SECTION 4 OF THE FATAL ACCIDENTS ACT 1976: RESOURCES AND LINKS DEALING WITH MATTERS THAT SHOULD BE DISREGARDED IN ASSESSING DAMAGES IN A FATAL ACCIDENT ACT CLAIM

 

 

This post looks at the law relating to Section 4 of the Fatal Accidents Act 1976.  This section is designed to prevent a defendant being able to take into account benefits which the dependants have received as a result of death, for example insurance payments or an inheritance.  It looks at:

 

1. The Act.

2. Relevant cases (with links to the cases when available).

3. The Law Commission discussion of the subject.

 

THE ACT

Section 4 of the Fatal Accidents Act 1976.

“4.  Assessment of damages: disregard of benefits.

 

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

 

As noted above this section is designed to prevent a defendant stating that certain benefits that the dependants have obtained, for instance because of life insurance, should be deducted from a claim under the Act.

 

Prior to the Act there had been a list of benefits that could not be deducted. However this led to anomalies and the more general definition of “benefits” was put in place.

 

 

CASES

 

The principle in relation to the width of this section was re-stated in Arnup –v- White [2008] EWCA Civ 447. Para 20

 

“The Act [The Fatal Accident Act] only requires the quantification of the loss of dependency, [the Defendant’s counsel’s] submission that there are some exceptions to the disregarded rule is unsustainable. Once the loss of dependency has been calculated, there is nothing to be disregarded. This is what Parliament has decided, and the fact that the claimant will in many cases receive more than she has lost is nothing to the point. Parliament has decided what the law should be, presumably for policy considerations which it regarded as appropriate.”

 

http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2008/447.html&query=arnup+and+white&method=boolean

 

Further examples of Section 4 in action include:

 

Stanley v Siddique [1991] 2 WLR 459

A child claimed damages under the Act following the death of his mother. After the accident his father met and married another woman. It was found that the child was receiving better care from his father’s wife than he would have expected from his mother. The court held that this was a benefit resulting from the death within Section 4 and so should not be taken into account when assessing the child’s damages.

 

 

Hayden v Hayden [1992] 1 WLR 986

S child lost her mother in a driving accident caused by her father’s negligence. The father gave up work to look after his daughter. The Court of Appeal decided that the plaintiff’s damages should be reduced to the extent that her father remedied the loss of her mother’s services.

http://www.bailii.org/ew/cases/EWCA/Civ/1992/13.html

 

Topp v London Country Bus South West Limited [1992] PIQR 206

The issue here concerned the prospect of remarriage of a widower. In Topp both parties had agreed that the court was bound to ignore the prospects of remarriage as a result of the decision in Stanley v Siddique. However the defendant reserved the right to argue a different position in a different court.

http://www.bailii.org/ew/cases/EWCA/Civ/1993/15.html

 

Watson v Wilmott [1991] 1 QB 140

A young child’s parents were both killed because of the defendant’s negligence. He was subsequently adopted by his uncle and aunt. It was held that the adoption replaced the loss of dependency. As a result of the wide interpretation of Section 4, it is unlikely that the decision in this case is sustainable.

 

CONSIDERATION BY THE LAW COMMISSION

 

This section was discussed in detail by the Law Commission it its series of papers and recommendations on fatal accidents.

 

http://lawcommission.justice.gov.uk/docs/lc263_Claims_for_Wrongful_Death.pdf

 

It remains the most detailed examination of the issue.  The crucial thing to note, however, is that no steps have been taken as a result of the recommendations made.

 

“At common law the basic approach was that benefits arising from the death of the deceased had to be taken into account in assessing a claim under the Fatal Accidents Act.102 But since the late nineteenth century there has been a gradual growth in the scope of legislation on this point. Insurance policies, 103 followed by certain pensions104 and then national insurance contributions105 were excluded from consideration in the assessment of damages under the Act. The scope of non-deduction was further widened by the Fatal Accidents Act 1959, the relevant section of which was re-enacted as the original version of section 4 of the 1976 Act. Under these provisions no account was to be taken of “any insurance money, benefit, pension or gratuity which had been or was expected to be paid as a result of the death.” 106

 

In 1982, section 4 of the Fatal Accidents Act 1976 was amended and now states:

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.107

 

The amendment was introduced following recommendations by the Law Commission and the Royal Commission on Civil Liability and Compensation for Personal Injury that, in addition to the benefits listed under the former section 4, benefits arising from the estate of the deceased should not be taken into account.108 Lord Hailsham LC regarded it as a “small change”, 109 seemingly to effect only the recommendations of the Law Commission and the Royal Commission on Civil Liability and Compensation for Personal Injury.110 This view of the intention of the legislature is supported by the retention in the Act of section 3(3), which explicitly excludes benefits accruing as a result of a widow’s remarriage from consideration in the assessment of damages.111 Nevertheless, a natural reading of the section suggests that all benefits accruing as a result of death should be disregarded.

 

Still, the courts have distinguished between situations where a benefit prevents the claimant suffering a loss, and situations where the claimant can be said to have suffered a loss despite the receipt of the benefit. In the former situation, they have regarded Section 4 as irrelevant.

 

This distinction was at issue in Auty v National Coal Board [1985] 1 W.L.R 784 . 113 One of the plaintiffs, Mrs Popow, was in receipt of a widow’s pension. In her claim under the Fatal Accidents Act 1976 she claimed damages for the loss of her husband’s support and for the loss of the widow’s pension she would have received had her husband survived the accident and died in his retirement. She argued that section 4 required the court to ignore her actual widow’s pension in assessing damages for both of these losses. The court agreed that section 4 required the pension to be ignored in respect of her claim for the loss of her husband’s support. However, in respect of her claim for loss of her own pension, it was held that Mrs Popow had suffered no loss because she was receiving precisely the pension she would have received had her husband died in retirement.114 Section 4 was therefore irrelevant to that aspect of her claim.

 

The difficulties of interpreting section 4 are further illustrated by two decisions of the Court of Appeal, which are mentioned above. In Stanley v Saddique115 a child claimed damages under the Act following the death of his mother. After the accident his father met and married another woman. It was found that the child was receiving better care from his father’s wife than could have been expected from his mother. The court held that this was a benefit resulting from the death within section 4 and so should not be taken into account in assessing the child’s damages. It ruled that the words “or otherwise” indicated that Parliament had intended greater reform than merely adding benefits received from the deceased’s estate to the list of benefits to be disregarded.

 

However, in Hayden v Hayden,117 a child lost her mother in a driving accident caused by her father’s negligence. The father gave up work to look after his daughter.118 Sir David Croom-Johnson and McCowan LJ considered themselves bound by Stanley v Saddique,119 but differed on the application of the decision to the facts. In Sir David Croom-Johnson’s view the father’s services were not a benefit to his daughter resulting from her mother’s death because the claimant’s

 

A related issue was that to ignore the father’s services would be to require the father to overcompensate the claimant. McCowan LJ thought this the logical implication of Stanley v Saddique.123 In Parker LJ’s view the tortfeasor could reduce his liability by alleviating the claimant’s loss.124 Sir David Croom-Johnson addressed the issue briefly in the context of how the services should be valued: On the facts of this case, the whole concept of valuing the lost services by reference to a “notional nanny” is inappropriate. Whether this expedient is useful in other cases is another matter, but there is no room for using it when on the facts a nanny would never have been employed… The jury, approaching this assessment, would have ignored all questions of a “notional nanny,” and simply gone on the established facts of what had happened in the past and was likely to happen in the future.125

 

This reasoning seems to us to be essentially the same as that underpinning Parker LJ’s decision. As such, Sir David Croom-Johnson’s judgment appears to contain inconsistent lines of argument.

 

Whether or not the reasoning in Hayden v Hayden126 bears close scrutiny, it seems to us that the majority judges sought to exclude the father’s care from the effects of section 4 so that the value of it could be taken into account. In the consultation paper, we took the view that the decisions in Stanley v Saddique127 and Hayden v Hayden are inconsistent.128

 

A recent decision of the Divisional Court, R v Criminal Injuries Compensation Board ex parte K,129 has revisited these issues. The Criminal Injuries Compensation Board held, applying Hayden v Hayden,130 that the claimants had suffered no loss of general parental care (as opposed to their mother’s individual care), since they received at least equivalent care from an uncle and aunt. The Divisional Court quashed that decision. Brooke LJ and Rougier J agreed with the majority in Hayden that Stanley v Siddique131 was binding authority. Brooke LJ distinguished between the ascertainment of the claimant’s loss, and the assessment of the damages to be awarded. Making reference to the reasoning of Oliver LJ in Auty v National Coal Board,132

 

 he said:

 

Oliver LJ enjoins us, however, to observe the provisions of section 4(1) at both stages of the inquiry. When we do so, we are bound by Stanley v Siddique to hold that in so far as the value of the replacement services formed a benefit resulting from the death (like the stepmother’s services in that case) we must disregard them when assessing damages. In other words at the first stage of the inquiry we cannot say that the children have suffered no loss because the only way in which we could do so would be to take into account something which we are not allowed to take into account. The factual position is quite different from the factual position in Hayden v Hayden, in which the majority of the Court of Appeal held that the value of the tortfeasor father’s replacement services was not to be disregarded under section 4(1), whether because section 4(1) did not apply at all (Parker LJ) or because this situation was totally different from a case in which the replacement services are voluntarily provided by a third party (Sir David Croom-Johnson).133

 

Rougier J also referred to the fact that Sir David Croom-Johnson and Parker LJ were able to distinguish Hayden v Hayden134 on two specific differences of fact –

 

(1) That in Hayden the benefits had been provided by the defendant, and

(2) That since the services were provided by the father, who had a duty to care for the child, they could not be regarded as a benefit arising as a result of the death.135

 

Accordingly, this decision clarifies the effect of section 4 to some extent by confirming the correctness of the decision in Stanley v Siddique.136 However it might be regarded as leaving open how section 4 should be applied in a case where the carer is the tortfeasor, and/or was under a duty to provide the care before the death.

 

 

It should also be explained that, as we have indicated above, the application of Hunt v Severs 137 has not yet been considered in the context of a Fatal Accidents Act claim. On the face of it, a dependant’s claim for loss of the deceased’s services where services have been gratuitously rendered by a friend or relative is analogous to a personal injury victim’s claim for the expenses of nursing and domestic care where the services have been gratuitously rendered by a friend or relative.138 It is therefore somewhat surprising that Hunt v Severs was not even mentioned in R v Criminal Injuries Compensation Board ex parte K.139 Although approaching the matter on a different basis, whereby the loss is regarded as the service provider’s rather than the claimant’s, Hunt v Severs provides support for the view that Hayden v Hayden140 was justified in awarding no damages because the service provider was the defendant.

 

A further example of the uncertain width of section 4 is its possible impact on a claimant’s earning capacity. In Malone v Rowan141 a woman was planning to give up work to have a child when her husband was killed. She claimed damages for the loss of the support she had expected to receive once she had given up work. Her cause of action accrued before the current section 4 was introduced by the Administration of Justice Act 1982 and so the section was not in issue. Russell J reluctantly followed the Court of Appeal in Higgs v Drinkwater142 and found that no loss had been suffered. Whilst as a matter of principle the claimant’s income should be set off against the loss of support, it is also strongly arguable that section 4 would now result in the widow’s earning capacity being disregarded.

 

In the consultation paper, we suggested that the decision of the Court of Appeal in Jameson v Central Electricity Generating Board143 was further evidence of the difficulties caused by section 4.144 During his lifetime, Mr Jameson brought an action for damages against his employer, Babcock Energy Limited (“Babcock”), claiming that the malignant mesothelioma which he suffered was the result of his employer’s negligence. The claim was settled for £80,000, which was agreed to be approximately two-thirds of the value of the claim. Mr Jameson died shortly after the settlement had been agreed (but before the damages had been paid). His widow inherited the £80,000 settlement. Mr Jameson’s executors then brought an action under the Fatal Accidents Act 1976 against an alleged concurrent tortfeasor, Central Electricity Generating Board (“CEGB”). At first instance and in the Court of Appeal it was held that the settlement between Mr Jameson and Babcock did not debar a claim against a concurrent tortfeasor. Since the effect of the settlement itself was silent on these matters, but I think that the correct view of its nature was that it was to take effect as soon as the agreement was made as having discharged the deceased’s claim of damages, subject to an implied resolutive condition which would render it void ab initio if the debt which was due under it was not satisfied….The same view would be taken if the plaintiff’s claim had been dealt with by means of a judgment.150

 

In summary, the settlement in the instant case had the effect of discharging the deceased’s claim against the other concurrent tortfeasors with effect from the date of settlement.151 Since the dependants could not satisfy the requirements of section 1(1) of the 1976 Act, there could be no claim under that Act.152 Yet although double recovery was prevented on the particular facts of the case,153 the decision of the House of Lords in Jameson leaves open this possibility where a settlement permits a further action against a concurrent tortfeasor.154

 

Aside from the question whether a benefit received as a result of the death should be taken into account in the assessment of damages, there are a series of related questions concerning the third party provider of the benefit. The fundamental issue here is who, ultimately, out of the provider and the tortfeasor, should bear the cost of the benefit. In our report, Damages for Personal Injury: Medical, Nursing and Other Expenses; Collateral Benefits, we have provided a fuller description of the present law on this issue in personal injury cases.155 We refer the reader to that discussion, since it is relevant here. We shall now briefly set out the position for wrongful death cases.

 

A third party provider of a (non-deductible) payment resulting from the death normally has no right to recover the value of the payment from the dependant. This is because the third party provider has rendered the benefit either as a volunteer (for example, where the collateral benefit comprises a charitable payment) or in accordance with a valid contractual (or perhaps statutory) obligation owed to the dependant (for example, where the collateral benefit comprises life insurance, an inheritance or a survivor’s pension).

 

In general, therefore, the only possibilities for recovery are where the provider has a contractual right to repayment (for example, where the victim promises to repay the provider of the collateral benefit in the event of recovering damages); or where the benefit is rendered on the basis of a condition that “fails” so that the provider has a claim for restitution grounded on “failure of consideration” (for example, where the benefit is rendered conditionally on the victim not succeeding in a tort

 

It is theoretically possible that payments to a dependant as a result of a death would be subject to a contractual repayment right in the event of damages being recovered, or paid conditionally on damages not being recovered.157 Nevertheless it seems to us somewhat unlikely that this would happen in practice.

 

What about recoupment by the provider from the wrongdoer of deductible benefits (other than state benefits)? That is, if contrary to section 4, a third party’s payment was deducted, would the provider of the payment have a restitutionary right to recover its value from the tortfeasor? The answer seems to be “no”. This follows from the decision of the Court of Appeal in Receiver for the Metropolitan Police District v Croydon Corp.158 In that case the claimant had made payments of sick pay to the victim pursuant to a statutory obligation. He was denied the right to recoup the payments from the tortfeasor. Reversing the decision of Slade J at first instance, the Court of Appeal reasoned as follows: given that sick pay is deducted in assessing a victim’s damages, the defendants had incurred no liability to the extent that the victim had received sick pay. The Court of Appeal therefore held that the payments could not be regarded as discharging any liability of the defendants, and that as a result, the defendants had not been enriched by the payments.159

 

An associated issue is that indemnity insurers’ have the right, which arises by operation of law,160 to be subrogated to a tort victim’s claim to recover the value of insurance payments made. The question is whether these rights are relevant here. It seems to us that they are not, since the only type of insurance which might be paid to a dependant as a result of a death is life insurance, which is classified as non-indemnity insurance.

 

The final issue regarding third party rights concerns social security. Where a person claims damages for personal injuries and is also in receipt of social security benefits, the state has the power to recoup from the compensator an amount of money totalling the social security benefits that the accident victim would be paid.”

 

Footnotes

101 See Claims for Wrongful Death (1997) Consultation Paper No 148, paras 2.43-2.47 for a fuller discussion of the law before the introduction of section 4.

 

102 Davies v Powell Duffryn Associated Collieries Ltd [1942] AC 601.

103 Initially by private Acts, and then extended to all insurance policies by the Fatal Accidents

(Damages) Act 1908.

104 Widows’, Orphans’ and Old Age Contributory Pensions Act 1929, s 22.

105 Law Reform (Personal Injuries) Act 1948, s 2(5).

106 For comment on the changes made by the Fatal Accidents Act 1959 see J Unger and O

Kahn-Freund, “Two Notes on the Fatal Accidents Act, 1959” (1960) 23 MLR 60, 62.

107 The amendment was made by the Administration of Justice Act 1982, s 3(1). The

difference made by the amendment can be seen in Cresswell v Eaton [1991] 1 WLR 1113,

1124-1125. Following the death of the mother, an aunt looked after the children. She

received foster allowances from the local authority. These allowances were deducted under

the old system applied by Simon Brown J, but he indicated that the payments would now be

disregarded. For a straightforward example of the application of section 4 – where the same

result would have been reached under the old section 4 – see Pidduck v Eastern Scottish

Omnibuses Ltd [1990] 1 WLR 993.

108 Report on Personal Injury Litigation – Assessment of Damages (1973) Law Com No 56,

paras 254-256; Royal Commission on Civil Liability and Compensation for Personal Injury

(1978) Cmnd 7054-I, paras 537-539.

109 Hansard (HL) 8 March 1982, vol 428, col 28. Its potential was nevertheless quickly

appreciated: Andrew Borkowski & Keith Stanton, “The Administration of Justice Act 1982

(Parts I and III): Darning Old Socks?” (1983) 46 MLR 191, 196.

 

110 We note that the writers of Kemp & Kemp disagree with this analysis: “In fact the enacting

history, including Lord Hailsham’s speech when introducing the amendment, clearly shows

that the amendment was intended to have the wide construction that the natural meaning

of the words requires” (Kemp & Kemp, The Quantum of Damages vol 1 para 19A-003). In

support of this interpretation, they rely on extracts from Lord Hailsham’s speech in which

he states that the Bill is intended to give effect to the recommendations of the Law

Commission and the Royal Commission on Civil Liability and Compensation for Personal

Injury, and to render “all benefits coming from the estate of the deceased” non-deductible:

Hansard (HL) March 8 1982, vol 428, col 28. In our view, these extracts do not support the

view that the Bill was intended to render any collateral benefit accruing to a claimant nondeductible. For example, there is nothing in Lord Hailsham’s speech to suggest that section

4 of the 1976 Act was intended to ensure that gratuitous care should be disregarded (as it

was in Stanley v Saddique [1992] QB 1). Neither the Law Commission nor the Royal

Commission on Civil Liability and Compensation for Personal Injury recommended that

“all benefits” should be disregarded when assessing damages.

111 This argument was rejected by the Court of Appeal in Stanley v Saddique [1992] QB 1, 13-

112 Wood v Bentall Simplex Ltd [1992] PIQR P332, P349.

113 [1985] 1 WLR 784.

114 Ibid, at pp 799, 806. Harvey McGregor QC supports this decision by reference to Lord

Reid’s speech in Parry v Cleaver [1970] AC 1, 13: McGregor on Damages (16th ed 1997)

paras 1828 and 1829.

115 [1992] QB 1.

116 Ibid, at pp 13-14. The decision effectively reverses Mead v Clarke Chapman & Co Ltd

[1956] 1 WLR 76, which was not referred to in the judgments.

117 [1992] 1 WLR 986. For criticism see David Kemp QC, “Substitute Services and the Fatal

Accidents Act” (1993) 109 LQR 173.

118 At common law, following Hay v Hughes [1975] QB 790, it could be expected that the

father’s services would be held to be a benefit not resulting from the death and therefore

ignored. However, since section 4 states that benefits resulting from the death are to be

ignored, the reasoning in Hay v Hughes would imply that the benefit would have to be taken

into account, the opposite result to that in Hay v Hughes.

119 [1992] QB 1.

112 Wood v Bentall Simplex Ltd [1992] PIQR P332, P349.

113 [1985] 1 WLR 784.

114 Ibid, at pp 799, 806. Harvey McGregor QC supports this decision by reference to Lord

Reid’s speech in Parry v Cleaver [1970] AC 1, 13: McGregor on Damages (16th ed 1997)

paras 1828 and 1829.

115 [1992] QB 1.

116 Ibid, at pp 13-14. The decision effectively reverses Mead v Clarke Chapman & Co Ltd

[1956] 1 WLR 76, which was not referred to in the judgments.

117 [1992] 1 WLR 986. For criticism see David Kemp QC, “Substitute Services and the Fatal

Accidents Act” (1993) 109 LQR 173.

118 At common law, following Hay v Hughes [1975] QB 790, it could be expected that the

father’s services would be held to be a benefit not resulting from the death and therefore

ignored. However, since section 4 states that benefits resulting from the death are to be

ignored, the reasoning in Hay v Hughes would imply that the benefit would have to be taken

into account, the opposite result to that in Hay v Hughes.

119 [1992] QB 1.

120 [1992] 1 WLR 986, 999-1000.

121 Ibid, at p 993.

122 Ibid, at pp 1004-1005.

123 Ibid, at p 993.

124 Ibid, at p 1005.

125 Ibid, at p 998.

126 Ibid, at p 998.

127 [1992] QB 1.

128 Claims for Wrongful Death (1997) Consultation Paper No 148, para 2.56.27

129 [1999] 2 WLR 948.

130 [1992] 1 WLR 986.

131 [1992] QB 1.

132 [1985] 1 WLR 784, discussed at para 2.41 above.

133 [1999] 2 WLR 948, 956 (citations omitted).

134 [1992] 1 WLR 986.

135 [1999] 2 WLR 946, 959.

136 [1992] QB 1.28

137 [1994] 2 AC 350.

138 Although one can argue that the starting point of the claim is different, in that in a Fatal

Accidents Act claim, the dependant has a claim for loss of the deceased’s services, whereas

a personal injury victim’s claim is for the expense of obtaining services.

139 [1999] 2 WLR 948.

140 [1992] 1 WLR 986.

141 [1984] 3 All ER 402.

142 Unreported, 9 May 1956.

143 [1998] QB 323.

144 Claims for Wrongful Death (1997) Consultation Paper No 148, para 2.59.

145 Jameson v Central Electricity Generating Board [1999] 2 WLR 141, Lord Lloyd dissenting.

146 [1999] 2 WLR 141, 150.

147 Ibid, at p 151.

148 Ibid, at pp 152-153. Lord Clyde agreed with this conclusion, but on slightly different

reasoning.

149 [1999] 2 WLR 141, 153.

 

 

150 [1999] 2 WLR 141, 155-156.

151 Ibid, at p 156.

152 Ibid, at pp 150, 157.

153 Ibid, at p 156.

154 More speculatively, this might also be possible if the deceased’s estate did not enforce an

unsatisfied judgment or settlement until after damages had been recovered from a

concurrent tortfeasor.

155 Damages for Personal Injury: Medical, Nursing and Other Expenses (1999) Law Com No

262, paras 10.58-10.78

156 “Failure of consideration” is wide enough to embrace the failure of a non-promissory

condition. See Chillingworth v Esche [1924] 1 Ch 97; Essery v Cowlard (1884) 26 Ch D 91;

Re Ames’ Settlement [1946] Ch 217; Birks, An Introduction to the Law of Restitution (1st ed

with revisions 1989) pp 223-226.

158 [1957] 2 QB 154.

159 But cf Land Hessen v Gray & Gerrish, unreported, 31 July 1998, which is discussed further in our report, Damages for Personal Injury: Medical, Nursing and Other Expenses; Collateral Benefits (1999) Law Com No 262, paras 10.70-10.72.

 

160 Although it is common for subrogation to be expressly provided for in a contract of indemnity insurance. In a five year period.161 However, no such provision for the recoupment of social security benefits exists in respect of Fatal Accident Act claims.

 

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