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AMENDMENT TO SECTION 1(2) OF THE DAMAGES (SCOTLAND) ACT 1976 CONSULTATION PAPER

ACKNOWLEDGEMENT

The Executive is very grateful for preparatory work on a draft Member's Bill and consultation carried out by Des McNulty MSP, trades unions, voluntary bodies and advisers. Following the statement in the Scottish Parliament by the Minister for Parliamentary Business on 22 June, Mr McNulty withdrew his draft Bill. With Mr McNulty's permission, this consultation paper draws mainly from his work. Scottish Ministers wish to pay tribute to Mr McNulty and all those who have campaigned tirelessly for this change in the law on behalf of mesothelioma sufferers and their families.

1. Introduction

Mesothelioma

1.1 Mesothelioma is a cancer of the lining of the lungs or abdomen. It is almost always caused by exposure to asbestos. It is almost invariably fatal, with many deaths occurring within a few months of diagnosis and most within 14 months. Everyone has breathed in small amounts of asbestos fibres, and while mesothelioma can arise with only low levels of exposure it is more likely to present in people with more extensive exposure to asbestos, particularly exposure to the more dangerous forms of asbestos. It has a long latency period - always at least a decade following exposure but normally thirty years or more. It can be difficult to diagnose from biopsy specimens and a confident diagnosis is often only made after death.

1.2 Mesothelioma used to be a rare cancer but there are now over 1800 cases a year in the UK. However, the long latency means that despite far better controls on asbestos exposure and the elimination of asbestos imports, the rate is still rising. It could reach 2400 deaths a year by around 2013 and then fall away to perhaps 500 cases per year by 2050. These projections are unstable and highly sensitive to assumptions on life expectancy, residual exposure levels and latency. The table below shows Health and Safety Executive's latest caseload data and projections for the UK.

Mesothelioma observed and projected deaths among males and females (all ages), upper and lower exposure scenarios

1.3 Most sufferers are men (85%). Most deaths (about two-thirds) occur between the ages of 60 and 80, with only 18% before the age of 60. The age profile of deaths is rising and many cases still involve exposure during the 1960s. About 80% of cases can be associated with occupations where there was a greater likelihood of asbestos exposure, such as shipbuilding and construction, and although all areas of the country show some level of asbestos-linked mesothelioma, there are strong geographical concentrations around shipbuilding areas, centres of railway engineering, and asbestos plants. Cases are more likely to come from lower and middle social class groupings, but not overwhelmingly so.

Compensation

1.4 Persons suffering from asbestos-related diseases can usually take legal action against employers who exposed them to dangerous quantities of asbestos. They can also apply to the Benefits Agency for industrial injuries benefit if they suffer from various asbestos-related conditions known as 'prescribed diseases'. This is typically £127 per week until death. If exposure occurred while working for an employer who is no longer trading, they may also receive a lump sum (typically £13000) under the Pneumoconiosis (Workers' Compensation) Act 1979.

1.5 In Scotland, the Justice 2 Committee in the first session of the Parliament took evidence and consulted with interested parties in dealing with Petition PE336 concerning the award of compensation for sufferers of asbestos-related diseases. After a 20 month inquiry, the Committee recommended special additional measures to speed up settlement of these personal injury cases. This co-incided with a view that had been reached by a Court of Session working party chaired by Lord Coulsfield that recommended a new procedure for all personal injury cases that were raised in that Court. New procedures were therefore implemented by the Court of Session in April 2003. Pending those reforms Lord Mackay of Drumadoon was appointed to oversee asbestos-related cases that were proceeding under the old procedures and this resulted in the expediting of these cases. Central to the new arrangements is a timetable created to manage claims in court from start to finish which is then closely monitored. In practice this has meant cases are being concluded within the shortened period of 12 to 13 months.

1.6 However, the introduction of the accelerated claims processing arrangements has served to highlight a predicament arising from the legislative provisions on relatives' claims. This is due to section 1(2) of the Damages (Scotland) Act 1976 (the 1976 Act) which means that claims by the relatives of injured persons are extinguished following an award to a living claimant. In practice this means that mesothelioma sufferers face the dilemma of having to choose whether or not they should pursue their claim for damages and live their remaining months with the dignity and comfort which compensation could provide or to defer making their claim so that the family they leave behind would be better off. The faster processing introduced by the Coulsfield reforms means that more sufferers are surviving the claims period and are therefore faced with this difficult dilemma.

2.WHAT IS BEING PROPOSED

2.1 The purpose of the Bill is to amend section 1(2) of the 1976 Act to enable the immediate family ¹ to claim non-patrimonial damages even when the deceased have settled their own claims while alive.

2.2 Section 35 of the Family Law (Scotland) Act 2006 redefines which relatives of a deceased person should be entitled to sue for non-patrimonial loss under the 1976 Act. In doing so it retains the concept of the deceased's immediate family; ensures that it consists of those relatives who are likely to have had a close tie of love and affection with the deceased in the context of present-day family structures; and gives appropriate weight to relationships which can arise between persons who have lived and/or been brought up in the same household. We believe that it is right that the proposed amendment is only advanced to the people closest to the mesothelioma sufferer and do not propose to re-open the question of whom the immediate family comprises.

2.3 We propose to amend the 1976 Act to disapply section 1(2) to allow the immediate family of a mesothelioma sufferer to claim damages for loss and suffering under section 1(4) of the 1976 Act in any case where (i) a person has contracted mesothelioma; (ii) as a result the sufferer dies earlier than would have been the case had he or she not sustained the injury; and (iii) the sufferer has subsequently died of the disease. We also propose that Scottish Ministers should have the power to extend the new provision to apply to other diseases or personal injury if experience shows this to be necessary through developments in science. These provisions will apply to all cases where the death of the mesothelioma sufferer occurs after the date on which the legislative provisions are brought into force. They will not affect cases settled before that date. Ministers propose that cases in progress (but not settled) at the date of commencement will be subject to this change. This proposed amendment is the subject of the partial Regulatory Impact Assessment at Annex B because of its potential implications for employers and the insurance industry.

3. THE NEED FOR CHANGE

Existing law

3.1 A detailed summary of the existing law relating to the right of an injured person, his executors and relatives to claim damages in respect of personal injury is given in Annex A to this Consultation Paper. The key points are as follows.

3.2 Where a person suffers personal injuries as the result of a wrongful act or omission of another ("the responsible person"), the injured person may claim damages from that person. Those damages are intended to compensate the injured person for any loss or damage which that person has suffered. The damages which may be claimed fall under two heads -

• damages for any patrimonial (or financial) loss i.e. for any pecuniary loss, such as loss of past or future earnings resulting from his injuries or loss of expectation of life; and

• damages for solatium (or non-patrimonial loss i.e. for any pain and suffering, loss of faculties and amenities and loss of expectation of life suffered by the injured person.

3.3 Under section 2 of the 1976 Act, if an injured person dies without having recovered any damages, any claim to damages which that injured person had at the time of his or her death transmits to his or her executor subject to certain modifications to ensure that certain damages are limited by reference to the period before death. Prior to 1993, the injured person's claim for solatium did not transmit to the executor but the 1976 Act was amended to provide for this by the Damages (Scotland) Act 1993 (c.5) ("the 1993 Act").

3.4 In addition, if the injured person dies in consequence of personal injuries and has not recovered damages during his or her lifetime, section 1 of the 1976 Act confers upon certain relatives of the deceased the right to claim damages. These damages are intended to compensate the relatives for their own loss and not that of the injured person. In terms of that Act, the damages are of two different kinds :-

• the relatives may claim damages for patrimonial (or financial) loss which are defined in section 1(3) of the 1976 Act as damages to compensate the relative for such matters as loss of support suffered by the relative since the deceased's death, or likely to be suffered, and reasonable funeral expenses; and.
• if the relative is a member of the deceased's immediate family (for the definition of "immediate family see footnote 1), that relative may claim damages for solatium (or non- patrimonial loss or injury to feelings) which are defined in section 1(4) of the 1976 Act, as amended by the 1993 Act, to consist of three elements of injury to feelings
• grief and anxiety suffered by the relative in contemplation of pre-death suffering of the deceased,
• grief and sorrow of the relative caused by the deceased's death and
• loss of the deceased's society and guidance.

The Problem

3.5 Under the existing law, the immediate family of an injured person is prevented from claiming damages on the death of that person if the deceased has already recovered damages for the deceased's own loss during his or her lifetime ².

3.6 This means that mesothelioma sufferers are faced with the prospect that, if they pursue their own claim, this would extinguish the claims of their immediate family. In order to protect their family, their instinct may be to forego their own claim in order to allow the claims of their immediate family to proceed later. On the other hand, the future widow (or widower) and children are likely to press the sufferer to pursue his or her claim so that he or she can obtain the benefit of some damages before death, even although this means that the immediate family forfeit the right to claim damages when the sufferer dies.

3.7 This dilemma has intensified in recent years. This is because the courts have recently substantially increased the amount of damages which they are prepared to award the immediate family for solatium to compensate for any grief and suffering and emotional distress which they suffer and loss of society and guidance under section 1(4) of the 1976 Act. Prior to 1993, after allowing for inflation, the amounts awarded for what was then called loss of society seemed to have changed very little from the amounts awarded pre-1976 for solatium at common law ³.

3.8 In 1992, the amounts awarded to a widow ranged from £5,500 to £12,500 and to a child from £600 to £10,500 ⁴. However, recent awards of section 1(4) damages have increased from £20,000 ⁵ to £28,000 ⁶ to a widow and £5000 ⁷ to £10,000 for an adult child ⁸ and £3,000 to £10,000 for an elderly parent ⁹ losing an adult son.

3.9 This dilemma occurs in those cases where the sufferer has sustained personal injuries which diminish his or her life expectancy and where the sufferer dies in consequence of his or her injuries. This is likely to happen where

• the sufferer contracts a terminal industrial disease, such as mesothelioma, which substantially reduces that person's expectation of life, and
• death is inevitable a short time after diagnosis, but
• there may still be sufficient time for the sufferer to seek to recover damages and, therefore, to be faced with the problem.

3.10 The dilemma does not occur in fatal cases where death occurs immediately or a short time after some traumatic accident and where the sufferer does not have the opportunity to recover damages before his or her death. Neither does the dilemma occur in cases where there is no diminished life expectancy and where there is little or no prospect of any substantial claim for damages for solatium by the immediate family of the sufferer. Currently, 80% of mesothelioma sufferers decide to wait and let their relatives pursue the claim after their death.

Proposed solution

3.11 This problem is caused by the existing rule of law which means that relatives of a mesothelioma sufferer can only claim damages if the sufferer dies without having recovered damages for their own loss or otherwise discharged or excluded or waived the liability of the responsible person for that loss.

3.12 There may be thought to be some justification for the rule so far as regards patrimonial loss. This is because the view may be taken that, if the deceased has already recovered damages for future earnings ¹⁰, there would be some duplication of damages if the relatives were also allowed to recover damages for loss of support even although there is no exact correspondence or equivalence between the two claims.

3.13 However, the same argument does not apply in the case of solatium. There is no correspondence or equivalence at all between the injured person's own claim for solatium and the claims of the immediate families claim for solatium to compensate for their grief, suffering and emotional distress and loss of society and guidance under section 1(4) of the 1976 Act.

3.14 This rule restricting the immediate family's title to sue in these circumstances has its origins in the common law. In the report which led to the 1976 Act, the Scottish Law Commission considered whether it should be abolished ¹¹. They took the view that, as the rights of both the deceased and the relatives arise from the same wrong, a balance has to be struck between the interests of the pursuers and those of the defender, in particular, that the defender should not be exposed to successive claims perhaps separated by long intervals. Accordingly, they decided to retain it and the rule is now contained in section 1(2) of the 1976 Act.

3.15 Successive claims appear to be less of a problem now than in 1976. The current law permits successive claims to be made in those cases where a person is allowed to sue for provisional damages and then come back later for a further award. It also allows the relatives to claim damages where the deceased has obtained provisional damages ¹².

3.16 It is proposed that section 1(2) of the 1976 Act should be disapplied so as to allow the immediate family of a mesothelioma sufferer to claim damages for non- patrimonial loss under section 1(4) of the 1976 Act even where the deceased has already recovered damages or obtained a settlement, but only:

• where the sufferer has sustained personal injuries as a consequence of mesothelioma which have diminished his or her expectation of life and dies as a result of those injuries;
• where the sufferer has recovered damages or obtained a settlement after the date when the Bill comes into force. Where the liability of the responsible person has been discharged prior to that date, that discharge should continue to bar any claim by the immediate family.

The immediate family will have the normal limitation period of three years after the death of the mesothelioma sufferer in which to make their claim.

3.17 The proposal is that the Bill is mesothelioma specific. The exposure of defenders to the proposed extension of relatives' rights to claim has to be delimited in order to give clarity and to link the change to the particular circumstances that have given rise to the dilemma faced by the mesothelioma sufferer and the immediate family in these particular cases. In principle, this could be done either by applying a time limit between the mesothelioma sufferers settling their claim and dying, after which the relatives' claim would be extinguished, or by specifying the diseases which fall into the category described in paragraph 3.9 and which give rise to the dilemma. On the first, there would inevitably be cases which fell on the wrong side of the time limit. On the second, we are not at present aware of any conditions other than mesothelioma that give rise to the predicament facing sufferers and their families in relation to claims. The better way therefore to address the problem, and to circumscribe the circumstances in which the claims of the immediate family can be raised after the sufferer has settled and subsequently died would seem to be to refer explicitly to mesothelioma. If we do so it seems only prudent to cater for the possibility that other diseases or other types of personal injury might produce a very similar dilemma in the future. For this reason we are proposing that Scottish Ministers should have the power to extend the new provision to apply to other diseases or kinds of personal injury if experience shows this to be necessary.

Conclusion

3.18 Ministers believe this relatively minor adjustment to the law will remove a source of much anxiety to mesothelioma sufferers and their families and that once the law has been changed they will be free from the distressing choice that they face at the moment. The Executive is keen to present its proposals to Parliament and, before doing so, to take account of the views of consultees.

3.19 The need to make this amendment has illustrated that the current law in this area is unclear and anomalous. The proposal is only to disapply section 1(2) in the limited circumstances which are necessary to deal urgently with this specific problem. It may be helpful in due course for the Scottish Law Commission to undertake a wider review of this area of the law. Scottish Ministers will give further consideration to this.

QUESTIONS

To assist in taking forward this proposal, we would like to hear your views on the following questions:

1. Do you agree that the existing law, which prevents the immediate family of mesothelioma sufferers from claiming damages for their non-patrimonial loss on the death of the sufferer if that person has already recovered damages or settled their claim during his or her lifetime, causes problems?

If you do not agree, it would be helpful if you would say why.

2. Do you agree that these problems should be remedied by disapplying section 1(2) of the 1976 Act so as to enable the immediate family of mesothelioma sufferers to claim damages for non-patrimonial loss, even although the deceased had already recovered damages or obtained a settlement in his or her lifetime?

If not, what do you see as an alternative solution?

3. Do you agree that the Bill should be confined to cases where the sufferer has contracted asbestos related mesothelioma with Scottish Ministers having the power to extend the new provision to apply to other diseases or other kinds of personal injury if experience shows this to be necessary?

If not, why do you think it should not be mesothelioma specific?

The covering letter to this consultation provides at Annex A, details on responding to this consultation; at Annex B, the Respondent Information Form which you should ensure is completed and returned along with your response; and at Annex C, further information on the Scottish Executive consultation process

We are inviting written responses to this consultation paper by 18 August 2006. Please send your response to:

Anne.Hampson@scotland.gsi.gov.uk or

Anne Hampson, The Scottish Executive Justice Department, Civil Law Division, 2 West Rear, St Andrew's House , Regent Road, Edinburgh, EH1 3DG

If you have any queries contact Anne Hampson on 0131 244 2442.

1. Summary of existing law relating to damages on death

1.1 In this Annex-

"the 1976 Act" means the Damages (Scotland) Act 1976 c 13;

"the 1982 Act" means the Administration of Justice (Scotland) Act 1982 c.53;

"the 1993 Act" means the Damages (Scotland) Act 1993 c.5;

"the 1973 Report" means the Scottish Law Commission Report on the Law relating to Damages for Injuries causing Death (Scot Law Com No 31) ( HMSO 1973); and

"the 1992 Report" means the Scottish Law Commission Report on the Effect of Death on Damages (Scot Law Com No 134) ( HMSO 1992).

2. Injured person's right to claim damages

2.1 Where a person suffers personal injuries as the result of a wrongful act or omission of another ("the responsible person"), the injured person may claim damages from that person.

2.2 The damages which an injured person may claim may be said to fall broadly under two main heads:-

(a) Solatium.

This is compensation for any pain and suffering, loss of faculties and amenities and loss of expectation of life suffered by the injured person ¹³;

(b) Patrimonial Loss

This is compensation for any pecuniary loss, including such items as loss of past or future earnings and loss of employability. Where the injuries have diminished the injured person's expectation of life, future patrimonial loss is calculated in accordance with section 9 of the 1976 Act; and

Under the 1982 Act, an injured person can also claim compensation for any necessary services rendered to an injured person by a relative in consequence of the injuries ¹⁴ and for any personal services to a relative which the injured person is unable to render by reason of their injuries ¹⁵. Although strictly the loss is suffered by the relatives, under the 1982 Act they have no direct title to sue to recover damages for such loss ¹⁶. Such loss is generally regarded as being part of the injured person's patrimonial loss.

2.3 Usually, the injured person has to seek all the damages in one action against the responsible person. This is to avoid the defender being subject to a multiplicity of claims arising out of the same incident. However, in certain circumstances, the injured person may claim provisional damages and come back later for further damages. These circumstances are where there is a risk that the injured person may at some time in the future develop some serious disease or suffer some serious deterioration in his physical or mental condition and the defender is a public authority or insured in respect of the claim ¹⁷.

3. Claim by executors

3.1 If the injured person dies, any right to damages in respect of those injuries which the injured person still had at the time of death (and which has not been extinguished or discharged etc) transmits to his executor.

3.2 However the damages payable to the executor for

(a) solatium and loss of expectation of life is limited by reference to the period immediately before death ¹⁸, and

(b) any patrimonial loss is limited to patrimonial loss attributable to the period up to the date of the injured person's death ¹⁹ . This would be for example loss of earnings. It would not allow damages for future loss of income in terms of section 9 of the 1976 Act to be claimed. (This may be offset by the relative's claim for loss of support - see paragraph 4.4 below).

3.3 Under the 1976 Act, as originally enacted, the injured person's claim for solatium did not transmit to the executor. This meant that the existence of a right to solatium depended on the ability or otherwise, often in circumstances well beyond their control, of the injured person achieving resolution of the claim for solatium before they died. This caused particular hardship in the case of claims arising from terminal industrial disease, such as mesothelioma, where injured persons frequently died from their injuries before they could recover damages and where the defenders, and their insurers, had an incentive to prolong legal proceedings until their deaths. To resolve this problem, the Scottish Law Commission recommended in their 1992 Report that the injured persons' claim for solatium should transmit to their executors. This recommendation was given effect by amendments made to the 1976 Act in the 1993 Act ²⁰.

4. Claim by relatives

4.1 If injured persons die in consequence of their personal injuries, their relatives may, in certain circumstances, claim damages for their own loss.

4.2 The claim for damages by the relatives is different from that by the deceased or by the deceased's executors because it is intended to compensate the deceased's family for their own losses rather than those of the deceased ²¹. However, at common law a relative could only claim such damages if the deceased could still claim damages at the time of his death. If the deceased had excluded or discharged that liability, this excluded the relatives' claim ²².

4.3 These provisions are now contained in section 1 of the 1976 Act. Section 1(2) of that Act provides that the relatives cannot claim for damages if the responsible person's liability to pay damages to the deceased has been excluded (whether by an exemption clause or waiver) or discharged (by the recovery or settlement of damages) by the deceased before his death ²³. The claim by the relatives is not excluded if the deceased has been awarded a provisional award of damages but there is an adjustment to prevent duplication of damages for patrimonial loss ²⁴.

4.4 The relatives of the deceased may claim damages for certain kinds of patrimonial loss, namely

(a) compensation for loss of support suffered by the relative since the date of death, and/or likely to be suffered by the relative for the future, as a result of the act or omission in question;

(b) payment in respect of the reasonable expenses incurred by the relative in connection with the deceased's funeral; and

(c) payment of a reasonable sum in respect of loss of personal services (otherwise obtainable on payment) which the deceased might have been expected to render gratuitously but for the injury ²⁵.

4.5 Members of the deceased's immediate family may also claim damages for certain kinds of non patrimonial loss (previously called " solatium" or "loss of society award") which are now defined in section 1(4) of the 1976 Act as being "all or any of the following

(a) distress and anxiety endured by the relative in contemplation of the suffering of the deceased before his death;

(b) grief and sorrow of the relative caused by the deceased's death; and

(c) the loss of such non-patrimonial benefit as the relative might have been expected to derive from the deceased's society and guidance if the deceased had not died" ²⁶.

4.6 This definition of non-patrimonial loss needs further explanation. At common law, damages were awarded for solatium or the grief and suffering of the relative caused by the injured person's death. This tended to be a relatively modest amount. In their 1973 Report, the Scottish Law Commission recommended that this should be replaced by a "loss of society award" which was intended to place less emphasis on the past suffering of the relatives and more upon their future or continuing loss arising from deprivation of the deceased's society and guidance and to encourage more generous awards ²⁷. "Loss of society award" was defined essentially in terms of section 1(4)(c) above. This was given effect in section 1(4) of the 1976 Act as originally enacted.

4.7 However, in their 1992 Report, the Scottish Law Commission discussed how the courts had in practice interpreted the "loss of society award". The Commission found that the courts had continued to award damages for the past suffering of the relatives ²⁸. In these circumstances, the Commission recommended "clarifying" and "reformulating" what was meant by "the loss of society award" in order to bring it into line with, and make the statutory wording reflect, the way in which the courts had interpreted it ²⁹. In particular, as it appeared that the courts continued to award damages for the past suffering of the relatives, this was reflected in section 1(4)(a) above ³⁰. These recommendations were given effect to by amendments to the 1976 Act in the 1993 Act.

4.8 The rights of the relatives to claim damages are not affected by the making of a claim by the deceased's executor and vice versa ³¹.

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