DAMAGES (SCOTLAND) BILL

Transcription

1 DAMAGES (SCOTLAND) BILL EXPLANATORY NOTES (AND OTHER ACCOMPANYING DOCUMENTS) CONTENTS 1. As required under Rule 9.3 of the Parliament s Standing Orders, the following documents are published to accompany the Damages (Scotland) Bill introduced in the Scottish Parliament on 1 June 2010: Explanatory Notes; a Financial Memorandum; and the Presiding Officer s Statement on legislative competence. A Policy Memorandum is printed separately as SP Bill 49 PM. SP Bill 49 EN 1 Session 3 (2010)

2 EXPLANATORY NOTES INTRODUCTION 2. These Explanatory Notes have been prepared by Bill Butler MSP, who is the member in charge of the Bill, in order to assist the reader of the Bill and to help inform debate on it. They do not form part of the Bill and have not been endorsed by the Parliament. 3. The Notes should be read in conjunction with the Bill. They are not, and are not meant to be, a comprehensive description of the Bill. So where a section or schedule, or a part of a section or schedule, does not seem to require any explanation or comment, none is given. 4. The Bill implements the Scottish Law Commission s ( the Commission ) Report on Damages for Wrongful Death ( the Report ) 1, which was published on 30 September Subject to one minor exception, the Bill is in exactly the same terms as the draft Bill which the Commission attached to its Report and which gave effect to its recommendations. 2 GENERAL 5. Where a person suffers injury or disease as a result of the wrongful actions or omissions of another, the victim has a right, under the common law of delict, to claim damages from the wrongdoer. The Damages (Scotland) Act 1976 ( the 1976 Act ), as amended (a) regulates who can claim damages and the kind of damages which can be claimed where the victim dies as a result of such injury or disease; (b) provides that the victim s right to claim damages may, in certain circumstances, pass to the victim s executor; 3 (c) (d) provides that the victim s relatives may also have a separate claim for the loss of support and grief and distress that they have suffered because of the death; and makes provision regarding the damages which can be claimed by the victim whose expectation of life is diminished by the injury or disease The general purpose of the Bill is to repeal, and re-enact with certain amendments, the 1976 Act. 7. The Bill is structured differently from the 1976 Act. It deals first with the rights of the victim (section 1) and the extent to which those rights transmit to an executor (section 2), before moving on to deal with the rights of relatives (sections 3 to 8) and the extent to which those rights transmit to a relative s executor (section 9). Further provision is made in relation to rights transmitted to executors (section 10). The remaining provisions are of a general nature. 1 Scot Law Com No Report, Appendix A. The minor exception is the omission of a consequential amendment in the schedule to section 651 of the Companies Act 1985 (c.6) because that section has now been repealed Act, section Act, sections 9 and 9A 2

3 COMMENTARY ON SECTIONS Section 1: Damages to injured person whose expectation of life is diminished 8. Section 1 re-enacts section 9 and 9A of the 1976 Act but with certain amendments to give effect to recommendations 3 and 4 of the Commission s Report. 9. Section 1 makes provision for damages to be payable to a victim of personal injuries whose expectation of life has been reduced as a result of the injuries suffered. It makes provision for the damages which such a victim can claim for (a) solatium, that is damages for the pain and suffering which the victim endures as a result of being aware of the loss of expectation of life; and (b) patrimonial loss, that is damages for the economic loss likely to be suffered by the victim in the future. This may include loss of future earnings, the cost of future maintenance, nursing and medical care, the cost of future necessary services rendered to the victim by a relative 5 and costs arising from the victim s inability to render gratuitous services to his family These damages are in addition to the damages which a victim is entitled to claim under the general principles of the common law of delict for solatium, that is damages for the pain and suffering which the victim endures as a result of his injuries, and for patrimonial loss which such a victim has suffered. 11. Subsection (1) provides that persons may only claim damages in terms of the section if their date of death is expected to be earlier than it would have been if the injuries had not been suffered. 12. Subsections (2) to (4) re-enact section 9A of the 1976 Act in a slightly recast form. They are concerned with a victim s claim for solatium. 13. Subsections (2) and (3) make it clear that a victim will continue to receive damages for loss of expectation of life as part of an award of solatium only if the victim is, or was at any time, aware, or is likely to become aware that the victim s life expectancy has been reduced. As a result, where a victim of personal injuries is killed instantaneously, the victim s executor will continue not to be able to recover solatium on behalf of the estate. 14. Subsection (4) provides that, where a victim claims solatium for loss of expectation of life as part of a wider claim for solatium, the court does not require to ascribe any part of the damages by way of solatium to loss of expectation of life. 15. Subsections (5) to (7) re-enact, with certain amendments, section 9 of the 1976 Act. They are concerned with a victim s claim for patrimonial loss suffered as a result of the victim s injuries. 5 Administration of Justice Act 1982, section 8 6 Administration of Justice Act 1982, section 9 3

4 16. Subsection (5) re-enacts section 9(2)(a) of the 1976 Act. It provides that, when quantifying future loss, the courts are to assume that the victim will live until the date when he would have been expected to die if he had not suffered the injuries. This date is known as the notional date of death. Subsection (5) ensures that a victim will continue to be able to claim damages for any patrimonial loss which the victim suffers, or is expected to suffer, between (a) the date of decree and the date when the victim is expected to die; and (b) the lost period, that is the period between his expected date of death and his notional date of death. 17. Subsection (6) specifies how patrimonial loss during the lost period is to be assessed. This differs from the computation presently carried out under section 9(2)(b) and (c) of the 1976 Act because subsection (6) is only concerned with damages for patrimonial loss during the lost period and not, as at present, also for the period between the date of decree and the victim s expected date of death. This gives effect to recommendations 3 and 4 of the Commission s Report Paragraph (a) of subsection (6) provides that the court is to estimate what the victim s earnings would have been during the lost period. 19. Paragraph (b) of subsection (6) restates the court s discretion to take into account, for the purposes of assessing the victim s patrimonial loss during the lost period, any benefits in money or money s worth derived from sources other than the victim s own estate. 20. Paragraph (c) of subsection (6) make provision for a deduction to continue to be made for the victim s reasonable living expenses from the aggregate amount under paragraph (a) and (b) so as to arrive at the amount of damages which the victim can recover for patrimonial loss during the lost period. However, rather than as at present leaving it to the courts to assess what deduction should be made, it provides that a fixed percentage of 25% should be deducted from that aggregate amount to represent what would have been the pursuer s living expenses during the lost period had the injuries not been suffered. This amendment gives effect to recommendation 4 of the Commission s Report Subsection (7) defines relevant benefits in paragraph (b) of subsection (6). It is based upon the wording of section 9(2)(b) of the 1976 Act, but by placing this information in a separate subsection it seeks to increase the readability of subsection (6). The definition will include benefits which accrue to the victim from third parties. Section 2: Transmission of deceased s rights to executor 22. Section 2 re-enacts section 2 of the 1976 Act, with minor changes. It makes provision for the transmission of the deceased victim s right to sue to his executor. 7 Commission s Report, paragraph 3.5 and Commission s Report, paragraph 3.9 4

5 23. Subsection (1) restates section 2(1) of the 1976 Act. It provides that the like rights to damages (including damages for non-patrimonial loss or solatium) in respect of injuries which are vested in the deceased victim immediately before death transmit to his executor. 24. For this purpose, injuries are defined as (a) personal injuries; and (b) injuries which, although not personal, are (i) injuries to name or reputation and (ii) injuries resulting from harassment actionable under section 8 of the Protection from Harassment Act 1997 (c.40). 25. This re-states the effect of section 2(1) of the 1976 Act but distinguishes between personal and non-personal injuries in view of definition of personal injuries in section 14(1) of the Bill which excludes non-personal injuries. 26. Subsection (2) restates section 2(2) and (3) of the 1976 Act. It limits the extent to which the deceased s right to damages transmits to the executor. It does so by defining what is meant by the like right to damages so as to exclude any right to damages for patrimonial loss, or for non-patrimonial loss, in respect of any period after the date of the deceased s death. This is to avoid overcompensation where the deceased s relatives will have a claim for patrimonial loss in terms of section 4(2)(a), and to reflect the fact that the deceased s sufferings are taken to end with his death. 27. Subsection (3) restates section 2(4) of the 1976 Act. It makes provision for the special case where the deceased had a right to damages for non-patrimonial loss arising from defamation, verbal injury or other injury to reputation. It provides that the right to damages only transmits to the deceased s executor if the deceased had raised an action to enforce the right before death and the action had not been concluded by then. In other words, an executor may be sisted into a defamation action which has already been raised, but he cannot raise a new action in which he seeks damages only for non-patrimonial loss. If the victim had sustained patrimonial loss as a result of the defamation, however, his executor will have title to sue by virtue of subsection (1). 28. Subsection (4) explains what is meant by an action being concluded in terms of subsection (3). This repeats the provision in section 2A(2) of the 1976 Act. Section 3: Application of sections 4 to Section 3 re-enacts part of section 1(1) of the 1976 Act. It introduces the provisions dealing with the rights of the victim s relatives to damages. It provides that the rights of relatives contained in sections 4 to 6 apply where the victim ( A ) died from personal injuries caused by the defender ( B ), so long as B would have been liable to pay damages to A if A had sued before his death. In this way, the relatives right to sue is dependent on B s liability to A. 5

6 Section 4: Sums of damages payable to relatives 30. Section 4 re-enacts the rest of section 1(1) and section 1(2) and (3) of the 1976 Act. It makes provision about the damages which the defender may have to pay to the relatives of the victim in the case where section 3 applies, that is, in the case where the victim ( A ) dies of personal injuries caused by the defender ( B ) and B is liable to pay damages to A. 31. Subsection (1) restates the rest of section 1(1) and (2) of the 1976 Act. It provides that, in these circumstances, the defender B is liable to pay damages in terms of subsection (2) to any relative of the victim. This is qualified by providing that no liability to relatives will arise where the victim has discharged or excluded liability before his death, or where liability is excluded by an enactment. The qualification is itself subject to an exception for mesothelioma cases, which are governed by section Subsection (2) specifies the damages which a defender B may be liable to pay to the deceased s relatives. 33. Paragraph (a) of subsection (2) re-enacts section 1(3) of the 1976 Act. It deals with patrimonial loss and provides that a relative will only be able to recover damages for 2 heads of such loss (i) the loss of support which, as a result of B s act or omission, is, or is likely to be, suffered by that relative after A s death; and (ii) the reasonable expenses incurred by that relative in connection with A s funeral. 34. Paragraph (b) of subsection (2) re-enacts section 1(4) of the 1976 Act. It deals with nonpatrimonial loss and provides that a relative will only be able to recover damages for 3 heads of such loss (i) distress and anxiety endured by the relative in contemplation of the suffering of A before A s death; (ii) grief and sorrow of the relative caused by A s death; (iii) the loss of such non-patrimonial benefit as the relative might have been expected to derive from A s society and guidance if A had not died. 35. Section 1(4) of the 1976 Act restricted damages under that subsection to a subset of the deceased s relatives known as the deceased s immediate family. However, there is no change in substance in the Bill in this case because the definition of relative in section 14(1) of the Bill corresponds to the definition of the deceased s immediate family in the 1976 Act. 36. Subsection (3) is new and implements recommendations 13(b) and 14 of the Commission s Report. It makes further provision in relation to awards of damages under paragraph (b) of subsection (2). 37. Paragraph (a) of subsection (3) provides that such an award is to be known as a grief and companionship award. At present, under the 1976 Act, there is no statutory name for such an award and it is simply known as a section 1(4) award. 6

7 38. Paragraph (b) of subsection (3) provides that such an award is not to be made in respect of mental disorder caused by A s death. This is because, in Gillies v Lynch (2002 SLT 1420), it was suggested that, where a relative suffers mental illness as a result of the deceased s death, damages for that mental illness should be awarded as falling within the heading of grief and sorrow. Paragraph (b) makes it clear that it does not. Section 5: Discharge of liability to pay damages: exception for mesothelioma 39. Section 5 re-enacts subsections (2A) and (2B) of section 1 of the 1976 Act which were inserted by the Rights of Relatives to Damages (Mesothelioma) (Scotland) Act It forms an exception, in cases where a victim dies of mesothelioma, to the general principle laid down in section 4(1) that the defender B is not liable to pay damages to the deceased s (A s) relatives where A has discharged or excluded liability before A s death, or where liability is excluded by an enactment. 41. Subsection (1) contains three criteria which must be met for section 5 to apply. 42. Paragraph (a) provides that A must have discharged B s liability to A before death. 43. Paragraph (b) provides that the personal injury from which A dies must be mesothelioma. 44. Paragraph (c) provides that both the discharge and the death must have taken place on or after 20 December This was the date specified in the 2007 Act as the date from which the exception would apply. 45. Subsection (2) provides that, where the three criteria set out in subsection (1) are met, B will be liable in damages to A s relatives even though A had discharged the liability before his death. However, B s liability is limited to damages for non-patrimonial loss: A s relatives may seek a grief and companionship award in terms of section 4(2)(b) but not damages for loss of support under section 4(2)(a). Section 6: Relative s loss of personal services 46. Section 6 re-enacts section 9(2) of the Administration of Justice Act It deals with the right of A s relatives to damages for loss of personal services which were provided by A before A s death. 47. Subsection (1) provides that a relative who is entitled to damages for loss of support may also include a claim for damages for loss of the A s personal services. 48. Subsection (2) defines personal services in subsection (1) by reference to section 9(1) of the 1982 Act. This refers to personal services as the services mentioned in section 9(3) of the 1982 Act, being services (a) which were or might have been expected to have been rendered by the injured person before the occurrence of the act or omission giving rise to liability; 7

8 (b) (c) of a kind which, when rendered by a person other than a relative, would ordinarily be obtainable on payment; and which the injured person but for the injuries in question might have been expected to render gratuitously to a relative. Section 7: Assessment of compensation for loss of support 49. Section 7 is a change from the existing law. It makes detailed provision as to how a relative s claim under section 4(2)(a) for damages for loss of the deceased s (A s) support is to be calculated. 50. Paragraph (a) of subsection (1) provides that, in every case, the court should assume that the total amount available to support A s relatives is an amount equivalent to 75% of A s net annual income. In other words, it should be assumed that, in every case, the deceased would have spent 25% of his net annual income on A s own living expenses. This accords with the provision made in section 1(6)(c). It gives effect in part to the Commission s recommendation 11(c). 51. Paragraph (b) of subsection (1) provides that the income of a relative claiming damages is to be disregarded when assessing the sum due. Although a relative s income is currently disregarded in most cases (as the relative has to prove the actual loss), it is taken into account where the relative is the deceased s spouse, civil partner, cohabitant or dependent child by virtue of the special rule laid down in Brown v Ferguson (1990 SLT 274). This paragraph will end that practice. It gives effect in part to the Commission s recommendation 11(a). 52. Paragraph (c) of subsection (1) restates the general principle that a relative must prove the actual loss of support suffered and can only recover damages to that extent, unless the relative falls within certain excepted cases for which special provision is made. The excepted cases are A s spouse, civil partner or cohabitant and any dependent children A may have had, for whom provision is made in paragraph (d). This paragraph gives effect in part to the Commission s recommendation 11(c). 53. Paragraph (d) of subsection (1) contains two exceptions to the general assessment of damages laid down in paragraph (c) which apply where A s spouse, civil partner, cohabitant or dependent child the cases excepted from paragraph (c) claim damages for loss of support. 54. Sub-paragraph (i) applies where it is only the relatives falling within those excepted cases who are claiming damages for loss of support. In this case, the court is to assume that A would have spent the whole amount of 75% of his net annual income provided for in paragraph (a) to support those relatives. This amount of damages is to be awarded to these relatives on this basis regardless of the degree to which A actually supported them. It is for the courts to apportion damages among the relatives, if there are more than one. This sub-paragraph gives effect in part to the Commission s recommendation 11(a). 55. Sub-paragraph (ii) applies where there are also other relatives than those falling within those excepted cases who are claiming loss of support. In this case, those other relatives have to 8

9 prove the actual loss of support suffered. This sum is then deducted from the 75% of the deceased s net annual income provided for in paragraph (a) and the court is to assume that A would have spent the whole amount of the sum left over on those excepted cases. This subparagraph (ii) gives effect to the Commission s recommendation 11(d). 56. Paragraph (e) makes provision in respect of the multiplier which the courts apply after the relative s loss of support has been calculated under paragraphs (a) to (d). At present, the courts apply the Ogden Tables 9 to find an appropriate multiplier which they apply as from the date of death. However, paragraph (e) provides that any multiplier applied by the court is only to be applied in respect of future loss of support and should run from the date of the interlocutor and not from the date of death. This paragraph gives effect to the Commission s recommendation Subsection (2) defines the term dependent child for the purposes of this section as meaning a child who, at the date of A s death (a) has not attained the age of 18 years; and (b) is owed an obligation of aliment by A. 58. A may owe an obligation of aliment to a child who is 18 or older under section 1(5)(b) of the Family Law (Scotland) Act 1985, such as a child in higher education. These children may claim for loss of support but they do not benefit from the special provisions which apply to a dependent child under this section and must accordingly prove actual loss of support in terms of paragraph (c) of subsection (1). This subsection gives effect to the Commission s recommendation 11(b). Section 8: Further provision as regards relative s entitlement to damages 59. Section 8 re-enacts subsections (5) to (7) of section 1 of the 1976 Act. 60. Subsections (1) and (2) re-enact subsection (5) of the 1976 Act, subsection (3) re-enacts subsection (5A), subsection (4) re-enacts subsection (6) and subsections (5) and (6) re-enact subsection (7). 61. In subsection (5), there is a change in that reference is now made to any other enactment rather than to the named provisions in subsection (7) of the 1976 Act. The other changes are largely for drafting reasons. Section 9: Transmission of relative s rights to executor 62. Section 9 re-enacts section 1A of the 1976 Act. 63. Subsection (1) provides that section 9 applies where a relative ( R ) who has a right to damages under section 4 or 6 dies before that claim can be resolved. 9 Actuarial Tables for Use in Personal Injury and Fatal Accident Cases ( The Ogden Tables ). The Tables and explanatory notes are published by the Government Actuary s Department and are available online at 9

10 64. Subsection (2) provides that any right to damages under section 4 or 6 which was vested in R immediately before R s death, will transmit to the relative s executor ( E ). However, the executor can only pursue the claim for damages up to R s date of death. Damages are not payable for future loss as R s death would have brought to an end the support which R received in any case. Similarly, the grief and suffering felt by the R is taken to end with R s death. 65. Subsection (3) re-enacts section 1(4) of the Rights of Relatives to Damages (Mesothelioma) (Scotland) Act It makes special provision for transitional cases involving the relatives of mesothelioma sufferers. The 2007 Act came into force on 27 April However, the exception which it introduced (see section 5 above) was intended to apply where the victim s discharge of liability and his death occurred on or after 20 December As a result, the 2007 Act contained a transitional provision at section 1(4). Section 1(4) provides that, where such a relative would have had rights to damages but died in the period between the victim s death and the coming into force of the Act, the rights in question were to be taken to have vested in the relative as at the victim s date of death. In this way, the rights would be deemed to have vested in the relative before R s death and accordingly they could transmit to his executor. Subsection (3) re-enacts this provision because there could still be cases where such a deceased relative s executor had not yet raised an action for damages. Section 10: Enforcement by executor of rights transmitted under section 2 or Section 10 re-enacts section 2A of the 1976 Act. It makes provision as to how an executor can enforce the rights which are transmitted on the death of a victim (by virtue of section 2) or on the death of a relative of the victim (by virtue of section 9). 67. Subsection (1) provides that an executor may raise an action to enforce the deceased s right or, if the deceased had already raised an action which has not been concluded, may be sisted as pursuer. 68. Subsection (2) provides that an action is not to be taken as concluded for this purpose while an appeal is competent or before any appeal is disposed of. Section 11: Executor s claim not excluded by relative s claim etc 69. Section 11 re-enacts section 4 of the 1976 Act but expresses it in a clearer way. Section 12: Limitation of total amount of liability 70. Section 12 re-enacts section 6 of the 1976 Act. 71. It deals with limitation of the defender s ( B s ) liability in cases where the victim ( A ) has died from personal injuries and A s executor seeks damages in respect of the injuries suffered by the victim or A s relative (or the executor of such a relative) seeks damages in respect of A s death. 10

11 72. Subsection (2) provides that, where A had agreed before his death to limit the damages payable by the defender, or where there is a statutory limitation on such damages, nothing in the Act entitles the executor or relative to recover damages of more than the permitted amount. 73. Subsection (3) provides that, where there is a multiplicity of pursuers, any damages to which they would have been entitled by virtue of this Act will be reduced pro rata if required in order to bring the total sum of damages within the permitted amount. 74. Subsection (4) makes provision for conjoined actions. Section 13: Amendment of section 9 of Administration of Justice Act Section 13 amends section 9 of the Administration of Justice Act Section 9(1) of the 1982 Act entitles the victim to claim damages in respect of the victim s inability to render personal services. Paragraph (a) inserts a new subsection (1A) in section 9 of the 1982 Act which provides that, in assessing damages under subsection (1) in cases where the victim s expectation of life has been reduced, the court is to assume that he would have lived until his notional date of death had the injuries not been sustained. This provision makes it clear that damages under section 9 of the 1982 Act are payable in respect of the lost period. It is new and reflects section 1(5) of the Bill. It gives effect to the Commission s recommendation 5(b). 77. Paragraphs (b) to (d) make amendments to section 9 of the 1982 Act in consequence of section 6 which re-enacts section 9(2) of the 1982 Act. Paragraph (b) repeals section 9(2); paragraph (c) deletes the reference to subsection (2) in subsection (3) and paragraph (d) amends subsection (4) by substituting, for the reference to subsection (2), a reference to section 6(1) of the Bill. Section 14: Interpretation 78. Section 14 makes provision for interpreting the Bill. It corresponds to section 10 of and Schedule 1 to the 1976 Act. 79. Subsection (1) defines what is meant by personal injuries and relative for the purposes of the Bill. FINANCIAL MEMORANDUM INTRODUCTION 80. This document relates to the Damages (Scotland) Bill introduced in the Scottish. It has been prepared on behalf of Bill Butler MSP, who is the 11

12 member in charge of the Bill, to satisfy Rule of the Parliament s Standing Orders. It does not form part of the Bill and has not been endorsed by the Parliament. 81. The main effect of this Bill will be to clarify, simplify and modernise the law in regard to loss of future earnings and loss of financial dependency in wrongful death cases. Some parts of the Bill re-state the present law (and therefore have no cost implications); some parts of the Bill will have the effect of increasing damages (and may therefore have cost implications). In particular, damages for a loss of financial dependency will increase in cases in which the surviving spouse, cohabitee or partner has their own income. For the reasons explained in the Policy Memorandum, these are cases which have become increasingly under-compensated because of the conservative approach judges are obliged to apply under existing law. BACKGROUND 82. It is unlikely that this change in the law will encourage victims to claim who would not otherwise have done so. It will only apply to wrongful death cases and does not therefore create any new category of case. It is unlikely to encourage victims and their families who would not have previously claimed to come forward because the type of case covered is one in which most victims and their families already claim. There is therefore not much scope for an increase in case numbers. Number of personal injury cases in which claims are made 83. Other factors will determine whether or not the annual average tolls of people who die in course of their employment or on the roads are reduced. An average of 30 people die every year in Scotland in workplace accidents people died on Scottish roads in A very large proportion of the work related fatalities in Scotland is due to asbestos exposure. Mesothelioma incidence is known to be rising. There were 1,969 mesothelioma deaths in Great Britain in However, the long latency period means that the overall incidence rate is still rising. Future projections (based on mesothelioma deaths to 2001) suggest that the incidence could reach 2,400 deaths per year by 2013 before falling away to an annual background rate of about 500 cases per year by Projections of the eventual annual incidence following the peak are uncertain. Latest available figures for Scotland show that there were 197 cases of mesothelioma diagnosed in 2003 and that in 2004 there were 161 deaths. Specific predictions of future incidence for Scotland are not available. What seems clear, however, is that mesothelioma deaths are on the rise and that rise will therefore impact on the level of damages payable in these cases as a whole. 10 HSE/SCO/124/ June Key 2008 Road Casualty Statistics Heath & Safety Executive 12

13 Effect of the Bill on amounts of damages 86. The Bill will have the effect of increasing the amount of damages paid out in individual cases. There will therefore be an increased cost to the insurer or organisation which is responsible for payment of damages for a wrongful death. 87. Thompsons Solicitors have provided information from their own case holdings which they estimate includes about 60% of the fatal cases in Scotland. They presently act for 620 families and are also acting in a further 99 live mesothelioma cases in which the victim s lifespan is severely limited. 88. From their case holdings, Thompsons Solicitors have calculated that the average current loss of support in a fatal case would rise from 63,930 to 97,683, ie an average rise of 35% (or 33,753). 89. In lost years cases in which the victim is dying from a fatal illness, the average will increase from 139,528 to 181,762, ie a rise of just over 23% (or 42,234). 90. The present averages are low given that this head of damage is meant to compensate a family for the loss of future financial dependency or income for what is usually more than just a few years. According to statistics supplied by Thompsons Solicitors, the average multiplier in fatal cases is and the average multiplier in lost year cases is Most cases involve families with relatively modest incomes and the effect of the deduction of the whole of the surviving partner s income has diluted the compensatory principle of restoring victims to the position they would have been in but for the death. 91. It has to be kept in mind that the multipliers referred to above are discounted to reflect mortality by reason of other causes and early payment. They are not therefore based on the actual length of time a deceased or dying person would actually have continued to receive an annual income. 92. On the basis of their own case statistics, Thompsons Solicitors estimate that about 100 fatal cases (wrongful death cases) settle in Scotland every year. In addition, a further 10 lost year cases settle before the victim dies. It takes between four years to five years from the date of the death for these cases to reach a conclusion. Traumatic fatal cases (ie where the victim died at the time of the accident) tend to take less time than those cases in which the victim has had a prolonged illness as a result of the wrongful act and has then gone on to die in the course of their case. Other effects of the Bill 93. The problem which has been identified in wrongful death cases is that they tend not to settle extra-judicially and are therefore more likely to be the subject of litigation. This is particularly so in mesothelioma cases where the victim s lifespan is very limited. Simplification of the law will reduce the scope for argument in an area which is presently a significant source of dispute that of calculation of future financial loss. Some cases will still require to be litigated where parties are in dispute on liability or causation, but in cases where there is no such dispute 13

14 (and that is particularly so in mesothelioma cases and very often the case in accidents at work or road traffic accident cases), the main area of dispute is financial loss. Simplification of the law in this area would have the beneficial effect of earlier settlement and a reduction in the number of cases which require to become court actions. Those which do become court actions are likely to settle at an earlier stage. 94. The effect of this legislation will therefore be to reduce the amount of court time and expense taken up with fatal cases. 95. Thompsons Solicitors advise that only about 1% of their fatal cases settle without litigation. They understand that to be the general experience of other personal injury lawyers even when these cases are relatively straightforward on facts, liability and damages. Dispute over the amount of damages tends to be the main sticking point in cases in which all other aspects are straightforward. The removal of this substantial area for dispute will result in earlier settlements and reduce the need for court proceedings. Insurers are experienced at dealing with claims and do not usually instruct lawyers until a court action has been raised. Earlier settlements will reduce the legal costs they have to pay to their own solicitors and the judicial expenses they incur after a case has been raised. If insurers embrace the spirit of this legislation then they do stand to make financial savings but these will depend on their engaging with the representatives of victims and their families sooner than they do at the moment. Margins of uncertainty 96. Costs are presented in this Memorandum in terms of averages but settlements in individual cases can vary substantially depending on the age and earnings of the victim. An elderly, retired victim whose spouse or partner is also retired will therefore have a case which is worth much less than that of a young man or woman killed in a road traffic accident who is at the top of their earning potential and supporting a young family. 97. There are also variations year by year in regard to the number of wrongful deaths. There is therefore a degree of uncertainty in the figures provided in this Memorandum. COSTS ON THE SCOTTISH ADMINISTRATION The Scottish Government 98. Thompsons Solicitors do not have any fatal cases against the Scottish Government (SG) in their caseload at the moment but the possibility of SG being a defender from time to time exists. There would appear to be few wrongful death cases brought against SG so the future cost for such cases is therefore expected to be negligible. There is, however, the possibility of the UK Government invoking the Statement of Funding Policy between itself and SG, which means the SG would be asked to meet any additional costs incurred by UK Government departments as a result of this legislation (see paragraphs 99 and 100 below). The Statement says that, where decisions taken by any devolved administration or bodies under their jurisdiction have financial implications for departments or agencies of the UK Government (or, alternatively, decisions of UK departments or agencies lead to additional costs for any of the devolved administrations) and other arrangements do not exist automatically to adjust for such extra costs, the body whose decision leads to the additional cost will meet that cost. 14

15 British Shipbuilders 99. Thompsons Solicitors have identified 62 relevant cases which they have against British Shipbuilders indemnified companies. These are all asbestos related cases of which Thompsons have, by their estimate, some 90% in Scotland. The only increase to be projected in these cases is the general increase in the incidence of mesothelioma cases which has been predicted and is referred to above. The case numbers are not particularly large and any increase in damages will depend on the financial circumstances of each family on a case by case basis. These cases are indemnified by Department for Business, Enterprise and Regulatory Reform. Ministry of Defence 100. Thompsons Solicitors advise that they have two recent cases against the Ministry of Defence (MOD) for wrongful death. It is a UK Government department and neither case would be affected by this legislation by reason of the victims not being someone who was financially supporting any dependents. There is scope, however, for this legislation to result in MOD facing larger claims for damages in wrongful death cases. On average there are only about two mesothelioma cases a year against the MOD and these type of cases are diminishing (against the run of the general trend in mesothelioma which is rising) because the MOD was swifter than most employers to improve working conditions relative to asbestos. The impact of this legislation as a whole against the MOD is therefore likely to be relatively small. Scottish courts 101. It is not anticipated that the proposed legislation will increase costs to the Scottish courts. Most cases raised in court are settled without the need for a hearing (98% of all personal injury cases raised in the court settle extra-judicially). That pattern is unlikely to change even if, as anticipated, fewer actions are raised as a result of this legislation. It will be in insurers interests to settle cases in which there is limited scope for argument at a much earlier stage. At present most cases are settling at or about the pre-trial meeting stage which occurs about four weeks before the hearing on evidence (Proof or Trial) Earlier settlement of these types of case either before a court action is raised or at an earlier stage in the action itself will free up the courts to deal with other business. Legal aid 103. Civil legal aid is available to some parties raising a court action. Most personal injury cases, however, are either supported by a trade union or run by solicitors on a speculative fee basis. In cases in which legal aid is applied for and granted there are statutory tests which have to be met in respect of both financial eligibility and reasonable prospects of success. Where the case is successful then the Scottish Legal Aid Board s costs and outlays will be defrayed by an award of expenses against the unsuccessful party. As noted above, 98% of litigated personal injury cases settle which means that there is unlikely to be any increase to legal aid costs as a result of this Bill. 15

16 COSTS ON LOCAL AUTHORITIES 104. Thompsons Solicitors advise that they are presently running 18 wrongful death cases against Scottish local authorities. These cases are at various stages and translate into an average of four new court actions being raised against Scottish local authorities every year by Thompsons Solicitors which would project to just under seven a year for all of Scotland Most of these cases are insured and the cost will therefore fall in large part on the local authorities employers liability insurer but each local authority also has an excess to meet in respect of that policy. Any increase in costs to local authorities will therefore depend to the extent to which their excesses increase but there are so many other factors which determine the amount of an excess including, in particular, an individual authority s claims experience in other cases, that the effect of this measure is unlikely to have any significant impact The case numbers would not appear to be high enough to make any material difference and local authorities, and their insurers, will benefit from a decrease in cost if cases are settled at an earlier stage. Earlier settlement gives them a real opportunity to reduce legal costs and court expenses. COSTS ON OTHER BODIES, INDIVIDUALS AND BUSINESSES 107. The Bill will have implications for employers liability, public liability and road traffic insurers. It will increase their liability in some fatal cases and in cases in which the claimant is dying as a result of work related fatal illness or injuries. This, in turn, may have the effect of raising insurance premiums for policies covering such liabilities but insurers will also have the option of loading premiums in respect of claim histories and increasing excesses. Any general increase in insurance premiums is not therefore a given as a result of this legislation and insurers already can, and do, tailor the cost of insurance for employers with a poor claims history The Bill will not have any direct cost implications for individuals. SUMMARY OF ADDITIONAL COSTS ARISING FROM THIS BILL 109. The effect of the Bill will be to increase the level of damages for loss of financial dependency or loss of future earnings in wrongful death and lost year cases The additional costs will fall on those responsible for the wrongful death The average increases will be as follows: Present level New level Increase Wrongful death case 63,930 97,683 33,753 Lost years case 139, ,762 42,234 16

17 Overall average increase per year: Wrongful death cases concluded per annum 100 x 33,753 3,375,300 Lost year cases concluded per annum 12 x 44, ,808 Total 3,882,108 Where will the additional annual costs fall? Cases Increase Totals Insurers 80 fatal 33,753 2,700, lost years 42, ,340 British Shipbuilders 10 fatal 33, ,530* 2 lost years 42,234 84,468* MOD 2 fatal 33,753 67,506* Local authorities 8 fatal 33, ,024** SG Negligible - - * It should be noted that in asbestos related cases, British Shipbuilders and the MOD will be only one of a number of defenders. It is common in these cases for there to be multiple defenders because of the victims work history which means that liability for the sums indicated would be shared with other defenders mainly insurers. ** A large proportion of this sum will fall to be met by the local authorities insurers and will depend on the terms and conditions of individual policies. PRESIDING OFFICER S STATEMENT ON LEGISLATIVE COMPETENCE 112. On 1 June 2010, the Presiding Officer (Alex Fergusson MSP) made the following statement: In my view, the provisions of the Damages (Scotland) Bill would be within the legislative competence of the Scottish Parliament. 17

18 DAMAGES (SCOTLAND) BILL EXPLANATORY NOTES (AND OTHER ACCOMPANYING DOCUMENTS) Parliamentary copyright. Scottish Parliamentary Corporate Body Applications for reproduction should be made in writing to: Information Policy, Office of the Queen s Printer for Scotland (OQPS), St Clements House, 2-16 Colegate, Norwich NR3 1BQ, or by to licensing@oqps.gov.uk. OQPS administers the copyright on behalf of the Scottish Parliamentary Corporate Body. Produced and published in Scotland on behalf of the Scottish Parliamentary Corporate Body by RR Donnelley. ISBN SP Bill 49 EN 2.70 Session 3 (2010)