First Principles of Business Law

3. Compensatory damages for personal injury

3.1.a.5. Taking account of other benefits received

Read the facts below and then answer the question.

A is seriously injured in an accident caused by B's negligence. At the time of trial, A has incurred medical and hospital costs of $250,000. The court estimates A's future pecuniary losses at $500,000. However at the trial, B establishes that A may be entitled to certain payments from other sources. These include her personal accident insurance and a possible claim from a criminal injuries compensation scheme. It is possible that a religious charity will provide some free nursing care. B argues that the court should take such payments and benefits into account to reduce the award of damages.

Which of the alternatives below most accurately reflects the current common law?

(a) The accepted principle is that no-one should be compensated twice. The common law requires a reduction of the award of damages to take account of payments and benefits from other sources such as accident insurance, superannuation benefits, charitable payments, social security payments, etc.

(b) While not wanting to overcompensate a plaintiff, the courts are reluctant to spare wrongdoers from the consequences of their wrongdoing. As a result the common law is complex and no consistency has emerged from the cases as to which benefits from other sources will reduce the damages payable.