The worker had been injured at work. His employer was partly at fault. The employer had a compensation scheme for which it paid, and sought to deduct the payments to the worker from the damages it was to pay. The Court was also invited by the defendants to consider an alternative ground for deductibility which was based on public policy grounds.
Held: Lloyd LJ: ‘Arguments based on public policy tend to be somewhat imprecise, even, at time, emotive. The present case was no exception. Why, said [counsel for the plaintiff[, should third party tortfeasors reap the benefit of a scheme which was intended, not for their benefit, but for the benefit of the employee? Why should a wrongdoer pay less than he would otherwise pay, or even nothing at all, when it is his victim who has earned the benefit by his labour? I do not find such arguments on either side of much assistance. But there is one consideration of public policy which is worth mentioning, If an employee is injured in the course of his employment, and his employers make him an immediate ex gratia payment, as any good employer might, I see no reason why such a payment should not be take into account in reduction of any damages for which the employer may ultimately be held liable. Employers should be encouraged to make ex gratia payments in such circumstances. If so, then public policy would seem to require that such payments be brought into account.
It could, of course, be said that an ex gratia payment is like a sum coming to the plaintiff by way of benevolence, and should therefore be disregarded. This is so, where it is a third party who is ultimately held liable: see Cunningham v Harrison [1973] QB 942. But there must surely be an exception to that general rule where the ex gratia payment comes from the tortfeasor himself. So, if it is right that an ex gratia payment by the employer should be brought into account where the employer is the tortfeasor, why should it make any difference that the payment is one which he has contracted to make in advance? So if [counsel for the defendants] is wrong in his main argument, that payments under the scheme are in the nature of wages, and should be brought into account on that score, there would be much to be said for his alternative argument that such payments should in any event be brought into account on the grounds of `justice, reasonableness and public policy’. But it is unnecessary to decide the case on that ground, since, on the facts of the present case, [counsel] is entitled to succeed on his first ground.’
Lloyd LJ, Ralph Gibson LJ
[1987] 1 WLR 336
England and Wales
Cited by:
Cited – Longden v British Coal Corporation HL 13-Mar-1997
The plaintiff was injured whilst at work in one of the defendant’s collieries. The House considered the deductibility from damages awarded for personal injury of a collateral benefit.
Held: The issue of deductibility where the claim is for . .
Appeal from – Hussain v New Taplow Paper Mills Ltd HL 1988
The plaintiff was injured in an accident at work. His employer was partly responsible. For 13 weeks he received full sick pay in accordance with his contract. He then received half his pre-accident earnings under the permanent health insurance . .
Lists of cited by and citing cases may be incomplete.
Updated: 21 September 2021; Ref: scu.225048
