Parry v Cleaver

In assessing personal injury damages, the court must first identify the claimant’s real loss, then ask separately whether a benefit received because of the injury should be deducted. There is no universal rule of deduction. The benefit’s intrinsic character, justice and public policy control.

A contributory occupational disablement pension is the product of past service and deferred remuneration, analogous to insurance. It is therefore not deducted from pre-retirement loss of earnings. After the normal retirement date, however, an ill-health pension is credited against the larger retirement pension lost, because pension is then compared with pension. A lump-sum award for future financial loss must also reflect contingencies and present value.

The appellant police constable was injured through the respondent’s negligent driving and became permanently incapable of police service. He was discharged with a contributory ill-health pension and obtained lower-paid clerical employment. He claimed damages for lost earnings until his expected police retirement and for the reduction in his eventual retirement pension.

John Stephenson J disregarded the ill-health pension when assessing pre-retirement lost earnings and awarded £16,580 15s 2d. The Court of Appeal treated the pension as income reducing the loss and reduced the award to £7,937. The central issue before the House was whether a contributory occupational disablement pension should be deducted from damages for loss of earnings, and how it should be treated after the claimant’s expected retirement date.

1. Disposition. By a majority of three to two, the House allowed the appeal. Lord Reid delivered the leading speech. Lord Pearce and Lord Wilberforce agreed that the police pension should not reduce the pre-retirement award for lost earnings. Lord Morris of Borth-y-Gest and Lord Pearson dissented.
2. Per Lord Reid, Lord Pearce and Lord Wilberforce, identifying the earnings actually lost is distinct from deciding whether a benefit received because of the injury must be deducted. British Transport Commission v Gourley [1956] AC 185 required a realistic assessment of lost income, including taxation, but did not establish a universal rule governing collateral benefits. Deductibility depends on the intrinsic character of the benefit, informed by justice, reasonableness and public policy.
3. Per the majority, private insurance proceeds remain outside the account because the claimant bought the benefit through premiums. Benevolent payments are likewise disregarded because they are intended for the injured person, not to relieve the tortfeasor. The principle in Bradburn v Great Western Railway Co [1874] LR 10 Exch 1 was applied.
4. Per Lord Reid, a contributory occupational pension is delayed remuneration and a form of insurance purchased through past service and contributions. Lord Pearce and Lord Wilberforce similarly regarded the pension as the reward of pre-injury service rather than a substitute for post-injury wages. The ill-health pension was therefore not deductible from damages for loss of earning capacity before the appellant’s expected police retirement. Payne v Railway Executive [1952] 1 KB 26 was approved, while Browning v War Office [1963] 1 QB 750 was overruled.
5. After the expected retirement date, the ill-health pension had to be credited against the larger retirement pension which the appellant would otherwise have received. At that stage the court was comparing like with like: both sums were products of the same pension arrangement. The discretionary character of a pension could affect its valuation but did not justify automatically disregarding it in full.
6. The future-loss figure also required reduction for mortality and other contingencies, and for the present receipt of a lump sum. The Court of Appeal’s reduction by one half was excessive. Damages were assessed at £9,500. Its order was discharged, the trial order was restored subject to that reduction, and the cause was remitted to the Queen’s Bench Division.
7. Dissent. Lord Morris and Lord Pearson considered that the fixed pension arose under the same employment arrangement as the lost salary and should reduce the pre-retirement loss. They would have applied the compensatory principle by comparing the claimant’s lost income with all income actually received, subject to an appropriate discount for future loss.

• House of Lords: In Parry v Cleaver [1970] AC 1, the appeal was allowed by a majority of three to two. The Court of Appeal’s order was discharged. The trial order was restored subject to reducing damages to £9,500, and the cause was remitted to the Queen’s Bench Division.
• Court of Appeal: The court treated the ill-health pension as reducing the appellant’s financial loss and reduced the award to £7,937.
• Queen’s Bench Division: John Stephenson J disregarded the ill-health pension when assessing pre-retirement lost earnings and awarded £16,580 15s 2d.