British and Irish Legal Information Institute

Freely Available British and Irish Public Legal Information

[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

United Kingdom House of Lords Decisions

You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Longden v. British Coal Corporation [1997] UKHL 52; [1998] AC 653; [1998] 1 All ER 289; [1997] 3 WLR 1336 (27th November, 1997)
URL: http://www.bailii.org/uk/cases/UKHL/1997/52.html
Cite as: [1997] UKHL 52, [1998] IRLR 29, [1998] OPLR 223, [1998] ICR 26, [1997] 3 WLR 1336, [1998] PIQR Q11, [1998] 1 All ER 289, [1998] AC 653

[New search] [Buy ICLR report: [1998] AC 653] [Buy ICLR report: [1997] 3 WLR 1336] [Buy ICLR report: [1998] ICR 26] [Help]

Longden v. British Coal Corporation [1997] UKHL 52; [1998] AC 653; [1998] 1 All ER 289; [1997] 3 WLR 1336 (27th November, 1997)

HOUSE OF LORDS

Lord Goff of Chieveley Lord Slynn of Hadley Lord Steyn
Lord Hope of Craighead Lord Clyde

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE

LONGDEN
(RESPONDENT)

v.

BRITISH COAL CORPORATION
(APPELLANTS)

ON 27 NOVEMBER 1997

LORD GOFF OF CHIEVELEY

My Lords,

I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hope of Craighead. For the reasons he gives I would allow this appeal.

LORD SLYNN OF HADLEY

My Lords,

I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hope of Craighead. I agree that the appeal should be allowed to the extent indicated by him but should otherwise be dismissed.

LORD STEYN

My Lords,

I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hope of Craighead. For the reasons he gives I would also make the order which he proposes.

LORD HOPE OF CRAIGHEAD

My Lords,

The question in this appeal relates to the assessment of damages in a claim of damages for personal injury. It concerns the treatment of a collateral benefit. The particular form of benefit with which we are concerned is an incapacity pension to which the plaintiff became entitled under his employers' staff superannuation scheme. This was a contributory pension scheme, which provided a pension to its contributors on their retirement from their employment at or after the normal retirement age. But it also provided an incapacity pension to its contributors in the event of their retirement before the normal retirement age on the ground of their ill-health. These were alternative forms of benefit, as contributors were entitled under the scheme to receive one or other of the two pensions but not both of them.

The plaintiff sustained injury in an accident during the course of his employment at one of the defendants' collieries. The payments by way of pension which he received upon taking incapacity retirement after the accident consisted of an annual pension and a lump sum. It was accepted that these payments had to be ignored in the assessment of the plaintiff's claim for loss of earnings, both for the past and the future, until he reached the normal retirement age. But the plaintiff had also included in his claim for damages a claim for loss of pension after the normal retirement age. That loss was said to consist of the lump sum to which he would have been entitled on retirement had he continued in his employment until the normal retirement age, together with the difference between the annual retirement pension which he would have received after that date and the annual incapacity pension which he was in fact receiving and would continue to receive under the scheme. This approach to the assessment of his claim of damages was the same as that which was approved in Parry v. Cleaver [1970] AC 1 and Smoker v. London Fire and Civil Defence Authority [1991] 2 A.C. 502. The method which was adopted in calculating the total amount of the pension loss was that which was approved in Auty v. National Coal Board [1985] 1 W.L.R. 784.

The defendants maintained at the trial that the award for the plaintiff's pension loss ought to take account of the lump sum which the plaintiff had received as part of his incapacity pension, together with the total amount of all the annual payments which he had received and would continue to receive or to be entitled to receive under his incapacity pension until he reached the normal retirement age. On their approach the pension loss had to be calculated by setting off against the net loss in the amount of pension which the plaintiff would receive after the normal retirement age all the benefits which he was entitled to receive in the form of an incapacity pension prior to that date. The defendants' superannuation scheme was benevolent to those who had to retire early on the ground of physical or mental incapacity--so much so, that the effect of the defendants' approach to the calculation of the claim for pension loss was to reduce that claim to nil. Their argument was that, if the calculation took full account of all the payments to which the plaintiff was entitled under the scheme from the date when he was awarded his incapacity pension, he had sustained no loss of pension at all.

The trial judge, Douglas Brown J., awarded the plaintiff a sum of damages which included £33,036 under the heading of pension loss. It was subsequently agreed that the amount of this loss was erroneously calculated at the trial and that it should be corrected to £26,570. The Court of Appeal (McCowan, Roch and Ward LJJ.) [1995] I.C.R. 957 dismissed the defendants' appeal, subject only to varying the sum for which judgment was to be entered for the plaintiff to correct the error which had been made in calculating the amount of the pension loss. The defendants have now appealed against that decision to this House. The plaintiff, while seeking to support the decisions of Douglas Brown J. and the Court of Appeal, has introduced an alternative argument which was not presented to the courts below. This is that the lump sum which he received on his retirement under his incapacity pension should be apportioned between the periods before and after his normal retirement age and that the portion attributable to the period after his normal retirement age should then be set off against the amount claimed for pension loss.

It is not necessary to say much about the facts of the case. The plaintiff was employed by the defendants as a deputy in their West Thorpe Colliery, North Derbyshire. He was injured in an accident there on 17 April 1985 when a load of heavy steel sections on a tram which he was accompanying up a gradient was dislodged and slid back on to his right foot. His foot was trapped and crushed between the steel sections and the rail of the tram track and he fell backwards, twisting his back. He was unable to continue in his employment as a result of his injuries. He resigned from his employment and applied for a pension to the staff superannuation scheme trustees. On 22 August 1986 he was awarded an incapacity pension under the scheme. He was 36 years old at the date of the accident, and he was 37 years of age when he retired. His normal retirement age for the purposes of the scheme, as a contributor whose service would have terminated on or after 17 May 1990 had he continued in the defendants' employment, would have been the date when he attained the age of 60. The trial judge found that if the plaintiff had not been injured he would probably have continued working for the defendants until he attained the age of 60, and that as a result of the accident his expectation of life had been reduced by three years to 71 years.

On accepting an incapacity pension after his accident the plaintiff became entitled to and did receive under rule 22 of the scheme a lump sum of £10,185.91, together with an annual pension amounting at the date of the trial to £5,199. It is agreed that if he had continued in his employment to the age of 60 he would have received on his retirement at that age by way of retirement pension under rule 21 a lump sum of £33,242 and an annual pension of £11,080. On these figures the net annual pension loss after the age of 60 amounted to £4,411. An agreed multiplier of 10 was applied to that figure, resulting in a loss of pension of £44,110. To this was added the lump sum loss of £33,242, resulting in a total arithmetical loss of £77,352. There were then applied to this total a discount factor of 0.458 per cent. to allow for the accelerated receipt of money, and the resulting figure of £35,427 was then discounted again by a factor of 25 per cent. to allow for contingencies. This produced a final discounted pension loss of £26,570. After taking account of sums for special damages including loss of earnings for the past, for future earnings loss, and for pain and suffering and loss of amenities the total award was £427,753.

The only other point which requires to be noted at this stage is that it had been the practice before the hearing at first instance in this case, as between the defendants and those claiming damages from them for personal injury, to deduct from the calculation of pension loss the whole of the lump sum received by the claimant when he took incapacity retirement under the scheme. The calculation of the plaintiff's claim of damages which was first put forward on his behalf was consistent with this practice, because it allowed for the deduction from his claim of the whole of the lump sum of £10,185.91 which the plaintiff received in August 1986. Counsel for the plaintiff was permitted to withdraw this deduction at the hearing at first instance. The primary argument which Mr. McLaren Q.C. advanced on his behalf was that no such deduction should be made. His alternative argument was that it should be apportioned between the pre- and post-retirement periods. He proposed the following method for carrying out this apportionment. Using the Ogden Tables and applying a discount rate of 4.5 per cent, the multiplier to the pension age of 60 for a man aged 37, which was the age which the plaintiff had attained when he retired, is 14. Taking his retirement age plus three years to add back the number of years which were deducted from his expectation of life due to the accident, i.e. 40, the whole life multiplier at the same discount rate is 16.7. The post-retirement element in the lump sum is thus 2.7/16.7 x 100 = 16 per cent. 16 per cent of the lump sum of £10,186 is £1,630. On this approach £1,630 should be deducted from the pension loss, resulting in a net figure of £24,940.

Mr. Hawkesworth Q.C. for the defendants made no criticism of these calculations, although he pointed out that the use of the Ogden Tables did not yet have statutory authority. Section 10 of the Civil Evidence Act 1995, which provides for the admissibility and proof of the Ogden Tables, is not yet in force: see the Civil Evidence Act 1995 (Commencement No 1) Order 1996 (S.I 1996 No. 3217), which brought into force all the provisions of that Act except sections 10 and 16(5). But we were informed that in practice the tables are now regularly used in the calculation of damages. It has been held in Scotland that the court can take judicial notice of the Ogden Tables: O'Brien's Curator Bonis v. British Steel Plc., 1991 S.C. 315. So there seems to be no good reason for not adopting Mr. McLaren's approach to the calculation, assuming that in principle such a calculation is necessary to arrive at the net loss.

Accordingly two issues are before us in this appeal. The first relates to the total of all the payments which the plaintiff will have received by way of incapacity pension by the date when he attains the normal retirement age. Is it necessary for the total of all these payments to be brought into account in calculating the amount of the loss of pension after the normal retirement age? The second, which arises only if the first question is answered in the negative, relates to the proper treatment of the lump sum which the plaintiff received when he took his incapacity pension. Is it appropriate for this sum to be apportioned, and for that part of it which is attributable to the period after the normal retirement--but only that part--to be deducted from the claim in order to arrive at the net loss?

The argument to which we listened was presented with commendable skill, clarity and economy on both sides. There was no dispute about the basic principles. The question is how they should be applied to the facts of this case, and in particular to the defendants' argument that the plaintiff can only be held to be entitled to damages for loss of pension if, looking at the matter overall, he has been able to demonstrate that he will be worse off in regard to the whole of his pension rights throughout his lifetime. As Mr. McLaren put it, the only question which divides the parties is one of deductibility. The defendants had conceded in the courts below that the incapacity pension payments which the plaintiff has received and will continue to receive up to his normal retirement age are not deductible from his claim for loss of earnings. There was no dispute that his claim for loss of pension after the normal retirement age could be no greater than his net loss of pension, after setting off the amounts of incapacity pension which he will receive after that date against the amounts of retirement pension which he would have received but for the accident. The question which remained was whether it was sufficient, in order to arrive at the net loss, to set off only the amounts of incapacity pension which the plaintiff will receive when he would otherwise have been in receipt of his retirement pension, or whether there must also be set off against the retirement pension the total amount of all the pension benefits which he has received and will continue to receive up to the date when he would have retired.

The defendants' argument was in essence a very simple one. The plaintiff was entitled to receive as damages no more than his net loss of pension. The proper way to calculate that net loss was to establish the difference, if any, between the annual pension and the lump sum actually received and receivable and the annual pension and the lump sum which the plaintiff would have received had he worked to his normal retiring age.

There is no doubt that the plaintiff cannot recover under his claim of damages for pension loss any more than the amount of his net loss. The purpose of the award of damages is to compensate him for his loss, not to enrich him. It should leave him no worse off than he was before, nor should he be any better off. As Lord Bridge of Harwich said in Hussain v. New Taplow Paper Mills Ltd [1988] A.C. 514, 527, the rule is that prima facie the only recoverable loss is the net loss. Financial gains which accrue to the plaintiff which he would not have received but for his accident are prima facie to be taken into account in mitigation of the losses which he has sustained. The principle is that the compensation which he receives by way of the payment of a sum of money as damages should as nearly as possible put him in the same position as he would have been in if he had not sustained the wrong for which he is to be compensated: Lord Blackburn in Livingstone v. Rawyards Coal Co. (1880) 5 App.Cas. 25, 39. In Hodgson v. Trapp [1989] AC 807, 819 Lord Bridge summarised the law in this way:

The main point: deduction of all the pre-retirement payments

I shall deal first with the main point, which was Mr. Hawkesworth's argument that the total of all the pre-retirement payments had to be deducted in order to arrive at the net loss of pension after the normal retirement age.

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 [1970] AC 1 and Smoker v. London Fire and Civil Defence Authority [1991] 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 [1947] 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 [1988] 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 [1995] 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 [1970] AC 1 has settled the matter in favour of the result in Payne v. Railway Executive [1952] 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 [1974] 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 [1970] AC 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.

Although the incapacity pension is not an indemnity against the disabled man's wage loss, its purpose is to provide him with a source of income which he can use to support himself and his family during the period of his disability. The same may be said of the retirement pension in regard to the period after his normal retirement age. What the plaintiff is seeking in his claim for pension loss is a sum of money to recompense him for the loss of the retirement pension which would otherwise have been available to enable him to support himself and his family after his normal retirement age. It is no help to him to be told that the money to compensate him for this loss is already being paid to him and that it will continue to be paid to him during the period when he is unable to earn wages because of his disability. He cannot reasonably be expected to set aside the sums received as incapacity pension during this period in order to make good his loss of pension after his normal retirement age. I think that it would, to adopt Lord Reid's approach in Parry v. Cleaver [1970] AC 1, strike the ordinary man as unjust if the plaintiff's claim for loss of pension after his normal retirement age were to be extinguished by capitalising sums paid to him before that age as an incapacity pension to assist him during his disability. On the other hand there can be no injustice in setting off the sums received by way of incapacity pension against the sums lost by way of retirement pension arising in the same period.

As for the second point, which is the point of principle, the defendants' argument has to be tested by looking once more at the rule that damages are compensatory and that the only loss which is recoverable as damages is the net loss. The defendants say that the whole amount of the disability pension should be taken into account in assessing the whole amount of the loss of retirement pension. In so far as the payments relate to the same period there is no argument. The loss of retirement pension cannot be claimed without bringing the sums received by way of incapacity pension into account over the same period. But what of the residue of the pension entitlement which is represented by the sums received by way of incapacity pension up to the normal retirement age? Prima facie, as receipts arising from the accident, they should be taken into account in the assessment of the plaintiff's claim of damages. But in Parry v. Cleaver it was held that receipts of this kind should be left out of account. This was not only because they were not of the same character as the loss of wages against which the deductions were sought to be made. It was because they were receipts of such a nature that--except in so far as they fell to be set against a loss of pension arising in the same period -they should not be considered at all in computing damages.

This seems to me to provide the complete answer to the argument which the defendants have advanced in this case. The effect of Parry v. Cleaver and Smoker v. London Fire and Civil Defence Authority [1991] 2 A.C. 502 is that incapacity and disability pensions fall outside the general rule that prima facie all receipts due to the accident must be set against losses claimed to have arisen because of the accident. It is impossible to reconcile the defendants' argument that at the end of the whole exercise one must stand back and assess the net loss, and in doing so make the deduction for which they contend, with the decision in these cases that these payments cannot be deducted against a claim for loss of income arising in the same period. The only reason why incapacity and disability pension payments received after the normal retirement age must be brought into account in computing the claim for loss of pension after that age is that the claim at this stage is for loss of pension, so one cannot properly calculate the loss of pension arising in this period without taking into account receipts of the same character arising in the same period.

In the Court of Appeal [1995] I C.R. 957 Roch L.J., with whose opinion the other members of the court agreed, said, at p. 962 that if the plaintiff were not permitted to recover the difference between the retirement pension he would have enjoyed after the normal retirement age and the incapacity pension, the tortfeasor would enjoy an advantage, namely the saving which he would make on the calculation of the loss of earnings which left the pension contributions out of account in computing the net loss. He saw this as being necessary in order to ensure that there was no element of double recovery. I would, with respect, prefer for my part to look at the matter from the point of view of the plaintiff, rather than that of the tortfeasor. The principle is that the plaintiff must be compensated, but no more than compensated for his loss. As Dixon C.J. indicated in the High Court of Australia in National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 C.L.R. 569, 572 not much assistance is to be found in contemplating the supposed injustice to the wrongdoer. The concern of the court is to see that the victim is properly compensated. There must, of course, be no element of double recovery for the same tort. But there is no element of double recovery on the plaintiff's approach to the calculation of his loss of income, applying Parry v. Cleaver [1970] AC 1 to his claim for loss of earnings, during each of the periods of his income loss.

I should for completeness add that we were referred by Mr. McLaren to the law in other jurisdictions on the question whether there should be a deduction from damages for this type of benefit. In both Scotland and Ireland this question has been resolved by statute. For Scotland section 10 of the Administration of Justice Act 1982 provides that, subject to any agreement to the contrary, in assessing the amount of damages payable to the injured person in respect of personal injuries there shall not be taken into account so as to reduce that amount any contractual pension or benefit. For Ireland section 2 of the Civil Liability (Amendment) Act 1964 (No. 17 of 1964) provides that in assessing damages in an action to recover damages in respect of a wrongful act resulting in personal injury not causing death account shall not be taken of any pension, gratuity or other like benefit payable under statute or otherwise in consequence of the injury. In Cooper v. Miller (1994) 113 D.L.R. (4th) 1 the Supreme Court of Canada held that pensions which were not in the nature of an indemnity for the loss claimed should remain non-deductible against a claim of damages. In Australia it was held in National Insurance Co. of New Zealand Ltd. v. Espagne (1961) 105 C.L.R. 569 that in assessing damages to be awarded in an action for personal injuries caused by negligence the award of an invalid pension was to be disregarded: see also Redding v. Lee (1983) 151 C.L.R. 117. Thus far the position in these other jurisdictions is consistent with what was decided in Parry v. Cleaver. But it does not appear that the issue with which we are concerned in this case has been considered in any of these jurisdictions. So I do not think that we can gain any assistance from them as to what, on public policy grounds, should be done in this case.

I would therefore reject Mr. Hawkesworth's argument on the main point.

The alternative point: the lump sum

The plaintiff's primary submission was that no deduction should be made from his claim for pension loss for the lump sum of £10,185.91 which he received following his retirement on 22 August 1986. But Mr. McLaren's alternative argument--it will be recalled that the previous practice was for the whole of the lump sum to be deducted--was that it should be divided between the pre- and post-retirement periods. I have already described the calculations which he then made in arriving at the figure which he said should be deducted in order to arrive at the net loss. The question to which I now turn is the question of principle, as to whether it is right that the lump sum should be divided up in this way in order to arrive at the sum to which the plaintiff is entitled as damages for his pension loss.

Mr. McLaren was commendable frank on this point. He said that the calculations were not unduly complicated, and he assured that us that no further evidence was needed to enable them to be done. The matter was simply one of arithmetic, making use of the Ogden Tables in a way that was now quite normal in practice in making calculations of this kind. He also accepted that, if one was trying to get as far as possible to the amount of the net loss, one should allocate the lump sum and that in logic--and thus in principle--it was preferable to take this course rather than leave it wholly out of account. But he submitted that no deduction should be made in this case, as it was simply a matter of chance that the plaintiff had met with his accident on a date prior to that on which, under the rules of the scheme, the claimant would have been entitled to exercise an option whether to take his pension all as income or to accept part of it commuted to a lump sum. Mr. Hawkesworth expressed no preference either way, as his argument was that the proposal to allocate did not meet his fundamental point which was that account should be taken of all receipts prior to the normal retirement age.

The answer to the argument is to be found in an analysis of the nature and purpose of the lump sum. The scheme is quite clear on these matters. Where a lump sum is paid at the commencement of the man's retirement, its effect is to reduce the amount of the annual pension which he will thereafter receive for the whole of the period for which the pension is to be payable. It is a commutation in part of the annual pension to which the contributor is entitled under the scheme to which he has contributed. Thus the effect of the lump sum which the plaintiff actually received in this case was to reduce the amount which he has received and will continue to receive for the rest of his lifetime by way of his annual pension. The fact that things might have turned out differently if his accident had occurred at a later date is irrelevant, because the calculations to arrive at the net loss must be directed to what has actually happened as a result of the accident for which the plaintiff is claiming damages. Thus the effect of the lump sum will be felt not only during the period up to the plaintiff's retirement age but also during the period after that age when he would, but for the accident, have been receiving his retirement pension.

It is not being suggested by Mr. McLaren that the whole of the lump sum of £10,185.91 should be deducted from the lump sum of £33,242 which the plaintiff would have received had he continued to work until he reached the normal retirement age. These two lump sums represent for the most part commutations of pension payments arising in different periods. But there is clearly an element of overlap during the period after the normal retirement age. The incapacity pension which the plaintiff will receive during that period will be less than it otherwise would have been as a result of the payment to him of the lump sum. The claim is for the difference between the periodical payments reduced by the lump sum and the periodical payments which he would otherwise have received, similarly reduced by the lump sum to which he would have been entitled on reaching the normal retirement age, but without bringing anything into account to make up for the effect of his lump sum on his incapacity pension after that age.

I think that it is clear that, in order to compare like with like, the plaintiff should be required to set against his claim for the loss of the retirement pension an appropriate portion of the lump sum which he received on his retirement on the ground of incapacity. This is for the same reason as that which explains why the annual payments by way of the incapacity pension must be brought into account. These annual payments will be received as income during the same period as that to which the claim for loss of pension relates. So it is right also to bring into account that part of the lump sum which represents the commutation of a part of the annual payments which he would otherwise have received as income during the same period. The effect of the calculations which have been provided to us is to identify £1,630 as the amount which should be deducted. The plaintiff's claim for his loss of pension must therefore be reduced from the sum of £26,570 which was awarded to him in the Court of Appeal, after correcting the figure presented to the trial judge, to £24, 940.

Although I would hold that the plaintiff has succeeded on the main point contended for by Mr. Hawkesworth, I would also hold that it is necessary for the award of damages to be altered to give effect to Mr. McLaren's alternative argument relating to the treatment of the lump sum. I would therefore allow this appeal to that extent, and assess the total award of damages at £426,124.

LORD CLYDE

My Lords,

I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hope of Craighead. For the reasons he has given, I, too, would allow this appeal.