Longden v British Coal Corpn

Damages for personal injury compensate the claimant’s net loss. An incapacity pension received before normal retirement age is nevertheless disregarded when assessing lost earnings. It cannot later be capitalised and deducted from a claim for pension loss arising after retirement.

For the post-retirement period, the court must compare like with like. Incapacity pension payments received during that period must therefore be deducted from the retirement pension which would otherwise have been received. A lump sum obtained by partially commuting the incapacity pension must be apportioned. The portion attributable to post-retirement pension income is deductible from the pension loss.

The respondent was injured while employed at the appellant’s colliery and retired on grounds of incapacity. Under the employer’s contributory superannuation scheme, he received an annual incapacity pension and a lump sum. Had he remained at work until the normal retirement age of 60, he would have received a larger annual pension and lump sum.

Douglas Brown J awarded damages which included pension loss. The Court of Appeal, in [1995] ICR 957, dismissed the employer’s appeal but corrected the calculation of that loss to £26,570.

The House considered whether all incapacity pension benefits received before normal retirement had to be deducted from the subsequent pension loss. If they did not, it also had to decide whether the incapacity pension lump sum should be apportioned between the periods before and after normal retirement.

1. The appeal was allowed in part. Lord Hope of Craighead delivered the leading speech. Lord Goff of Chieveley, Lord Slynn of Hadley, Lord Steyn and Lord Clyde agreed with the order and reasoning. The pension-loss award was reduced from £26,570 to £24,940, producing total damages of £426,124.

2. Per Lord Hope, damages are compensatory and ordinarily measure the claimant’s net consequential loss. Receipts caused by the injury are prima facie brought into account. That principle, however, operates subject to the established treatment of incapacity and disability pensions under Parry v Cleaver [1970] AC 1 and Smoker v London Fire and Civil Defence Authority [1991] 2 AC 502.

3. An incapacity pension received before normal retirement age cannot be deducted from lost earnings. Nor can those earlier payments be capitalised and carried forward to extinguish pension loss arising after retirement. Pension receipts and earnings are different in character. The earlier pension also supplies income during disability, and the recipient cannot reasonably be expected to preserve it for retirement.

4. The comparison must instead be made within the period to which the claimed loss relates. After normal retirement age, the lost retirement pension and the continuing incapacity pension are receipts of the same character arising in the same period. The incapacity pension must therefore be credited against the retirement pension which would otherwise have been received. This produces the recoverable net pension loss without double recovery.

5. The incapacity lump sum represented a partial commutation of annual pension payments throughout the pensioner’s lifetime. Its effect consequently extended beyond normal retirement age. To compare like with like, the portion representing commuted post-retirement income had to be deducted from the pension loss. The accepted actuarial calculation, using the Ogden Tables, identified that portion as £1,630. The employer’s broader contention concerning all pre-retirement pension payments failed, but its appeal succeeded to the extent of this deduction.

1. House of Lords: The employer’s appeal was allowed only to the extent of deducting £1,630, representing the post-retirement portion of the incapacity pension lump sum. The total award was reduced to £426,124.

2. Court of Appeal: McCowan, Roch and Ward LJJ dismissed the employer’s appeal, subject to correcting the pension-loss award to £26,570: [1995] ICR 957.

3. High Court: Douglas Brown J awarded damages including £33,036 for pension loss. The parties subsequently agreed that this component had been miscalculated and should have been £26,570.