Should death in service payments and employee benefit payments be deductible from damages? | Thompsons Solicitors

A widow brought a claim for damages against a defendant company pursuant to the death of her husband. The issue was whether payments made by the employer to the widow were benefits accruing as a result of the death so that by Section 4 of the Fatal Accidents Act they should be disregarded for the assessment of damages.

The first payment was £129,600 from a death benefit scheme, the second around £100,000 in respect of benefits received under a life policy from the defendant’s employee benefit trust.

The defendants contended that the two benefits had not accrued as a result of the death but as a result of the benevolence of the defendants in establishing the death benefit scheme and the benefit trust; or alternatively that they accrued as a result of the defendant’s decision, in the case of the death in service policy, to pay the money to the claimant, rather than to one of the other permitted recipients.

The Judge held that the amount of £129,600 had become payable under the death in service policy on the death, but was payable to the defendants and not to the claimant. Under the scheme rules, the claimant could not keep the sum but had to pay it out.

The amount of £100,000 also became payable under the life policy on the death to the employee benefit trust. The trust was not bound to pay the money on to anyone; it could have added it to the trust funds. In the circumstances, what had caused the payment of £129,600 was the decision of the defendants to pay that sum to her, and what had caused the payment of £100,000 had been the trust’s decision that the amount be paid to her.

On the facts, neither of the payments made to the claimant fell within the scope of Section 4. The deceased had not directly contributed to the cost of the death in service benefit of the life policy and there was no evidence that he would have been paid a higher wage if those benefits had not existed.

However the payment of £100,000 did fall within the scope of the exceptions of benevolent payments; the trust had been a third party totally independent of the defendants and with an unfettered discretion as to how to deal with the assets to form the trust fund, and therefore the payment of £129,600 did fall to be taken into account in assessment of the claim but the payment of £100,000 did not.

Arnup -v- M W White Limited. QBD, Judge Richard Seymour QC, 27 March 2007, EW8C601 QB.