In February it was announced that the Damages (Scotland) Bill,
proposed by Bill Butler MSP, would be introduced to the Holyrood
Parliament after receiving cross-party support. Mr Butler, the MSP
for Glasgow's Anniesland, introduced his Members Bill following the
Scottish Law Commission's Report on Damages for Wrongful
Death published in September 2008. The consultation response
to the proposal states:
"The intention of the proposal is to repeal the Damages
(Scotland) Act 1976 and replace it with a new Act, restating the
law in a clearer and simpler form; and for connected purposes such
as making provision for a new method of calculating damages
recoverable by relatives where a person dies as a result of
personal injuries."
A re-statement of the law in a more logical and coherent form is
always welcome, both to lawyers and lay persons. However, the Bill
seeks to introduce a controversial change in relation to claims
brought either by the injured party or by their relatives after
their death in respect of patrimonial loss: the loss of financial
support.
The present approach to quantifying such claims is set down in
Brown v Ferguson 1990 SLT 274 as follows:
• calculate the net annual income of the injured party and
spouse;
• deduct a proportion representing the injured party's own
living expenses (25% in Brown but often agreed at 40% in a
mesothelioma claim);
• deduct the spouse's income from that figure to arrive at a sum
for loss of dependency (the multiplicand); and
• multiply that by the appropriate factor.
The Bill, on the other hand, proposes a fixed deduction of 25%
from the injured party's net annual income to represent their
living expenses. It also proposes that the spouse's income be
ignored when carrying out the calculation.
Until now the percentage deduction for the injured party's own
living expenses has been for a court to determine having heard
evidence. The percentage has been increased to 50% in circumstances
where the deceased leaves only a spouse, and no other
dependents.
In the recent case of Guilbert & Ors v Allianz Insurance
plc [2009] CSOH 10 the contention that a deduction of 25% for
the deceased's own living expenses was a general rule of thumb was
rejected. Lord Kinclaven stated:
"A rule of thumb may be a useful tool and a starting point,
or a cross check available to help reduce the matters in dispute
and to focus the issues, but it is no substitute for deciding a
case according to the evidence. In the absence of agreement it is
for the pursuer to satisfy the court that the sums claimed are
appropriate, fair and reasonable in the circumstances of the
particular case concerned."
If the proposals become law then the loss of support element in
almost all claims will increase. The reasoning behind this is the
Scottish Law Commission's conclusion that some areas of the current
law no longer reflect the economic realities of modern family
structures. The Commission's view was that this formula might have
been satisfactory in the days of the traditional family, when the
husband was the main breadwinner and the wife's primary role was to
look after the home and children with no substantial income of her
own. However, nowadays the husband and wife are more likely to have
joint incomes and in such cases the application of the Brown v
Ferguson formula leads to unsatisfactory results. It does not
recognise that the surviving spouse may sustain substantial loss as
a result of the deceased's death even though they would not have
been supported by the deceased in the traditional sense because
they were also earning their own salary.
While this is no doubt a valid point and the proposed
legislation undoubtedly simplifies the issues, the reality is that
each case is different. The present approach is undoubtedly the
preferred one so far as insurers are concerned as it allows for
variables to be taken into account and for claims to be dealt with
on a case by case basis. The proposed approach might allow
patrimonial loss claims to be quantified more quickly and easily,
but in the vast majority of situations it is going to produce an
artificial result.
The Scottish Law Commission's remarks also fail to take account
of the fact that a high percentage of loss of support claims arise
out of mesothelioma actions, where the injured party and his spouse
tend to be of an older generation and often, in fact, fall within
the Commission's own definition of a "traditional family", where
the husband was the main breadwinner.
The Bill will now be debated by Holyrood, but given the amount
of cross-party support received it seems inevitable that it will
become law.
Contributed by Toni Ashby