When a person is fatally injured, it may be possible to make a claim for compensation under the Fatal Accidents Act 1976 (FAA). When the accident is the fault of another person, it is also normally possible to claim damages from them. In these cases the damages will include, where appropriate, a sum for loss of earnings.

One of the main principles of the British system of tort is that where damages are payable, the intention is to put the claimant in the same position in which they would have been had the event which led to the claim not occurred, not to make them better off. There is no concept of punitive damages.

This has led to the insurers of those found liable for damages in accident cases arguing that the payment they are required to make should be reduced where there is any other form of compensation paid.

Recently, a case came before the Court of Appeal which involved a man who died after being caught in a machine at the paper waste recycling plant where he worked. His employer was prosecuted and the case was serious enough for the managing director of the firm to be imprisoned for 12 months for manslaughter.

The man’s widow was paid £100,000 from a trust fund set up by her late husband’s employer and a further £129,600 under the employer’s death in service benefit scheme. These payments were discretionary.

The company’s insurers argued that the payments should be set off against the widow’s claim for damages from the company. In court, the judge agreed that the payment from the death in service scheme should be set off, but the trust fund payment should not. The widow appealed.

The Court of Appeal ruled that since both payments were discretionary, neither should be taken into account when fixing the amount of damages payable to the widow. The FAA (Section 4) would exempt them from being taken into account. It states that, ‘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’.

Therefore the payments should be disregarded for the purposes of assessing the damages due to the widow.