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Gaca v Pirelli General Plc, Court of Appeal, 26 March 2004

1 April 2004
The issues

McCamley -v- Cammell Laird Shipping Limited – Employers Personal Accident Policy – Double Recovery – whether Claimant need give credit for sums received under the Insurance Policy.

The facts

In August 1998, the Claimant was seriously injured in an accident at work. Whilst he was off work, but before his employment was terminated in March 2000, he received sick pay. He also received £34,167.18 under a Group Personal Accident Insurance Policy for “temporary total disablement” from Europe Assistance. Following the termination of his employment, he received an ill-health gratuity of £10,000.00 from the Defendant and £88,620.00 from Europe Assistance under the terms of the Policy for “permanent total disability”. All the premiums were paid by the Defendant. The Claimant issued proceedings and Judgment was entered in his favour, together with an Order for damages to be assessed. The Defendants contended that the proceeds of the insurance should be deducted from the Claimant’s damages. The matter was ordered to be tried as a preliminary issue. The matter came before the Recorder, who held that the insurance payments were not deductible.

The Defendant appealed.

Before the Recorder, it was submitted that the proceeds of the Insurance Policy should not be deducted from his damages on the basis that they came within the ambit of the benevolence exception to the general rule that monies received as a result of an accident should not be brought into account. On Appeal, the Claimant sought to uphold the decision on the basis that the proceeds of the policy fell within the second exception as well, namely the insurance exception. The Recorder found himself bound by the decision in McCamley -v- Cammell Laird.

(The Plaintiff in McCamley received a lump sum payment under an insurance policy taken out on behalf of Defendants by their parent company for the benefit of employees injured at work. The Court held that the payment did not come within the insurance exception and that the Plaintiff had not paid or contributed towards the payment of the premiums, but that it came within the benevolence exception on the basis that the whole idea of the Policy covering all the employees of British Ship Builders was clearly to make the benefit payable as an act of benevolence whenever a qualifying injury took place – a lump sum payable regardless of fault or whether the employers or anyone else were liable – and not a method of advancing sick pay)

The decision

1. McCamley was wrongly decided for two reasons. Firstly, the payment in McCamley was not analogous to a payment within the typical benevolence exception. The benevolence exception properly applied to payments made to victims of accidents by third parties out of sympathy for their plight. It was unreal to treat the payment of benefits under an insurance policy as equivalent to such payments. The latter were made available by employers to their employees in order to promote good relations with employees and their Trade Unions to mutual advantage. Secondly, ex gratia payments made to employees by their employer tort feasors do not normally fall within the benevolence exception, even if it could be shown that they were made from motives of benevolence.

2. If necessary, McCamley could and should be distinguished. In McCamley, the existence of the Policy was unknown to the Plaintiff and his Trade Union. In the present case, entitlement to benefits under the Policy was part of the employment package known to the Claimant. The Claimant had tried to argue that the decision of the Recorder should be upheld on the basis that the payment also came within the insurance exception. Although the Claimant had not contributed to the premiums directly, he had contributed to them by virtue of the provision of labour. Those admissions were contrary to authority and in the absence of any evidence showing that the Claimant paid or contributed directly to the cost of the Policy, those arguments were not sufficient to avoid the deduction of benefits from the Claimant’s damages.

Appeal allowed.


Both Lord Justice Brook and Lord Justice Dyson commented that McCamley was a case that was wrongly decided and should not be followed, on the basis that it was plainly inconsistent with Hussain -v- New Taplow Paper Mills.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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