Black v Doncaster Metropolitan Borough Council

Late acceptance of a payment into court before trial does not give a claimant an automatic right to payment out. The court has a discretion under the County Court Rules. It should compare the litigation risks when the payment was made with those at the time of the application. Payment out may be refused where the risks have materially altered, whether through new evidence, trial developments or a change in law. The court must consider fairness to both parties, including the defendant’s reasons for paying in and the statutory consequences of recoupable benefits. A settlement should not be ordered where changed legal consequences would cause injustice to the defendant and no comparable injustice would result to the claimant.

An employee brought a county court personal injury claim alleging tenosynovitis caused by pneumatic and percussion tools. The defendants disputed liability and quantum but paid £2,500 into court under the Social Security (Recoupment) Regulations 1990.

Before trial, the Social Security (Recovery of Benefits) Act 1997 changed the recoupment consequences retrospectively. The claimant then gave late notice accepting the payment. Mrs Recorder Shipley ordered payment out. The defendants appealed, arguing that late acceptance engaged a discretion and that the change in law made payment out unjust. The central issue was how that discretion should be exercised under Order 11 of the County Court Rules.

Disposition and construction

Lord Justice Stuart-Smith delivered the principal judgment. Lord Justices Swinton Thomas and Ward agreed. The appeal was allowed unanimously.

1. Late acceptance. Under Order 11, rule 5, a claimant who gives notice of acceptance outside the prescribed period is not entitled as of right to payment out. Rule 5(3), which requires an order before money is paid out, gives the court a substantive discretion rather than requiring only a formal order.
2. Applicable approach. Although the wording of the county court provisions differs from the corresponding High Court provisions, their effect was the same for this purpose. The court considered Gaskins v. The British Aluminium Co Ltd [1976] 1 All ER 208, Proetta v. Times Newspapers Ltd [1991] 1 W.L.R. 337 and Cumper v. Pothecary [1941] 2 All ER 516. The relevant comparison is between the risks when the payment was made and those when payment out is sought. If the risks have substantially altered, payment out should ordinarily be refused. A material alteration may result from new evidence, developments at trial or a change in the law. If the risks remain substantially the same, payment out may be allowed, usually on appropriate costs terms.
3. Application. The retrospective change made by the 1997 Act meant that releasing the payment could expose the defendants to an additional liability of £15,247.15. Their payment had protected them not only against recoupment but also against the possibility of liability for modest general damages without loss of earnings. The potential statutory linkage between compensation for loss of earnings and recoverable benefits was therefore relevant to the fairness of the order.
4. Relative injustice. Payment out would cause injustice to the defendants because it would hold them to an offer made in materially different legal circumstances. There was no corresponding injustice to the claimant. He had ample opportunity to accept before the change in law and had chosen not to do so. The recorder was wrong either to treat payment out as an entitlement or, if exercising a discretion, to regard the defendants’ failure to withdraw the money as decisive.
5. Order. The order for payment out was set aside. The appeal was allowed with costs. The claimant was given 14 days to repay the money paid out, with interest from the date of payment. Leave to appeal to the House of Lords was refused.

• Court of Appeal: Allowed the defendants’ appeal, set aside the order for payment out, ordered repayment within 14 days with interest, and awarded costs.
• Doncaster County Court: Mrs Recorder Shipley ordered payment out of £2,500 on 24 October 1997 and made consequential costs orders.