Arnup & Arnup v MW White Ltd [2007] EWHC 601:

Section 4 of the Fatal Accidents Act 1976 and the Benevolence

and Insurance Exception

Introduction

In this case, Section 4 of the Fatal Accidents Act 1976 again fell for consideration: namely, the extent to which payments made to a widow under the Defendant’s “Death Benefit Scheme” and an “Employee Benefit Trust” should be disregarded by the Court in the assessment of damages. On the facts of this case, the judge found that both neither payment should be disregarded by virtue of Section 4 when assessing the Claimant’s damages. However, one of the payments was to be disregarded under the common law “benevolence exception”.

Background

The Deceased worked for the Defendant as the yard foreman. He climbed into a paper hogger to try and remove a blockage. Whilst he was inside the machine, it started up and he was crushed to death. Liability was not in issue.

Following his death, his wife received a payment of £129,600 under the Defendant’s “Death benefit scheme”. Under the terms of the Scheme, the payment was not made directly to her. Instead, upon her husband’s death, the Defendant had to pay the sum to the benefit of the Deceased’s estate or for the benefit of any one of his dependants or relations as defined under the Scheme. In exercising its power, the Defendant was not bound by the wishes of the Deceased. 

The widow received a further £100,000 under the Defendant’s “Employee Benefit Trust”. Under the Scheme, his life was assured for that sum. A company called Bridgewater were the Trustees. The Trust was financed by contributions by the Defendant and although the Defendant could make suggestions as to the manner in which the Trust was distributed, Bridgewater had sole discretion to determine to whom the sum should be paid.

The Defendant contended that those two sums should be brought into account against the widow’s damages. The Deceased had made no contributions to either scheme. The matter was heard as a preliminary issue by His Honour Judge Richard Seymour QC sitting as a Judge of the High Court. He handed down his judgment on 27^th March 2007.

Section 4

Section 4 abrogated the common law rule that damages awarded to a dependant of a deceased person under the Fatal Accidents Acts must take into account any pecuniary benefit accruing to that dependant in consequence of the death of the deceased. It provides as follows:    

“In assessing damages in respect of a person’s death in an action under this Act, benefits which have accrued or will or may accrue to any person from his estate or otherwise as a result of his death shall be disregarded.”

The Defendant’s Contention

The Defendant contended that the Section was not intended to take into account payments that accrued from the tortfeasor as that would create a conflict with the fundamental principle against double recovery. Instead, it should be construed purposively to accord with the common law. Accordingly, whilst benevolent donations and the proceeds of an insurance policy paid for by a claimant should be disregarded, an important exception was where the insurance was funded by the wrongdoer. On the facts of that case, it was contended that the payments did not accrue as a result of the death of Mr Arnup but were ex gratia discretionary payments made by or on behalf of the Defendant. The death was the occasion of the making of the payments, not what caused the payments to accrue.

The Decision

The judge carried out a comprehensive tour of the authorities and in particular, relied upon the Court of Appeal authority in McIntyre v Harland & Wolff [2006] EWCA Civ 287. He concluded that the authorities gave no support for the proposition advanced by the Defendant that the provision of services or money by a tortfeasor to a dependant fell to be treated differently to payments made by third parties. The prospect of double recovery was inherent in the statute itself.

The judge went on to conclude that the issue of whether the payments accrued to any person or otherwise as a result of the Deceased’s death was essentially a matter of causation. On the facts of this case, neither amount became payable to the widow on the death of her husband: rather, in respect of the first payment under the Death in Service Policy, it was payable to the Company who retained a wide discretion as to whom to pay the sum to. In respect of the other, Bridgewater was not obliged to pay the sum on to anyone but could have used it in any way. As it was, as a result of the suggestion of the Defendant, it elected to pay the whole sum to the widow. He agreed with the Defendant’s contention that what caused the payments to accrue to the widow was the decision of the Defendant and Bridgewater to pay those sums to her.

Having reached the decision that Section 4 did not apply, the judge then went on to consider the Claimant’s alternative contention that the payments should be ignored under the insurance exception and the benevolence exception. Following Pirelli General plc v Gaca [2004] EWCA Civ 373, the judge considered that neither payment fell within the insurance exception. There was no evidence that the Deceased had contributed either directly or indirectly to the scheme. However, he did consider that the payment of £100,000 fell within the Benevolence exception, as the Defendant had requested Bridgewater to claim on the Life Policy and pay the proceeds to Mrs Arnup who acted independently in deciding to pay the sum, much as a charity might do. Accordingly, the sum of £100,000 would be disregarded in the assessment fo the Claimant’s damages but not the sum of £129,600.

Conclusion

It remains to be seen whether or not this decision is appealed. The judge’s conclusion that Section 4 applies to Defendant tortfeasors as well as third parties would seem unimpeachable. However, in determining that both payments were not to be disregarded under Section 4, the judge gave a very narrow interpretation of causation. The fact that there was no absolute entitlement to receive the sums and the payment was discretionary prevailed over the fact that the sums would not have been paid to the widow if her husband had not died on straightforward ‘but for’ principles. Whilst it is undoubtedly correct that the widow could not demand the payment, it remains very arguable that the Death in Service sum in particular which had to be paid to the estate, dependants or beneficiaries was a benefit which had “accrued or will or may accrue…from his estate or otherwise as a result of his death’.

ELIOT WOOLF

CHRISTOPHER WILSON-SMITH QC