Williams v BOC Gases Ltd

Damages for negligence are compensatory and are assessed by reference to the claimant’s net loss. Financial benefits received because of the injury are therefore prima facie deducted, subject to narrow exceptions.

The exception for benevolent payments protects benefits provided by third parties. It does not normally protect a voluntary payment made by the tortfeasor. A tortfeasor’s payment, particularly one expressly made as an advance against damages, is deductible even if it was discretionary and was made before a claim was intimated. This avoids double recovery and encourages employers to make prompt voluntary payments to injured employees.

The claimant, a goods-vehicle driver, left his employment on medical grounds. On termination, his employer paid him £11,889.10 from its own discretionary fund. Its letter described the sum as an advance against any damages awarded in a claim against the employer.

He later brought a personal-injury action alleging that his work had aggravated a pre-existing back condition. Liability was conceded and damages were agreed at £3,000, subject to whether the termination payment had to be set off.

HH Judge Diehl QC in Swansea County Court held that the payment was not deductible and entered judgment for the claimant. The employer appealed. The central issue was whether a discretionary payment by the alleged tortfeasor, made on medical retirement and expressly described as an advance against damages, fell within the collateral-benefits exception to the rule against double recovery.

Disposition

Brooke LJ, with whom Thorpe LJ agreed, allowed the employer’s appeal. The county court order was set aside and judgment was entered for the defendants.

1. The starting point was that negligence damages are purely compensatory. A claimant should recover no more and no less than the net loss caused by the tort. Benefits which would not have been received but for the injury are prima facie brought into account. Insurance proceeds and third-party benevolence are limited exceptions to that rule.

2. The benevolence exception protects gifts provided by third parties for the injured person’s benefit. Its policy is to avoid allowing the wrongdoer to benefit from another person’s generosity and to avoid discouraging charitable giving. Those reasons do not apply where the payment comes from the tortfeasor. Deduction of the tortfeasor’s voluntary payment instead encourages prompt assistance to an injured employee and prevents compensation twice for the same loss.

3. The court treated McCamley v Cammell Laird Shipbuilders Ltd [1990] 1 WLR 963 as turning on its particular facts. That case concerned a pre-arranged personal-accident insurance benefit, payable independently of fault, rather than a direct payment by the employer expressly advanced against damages.

4. The claimant’s arguments that the payment was unconditional and calculated by reference to employment factors did not displace the general rule. The employer had expressly identified it as an advance against damages. Neither rationale for the third-party benevolence exception was available. The sum exceeded the agreed damages, so the claim was extinguished by set-off.

• Court of Appeal (Civil Division): Allowed the defendants’ appeal, set aside the county court order, and entered judgment for the defendants.
• Swansea County Court: On 19 April 1999, HH Judge Diehl QC held that the discretionary termination payment was not deductible and entered judgment for the claimant for £3,000.