Supreme Court of Ireland Decisions

1. The plaintiff in these proceedings was, at the relevant time, in the employment of the Notice Party (hereafter “the ESB” ). He was injured while he was delivering materials to the defendant’s premises. The plaintiffs instituted proceedings against the defendant arising out of the injuries he had sustained which were subsequently settled. While the plaintiff was out of work [*2]

2. An issue was tried in the High Court (Macken J.) as to whether the plaintiff was entitled to recover these sums from the defendant, the defendant contending that, since the plaintiff was not at any loss in respect of them, they could not form part of his damages. Since, in the event of the plaintiff being held to be entitled to recover these sums from the defendant, he would be obliged by virtue of his undertaking to refund them to the ESB, the protagonists in the argument before the High Court and again in this court were effectively the ESB and the defendant.

3. The ESB had deducted from the sums paid to the plaintiff during the time that he was out of work the normal deductions for PAYE, PRSI and contributions in respect of his pension. In a careful and comprehensive written [*3] judgment, the learned High Court judge upheld the contention of the ESB that the plaintiff was entitled to recover the sums in respect of loss of wages from the defendant, but concluded that the deductions in respect of PAYE, PRSI and pension contributions were not recoverable from the defendant. The ESB has appealed to this court from the latter finding: a cross-appeal by the defendant from her finding in favour of the ESB on the recoverability of the sums paid in respect of wages was not pursued.

4. The undertaking given by the plaintiff was in the following terms:-

5. That undertaking in turn gave effect, in broad terms, to a clause in an agreement entered into between the ESB and the Trade Unions representing its employers, known as the 1975 Comprehensive Agreement, which provided that

6. On behalf of the ESB, Mr. Hardiman S.C. submitted that the true measure of the plaintiff’s loss was not the wages which he would have earned during the period net of PAYE, PRSI and pension contributions. The measure of his loss was the gross wages which he would have earned and the defendant, as a wrongdoer, was not entitled to benefit from the fact that the plaintiff would have been paid his wages net of these deductions. Nor could the defendant be heard to complain that the plaintiff was now receiving more money than he would have if he had not been injured in an accident: the assessment of damages in accordance with recognised legal principles sometimes had the consequence that the plaintiff was financially better off than he would have been if the defendant had not committed the wrong in question. He cited in this [*5] context the decision in Harbutt’s Plasticine Limited .v. Wayne Tank and Pump Company Limited (1971) All ER 225.

7. Mr. Hardiman said that the decision in British Transport Commission .v. Gourley (1955) 3 All ER 796 which had been followed in this country in Glover .v. BLN Limited (No. 2) (1973) IR 432 was undoubtedly authority for the proposition that, in some cases at least, damages in respect of loss of earnings should be calculated on the basis of the net loss after deducting tax. However, he submitted that it was unduly simplistic to treat this as a universal rule that damages must always be assessed on this basis. Both of those cases were dealing solely with the question of the loss sustained by the plaintiff. Different considerations arose where a third party made the payments as part of the process of paying the plaintiff the full amount of his wages during the period of his absence from work as a result of the injury and thus avoiding undue hardship to him.

8. Finally, he submitted that, in a case such as this involving three parties -the wrongdoer, the plaintiff and the employer - justice required that the loss should fall on the wrongdoer rather than the blameless parties involved. [*6]

9. On behalf of the defendant, Mr. Reidy S.C. submitted that the liability of his client in damages was confined to the actual loss sustained by the plaintiff. He owed no duty, either tortious or contractual, to the ESB. To allow a third party to recover damages from an admitted wrongdoer to which he was only entitled, if at all, as a result of an agreement between himself and the injured party was inconsistent with the statement of the law by Kingsmill Moore J., speaking for this court in Attorney General .v. Ryan’s Car Hire Limited (1965) IR 642.

10. It is beyond argument, in my view, that the plaintiff will be fully compensated in this case by the payment to him of the wages that he would have earned after deducting PAYE, PRSI and pension contributions. His obligation under the undertaking was to refund to the ESB “the total amount so advanced [to me during my absences from duty arising out of my accident]” out of any monies which he might recover from the defendant. To require the defendant to pay more than that sum would be to compensate the plaintiff for a loss which he had never suffered. It would, of course, have been open to the ESB to require the plaintiff to include in his claim the gross wages to which he would have been entitled during his absence from work because of the injury without any deduction for PAYE, PRSI or pension contributions. Whatever might have been the position if such an agreement had been entered into, there [*7] is no legal basis, in its absence, on which either the plaintiff or the ESB could recover those sums from the defendant. Unlike the net wages, these were payments which had been applied for particular purposes by the ESB on behalf of the plaintiff and, in the absence of any agreement, were irrecoverable.

11. That conclusion is supported by the decision of the English Court of

12. Thomas Bingham M.R. and Sir Michael Fox agreed), said:-

13. I would also adopt that as a correct statement of the law. Although

14. Mr. Hardiman suggested in argument that the pension contributions were in a

15. As to the broader grounds on which the ESB sought to base their claim in

16. Kingsmill Moore J. in Attorney General & Other .v. Ryan’s Car Hire Limited .

17. In that case the learned judge said that [*9]

18. I would dismiss the appeal and affirm the order of the High Court.