No damages award for loss of moonlighting earnings

LAW REPORT v 2 January 1996
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Hunter v Butler; Court of Appeal (Lord Justice Hirst, Lord Justice Waite and Lord Justice Hobhouse); 19 December 1995

A widow could not claim, as damages for loss of dependency under the Fatal Accidents Act 1976, sums her deceased husband would have earned by "moonlighting", which he would not have declared lest they affect his entitlement to social security benefits.

The Court of Appeal upheld the decision on this point by District Judge Moon, sitting in Torquay District Registry on 25 November 1993, but allowed the appeal of the plaintiff, Maria Hunter, suing as the widow and administratrix of her husband, Kenneth Hunter, against the judge's refusal to make an award of damages for loss of dependency in respect of the prospects of her husband, who was unemployed at the time of his death, later obtaining full-time employment.

To take account of this, the appeal court added pounds 12,480 to the total of pounds 6,575 plus interest awarded by the judge for bereavement, funeral expenses and general damages, in respect of a fatal road accident, on 9 December 1983, for which the defendant accepted liability.

Michael de Navarro QC and James Hayward (Hyde Mahon Bridges, for Lee- Barber Goodrich & Co, Torquay) for the plaintiff; William Stevenson (Beachcroft Stanleys, for Cann & Hallett, Exeter) for the defendant.

Lord Justice Waite said the deceased was 41 at the time of his death, leaving a widow then aged 36 and six children. He had always supplemented his earnings by doing odd jobs at evenings and weekends, and from July 1983 until his death he had been working part-time, earning some pounds 90 a week, as a kitchen porter and hotel gardener. He did not disclose those earnings to the social security authorities, from whom he drew full supplementary, family allowance and housing benefits on the basis that he was unemployed. Had he disclosed his earnings, the benefits would have been reduced accordingly.

The judge held that, had he lived, the deceased would have had no prospects of permanent employment, because none existed. The defendant, seeking to uphold that decision, argued that the deceased fell squarely into the "poverty trap": no wage he could earn from any full-time work he could get would match, after deductions, the sum he and his dependants were already receiving from social security.

In his Lordship's judgment, the conclusion that there was no prospect of the deceased obtaining full-time employment could not be sustained on the evidence of his own employment history and statistical evidence as to subsequent demand for labour in the area.

Applying a multiplier of 12 to an annual multiplicand of pounds 4,160, and adopting a dependency percentage of 75 per cent and an "abatement" percentage of 33.3 per cent to reflect the element of chance, his Lordship calculated the deceased's "lost chance" as worth pounds 12,480 to his dependants.

His Lordship rejected the widow's claim to have lost the deceased's supplementary benefit entitlement as a result of his death. In respect of such benefit, she was in no sense dependent on the deceased: she, no less than he, was in that regard dependent upon the state.

As to the question of "moonlighting", it was argued that to the extent that the deceased would not have been in full-time employment (as reflected in the abatement of the award of lost chance damages) he would have supplemented his income from undeclared part-time work, the proceeds of should be treated as forming part of the dependancy lost by his widow.

His Lordship would reject that argument on two grounds. First, it read too much into the process of abatement in calculating the lost chance of full-time earnings. The abatement was solely to reflect the exigencies of chance, and it was over-sophisticated to introduce into the calculation some notional apportionment between weeks worked for a declared wage and weeks supported by supplementary benefit and undeclared part-time earnings.

Second, it offended public policy in two respects: (a) by assuming that someone who committed fraud in the past would continue to do so, ignoring the possibilities of repentance or detection; and (b) by treating the proceeds of illegally concealed earnings as providing a valid head of recovery by way of damages for loss or injury.

Lord Justice Hobhouse and Lord Justice Hirst concurred.

Paul Magrath, Barrister