Wisely v. John Fulton Plumbers Ltd (Scotland) and Wadey v. Surrey County Council

The House of Lords held that, under the Social Security (Recovery of Benefits) Act 1997, listed social security benefits which are to be disregarded in the assessment of damages (section 17) must also be disregarded when interest on those damages is calculated. The court treated the statutory scheme for recovery by the Secretary of State and the separate compensator process as distinct from the court's assessment of damages; accordingly the court should assess damages on a gross basis (disregarding listed benefits) and award interest on that gross amount. Key provisions considered included section 17 and the scheme in sections 8 and Schedule 2 of the 1997 Act and earlier provisions in the 1989 and 1992 Acts relating to interest.

This group of appeals raised whether social security benefits, which the Social Security (Recovery of Benefits) Act 1997 requires be disregarded when assessing damages for personal injuries, must nevertheless be taken into account when awarding interest on damages.

Background and parties:

• Wisely: pursuer injured at work brought an action in the Court of Session; the Inner House held interest should be calculated without deducting listed benefits (approving Spence v. Wilson and overruling George v. George C. Peebles & Son).
• Wadey: claimant in the County Court had special damages for past wages assessed without deducting benefits but the trial judge deducted benefits when assessing interest; the Court of Appeal allowed the claimant's cross-appeal following Wisely.

Procedural history: the Scottish case came from the Inner House of the Court of Session (1998 S.C. 910) and the English case from the Court of Appeal ([1999] 1 W.L.R. 1614); both were appealed to the House of Lords.

Issues framed: (i) Whether section 17 of the 1997 Act, which directs that listed benefits are to be disregarded in assessing damages, also requires those benefits to be disregarded when calculating interest on awards of damages; (ii) whether the court may, in exercise of its statutory discretion to award interest, take account of the benefits because the compensator will later deduct and pay recoverable benefits to the Secretary of State.

Court's reasoning in brief:

• The court emphasised the scheme of the 1997 Act which separates the court's assessment of damages from the compensator's later obligation to pay recoverable benefits to the Secretary of State, and noted the absence (unlike earlier legislation) of any provision requiring interest recalculation or directing that interest be assessed on a reduced sum.
• Section 17's clear direction to disregard listed benefits in assessing damages means the court must assess the gross amount for patrimonial loss and award interest on that assessed amount; sums disregarded for the purpose of assessing damages should not be treated as relevant when calculating interest.
• The court rejected submissions that the statutory discretion to award interest allowed courts to look behind section 17 and take anticipated deductions into account, concluding the statutory scheme and practical consequences point to awarding interest on the gross assessed damages.

Remedy sought: determination whether interest should be awarded on gross damages or on net damages after deducting listed benefits. The House held interest should be awarded on the gross damages assessed with benefits disregarded.

The appeals were dismissed. The House held that under the Social Security (Recovery of Benefits) Act 1997 the amount of listed benefits is to be disregarded in the assessment of damages (section 17) and, consequently, interest on those damages is to be calculated on the gross assessed amount without deducting the listed benefits. The court relied on the statutory scheme separating the court's award from the compensator's subsequent deduction and the omission from the 1997 Act of the earlier express provision (in the 1990/1992 provisions) directing deduction for interest calculations.

Appeals from the First Division, Inner House of the Court of Session (Wisely v John Fulton (Plumbers) Ltd, 1998 S.C. 910) and from the Court of Appeal, Civil Division (Wadey v Surrey County Council [1999] 1 W.L.R. 1614). Both were heard together and the House of Lords dismissed the appeals in [2000] UKHL 24; [2000] 1 WLR 820.