Hewison v Meridian Shipping Services PTE Ltd

A claimant is barred by public policy from recovering a head of damages only where that part of the claim depends substantially on the claimant’s own unlawful conduct. Collateral or insignificant illegality does not have that effect.

The discredited public conscience approach is not the governing test. The decisive question is whether the claimant must assert that, but for the tort, they would have continued to commit unlawful acts in order to obtain the earnings claimed.

Deliberate deception of employers, central to obtaining and retaining hazardous employment, may preclude recovery for future earnings. Mere non-disclosure is insufficient. The deception must be deliberate and material to the claimed opportunity to earn.

The claimant, an able seaman and crane operator, sustained serious injuries in an accident for which the respondents admitted liability. He claimed future loss of earnings on the basis that he would otherwise have continued working at sea until retirement.

He had deliberately concealed epilepsy and his use of anti-convulsant medication from his employers. The injury caused further seizures, leading to the discovery of his condition and the termination of his employment. Morland J held on 5 December 2001 that public policy barred the claimed seafaring earnings. The claimant appealed. The central issue was whether the loss depended on future criminal or unlawful deception, or only on collateral illegality.

By a majority, Clarke and Tuckey LJJ, the Court of Appeal dismissed the appeal. Ward LJ dissented.

1. The governing public-policy principle was not whether refusal of compensation would affront ordinary people. The court rejected that discretionary formulation, consistently with Tinsley v Milligan [1994] 1 AC 340. A claimant cannot recover a head of loss where establishing it requires reliance, in a substantial way, on the claimant’s own criminal or unlawful acts.

2. The court followed the principle identified by Hobhouse LJ in Hunter v Butler [1996] RTR 396: a claimant cannot found recovery on an assertion that future criminal acts would have been committed. The principle may exclude part of a damages claim even though the underlying negligence action remains maintainable.

3. Illegality which is collateral or insignificant does not bar compensation. Thus, lawful earnings remain recoverable despite collateral failures to account for tax, subject to an appropriate adjustment. The cases concerning unlawful performance of an otherwise lawful occupation were distinguishable on that basis.

4. Here, recovery for future earnings as a crane operator required proof that the claimant would have continued deliberately deceiving future employers about epilepsy and medication. That deception was central, not collateral, to his opportunity to retain the employment. It amounted to obtaining a pecuniary advantage by deception under section 16 of the Theft Act 1968, and carried significant potential risks to colleagues in hazardous work.

5. The majority therefore held that the claimant could not recover that head of future loss. A 20% reduction for the risk of discovery did not answer the public-policy objection, because it merely priced the chance of detection while allowing recovery founded on the assumed continuation of the deception.

Ward LJ would have allowed the appeal. In his view, the employment and wages were lawful, the loss resulted from the respondents’ negligence, and a 20% discount adequately reflected the risk that the employment would have ended.

• Court of Appeal: Appeal dismissed by a majority: Clarke and Tuckey LJJ; Ward LJ dissenting. [2002] EWCA Civ 1821
• High Court, Great Grimsby District Registry: Morland J held on 5 December 2001 that public policy barred the claimant from basing future-loss claims on seafaring earnings obtained or retained through deception. No citation was stated.