbuilders Ltd (1990) 1 W.L.R. 963 should no longer be followed.

The defendant (D) appealed against the decision that insurance payments were not deductible from damages awarded to the claimant (C) . C was seriously injured in an accident at work. D was his employer. C's employment was terminated on the grounds of ill health. C received sick pay and payments pursuant to a group personal accident insurance policy for temporary total disablement.

Following the termination of his employment he received an ill health gratuity from D and a payment under the terms of the insurance policy for permanent total disability. C issued proceedings and D admitted liability. Judgment was entered in favour of C with damages to be assessed. D contended that the proceeds of the insurance should be deducted from the damages. C contended that they should not. The recorder applied McCamley v Cammell Laird Shipbuilders Ltd [1990] 1 W.L.R. 963 and held that the insurance payments were not deductible and D appealed.

HELD: As a matter of principle, and on the basis of the authorities apart from McCamley, ex gratia payments made to victims by tortfeasors did not normally fall within the benevolence exception, even if it could be shown that they were from motives of benevolence. McCamley had been wrongly decided and should not be followed for two reasons.

Firstly, the payment in McCamley was not analogous to a payment within the classic benevolence exception and it was unreal to treat the payment of benefits under an insurance policy as equivalent, or even analogous, to payments made by third parties out of sympathy.

Secondly, ex gratia payments made to employees by their employer tortfeasors did not normally fall within the benevolence exception even if it could be shown that they were made from motives of benevolence. The facts in McCamley did not satisfy the criteria for the benevolence exception as it had been expounded in statements of the highest authority in HUSSAIN v NEW TAPLOW PAPER MILLS LTD (1987) 1 WLR 336 and HUNT v SEVERS (1994) 2 WLR 602.

The instant case did not come within the benevolence exception because the payments were made by the tortfeasor and the payment of benefits under the insurance policy was not equivalent, or analogous, to payments made by third parties out of sympathy. The insurance exception recognised in Bradburn v Great Western Rail Co (1874) LR 10 Ex 1 did not apply as there was no evidence to show that C paid or contributed to the cost of the insurance policy.

Appeal allowed.

Damages - Personal Injury

CA (Brooke LJ, Mummery LJ, Dyson LJ) 26/03/2004

LTL 26/3/2004 (Unreported elsewhere)

Document No.: AC01080