fatalaccidentsactclaims

Last month I gave part II of a talk about the legal background to and handling of fatal accident claims at our last Buller’s Briefing of the series.

Part I was an introduction for beginners including two working examples to help in calculating such claims and part II dealt with the question of what deductions the defendant to such claims could make.

Guests who attended the briefing on 18 April will recall that we got the timing wrong and I had to leave part of the issue of the deductibility of death benefits paid to the surviving spouse via the deceased’s employer, up in the air pending consideration of the case of Mrs M J Arnup v M W White Ltd by the Court of Appeal.

The appeal was heard on 22 April and judgment has just been handed down on 7 May.

Very much as I predicted the case went Mrs Arnup’s way and there is nothing of any consolation for defendant’s insurers in the judgment of the court given by Lady Justice Smith.

It may be remembered that Mrs Arnup benefited from two large sums which she subsequently received via the negligent employer as follows:

Death in service payment		Employee benefit trust payment
£129,600.00 payable to the employer under the terms of a death in service scheme, equivalent to 4x salary (secured by life assurance). The employer had the right to decide what happened to the payment. It opted to pay it all to Mrs Arnup.		£100,000.00 being one of various benefits for employees under the trust, payable to independent trustees and then paid out to Mrs Arnup at the employer’s request but under the trustees’ absolute discretion. This payment was also secured by a separate life assurance policy.

The issue to be decided was whether those sums should be deducted from Mrs Arnup’s compensation. Her late husband had paid nothing towards either benefit. It will be remembered, rather perversely I felt, that the judge in the High Court decided that neither payment accrued to Mrs Arnup “as a result of his death” within the meaning of section 4 of the Fatal Accidents Act 1976 and thus was deductible from her damages by the insurers except that almost as a sop to her he allowed her to keep the payment of £100,000.00 without deduction as he held that this fell within the old common law benevolence exception as it was paid to her via a third party ie the independent trustees rather than by the employer itself.

She, therefore, effectively lost the other payment of £129,600.00 which was deducted from her damages.

The Court of Appeal has now taken a completely fresh look at section 4 and decided that it should be applied in both a liberal and common sense way. The trial judge had been wrong to hold that the two payments did not accrue to Mrs Arnup as a result of the death – that was highly artificial. If Mr Arnup had not died she would simply not have received them.

The unanswerable argument of Mrs Arnup’s junior counsel was that if the trial judge had been correct in this view ie the payments had not been received as a result of Mr Arnup’s death then it was totally wrong for the two payments to have been brought back into account. The defendant could not have it both ways.

It was said that the intention of Parliament in introducing the new wording of section 4 (in 1982) was to continue and complete the trend towards disregarding receipts so as to ensure that all benefits coming to a dependant as a result of the death were to be left out of account.

The defendant’s leading counsel vainly tried to argue that the deductibility of benefits accruing to dependants should be treated in Fatal Accident claims in exactly the same way as in personal injury cases and that if it was otherwise the case then negligent defendants would be discouraged from making benevolent payments or interim payments to bereaved dependants.

Lady Justice Smith said that there was an easy way round that. If a defendant wished to make a payment of any description to be taken into account when damages are assessed then they must make the payment subject to that stipulation. Then it will not be classed as a benefit under section 4 and deemed disregarded.

If any reader would like a copy of parts I and II of my talk please let me know and I will forward it to you.