Avoiding double recovery

Lowther v Chatwin CA TLR 4 August

The claimant was an insurance broker who as a result of her injuries in a road traffic accident was unable to work and she closed her business. The accounts for her last completed year prior to the accident showed commissions receivable of £20,000 and professional expenses of £22,000 resulting in a net loss of £2,000. Her professional expenses included rent of £7,000 which continued for a further two-year period. The claimant included her liability for rent in her claim for damages. The judge awarded her five-sevenths of her claim on the basis that her annual commissions would have remained the same. The Social Security (Recovery of Benefits) Act 1997 provides for a defendant compensating a claimant for an accident, injury or disease to pay a sum to the Compensatory Recovery Unit calculated in accordance with the Act when paying damages to a successful claimant ensuring: (i) that the State should be reimbursed for certain State benefits paid to the claimant; and (ii) that the benefits recouped from the defendant should be offset against the sums received by the claimant, so that the claimant should not receive a double recovery. The Act refers to ‘compensation for earnings lost’ and the point in issue was whether in the case of a self-employed person this referred to turnover lost rather than to actual income or net profits lost. By a majority the Court of Appeal agreed with the defendant s contention that although the gross fees of the claimant as a self-employed person might be described as ‘turnover’ that did not alter their colour as earnings and he was therefore entitled to offset his payment to the CRU against the damages.