Civil Law of Damages: Issues in Personal Injury - Analysis of Written Consultation Responses

1. Executive Summary

1.1 Damages for personal injury are the amount of money negotiated between pursuers and defenders, or awarded by the courts, to compensate the pursuer for the injury and loss suffered as a result of the wrongdoing of the defender. In its manifesto, the Scottish Government committed to consolidating and updating the existing legislation on the law of damages, building on the work of the Scottish Law Commission (the Commission).

1.2 The Scottish Government published a consultation paper on 19 December 2012 in which views were invited on implementing the Commission's 2004 report on Damages for Psychiatric Injury^[1], its 2007 report on Personal Injury Actions: Limitation and Prescribed Claims^[2], and on the one outstanding recommendation in its 2008 report on Damages for Wrongful Death^[3]. The other recommendations in that report were taken forward in the Damages (Scotland) Act 2011.^[4] It also sought comments on a range of related issues such as the discount rate to be applied in calculating future loss; interest on damages; and periodical payments.

1.3 Forty five responses to the consultation were submitted: 82% of these were from organisations, and 18% from individuals. The largest category of respondent was insurance bodies, comprising 29% of all respondents.

1.4 A summary of views contained in the consultation responses follows.

Psychiatric injury

1.5 The summary of defects outlined in Damages for Psychiatric Injury (2004) was considered to be full and accurate by the majority (80%) of respondents who provided a view. However, there were mixed views on whether common law rules applying to reparation for mental harm should be replaced by a statutory obligation to make reparation for wrongfully caused mental harm. Concerns focused largely on a common perception that this would risk courts losing their flexibility to deal with cases according to their individual circumstances.

1.6 A slight majority (57%) of those who addressed the issue disagreed with the SLC that the concept of "ordinary fortitude" is unsatisfactory, arguing that the term has been generally understood over time, has been well tested in case law and is accepted as a standard.

1.7 The vast majority (89%) of those who provided a view did not agree that an appropriate balance between the right of an injured person to secure damages and the right of a defender to expect a certain level of mental resilience in individuals would be achieved by focusing on the stresses or vicissitudes of life or the type of life the person leads. The most common argument was that each case should be assessed according to its own specific circumstances, rather than applying broad brush rules.

1.8 Most (71%) of those who provided a view agreed that where physical harm is reasonably foreseeable, but mental harm is not, and a victim sustains only mental harm, the negligent party should not be held liable.

1.9 The vast majority (88%) of those who provided a view agreed that there should be a general prohibition on obtaining damages for a mental disorder where the victim has sustained that injury as a result of witnessing or learning of an incident, without being directly involved in it. Most (82%) of those who addressed the issue agreed that it is appropriate to except rescuers from the general prohibition; most (81%) agreed that it is appropriate to except those in a close relationship with anyone killed, injured or imperilled by the accident from the general prohibition. Around two-thirds (69%) of those commenting agreed that the two exceptions outlined above strike the appropriate balance between the right of the injured person to secure damages and the right of a defender.

1.10 The majority (82%) view amongst those who commented was that, overall, the proposed framework set out in the Commission's report does not strike the appropriate balance between flexibility of approach and certainty of outcome. Some respondents considered the framework to lack precision and leave too much to judicial discretion.

Psychiatric Injury caused by a Wrongful Death

1.11 The majority (79%) of those providing a view agreed that it should not be possible for a bereaved relative to secure damages for psychiatric injury under s.4(3)(b) of the 2011 Act.

1.12 It was commonly thought that the overall impact of the proposals under discussion would be an increase in the number of actions, cases coming to court, preparation time, court time, awards of damages and size of damages.

Time-bar

1.13 Around three-quarters (74%) of those who provided a view agreed with the Commission that it would not be advisable to seek to revive prescribed claims for all personal injuries, regardless of the nature and circumstances of the personal injury, even it were lawful to do so. The most common argument in favour of not reviving prescribed claims was that this would unfairly prejudice defenders who would most likely encounter problems gathering quality evidence.

1.14 There was much opposition (77% of those providing a view) to the proposal to raise the standard limitation period from three to five years. Main arguments were that extending to five years could pose a risk to the quality of evidence and might encourage unnecessary delays in proceedings. The majority view (79% of commentators) was in favour of a single, standard limitation period for all types of personal injury claim. This was seen as creating a simple rule which is easy to understand.

1.15 Respondents were evenly split over whether there should be a statutory, non-exhaustive list of matters relevant to determining whether it would be equitable for the courts to exercise discretion to allow an action to be brought outwith the limitation period.

1.16 The majority (73%) of those who provided a view agreed that it is in the interests of justice that there should be only one limitation period following the discovery of a harmful act, during which all claims for damages for associated injuries must be brought. Most (71% of those commenting) did not consider that there should be any exceptions to this principle. It was commonly felt that only one cause of action should arise following a delictual act, with all damages sought at that time. A recurring view was that the Carnegie approach^[5] cannot readily be reconciled with this principle, and the current law as defined by Aitchison^[6] is now part of the bank of case law which informs the court in relation to applying discretion under s.19A^[7].

1.17 Of those who provided a view, the majority (79%) did not consider there to be a need to make provision for cases where it was known that the initial harm was actionable but where decisions not to litigate were taken in good faith in reliance on the rule in Carnegie before it was overturned by the court in Aitchison.

1.18 It was commonly thought that the overall impact of the proposals under discussion would result in an increase in the number of actions raised with more of these coming to court and requiring more preparation and court time. Respondents envisaged overall increases in the number and size of awards for damages.

Recent legislative reform

1.19 Of the 18 respondents who provided a view all agreed that the Rights of Relatives to Damages (Mesothelioma) (Scotland) Act 2007 is achieving its central aim of ensuring that a person dying of mesothelioma can secure damages without thereby preventing members of his/her immediate family making a future claim. The 2007 Act was viewed largely as producing positive impacts such as a swifter settlement of claims, helped by the earlier disclosure of information in support of claims.

1.20 Fifteen of the 16 respondents who provided a view agreed that the Damages (Asbestos-related Conditions) (Scotland) Act 2009 is achieving its central aim of ensuring that a person with pleural plaques (or one of the other specified asymptomatic asbestos-related conditions) may pursue an action of damages in the same way as a person with any other non-negligible personal injury. The most significant positive impacts of the 2009 Act were described as opening up justice to claimants previously unable to access this, and widening the scope of justice to encompass claimants with a "fear of the future". The most commonly cited unintended consequence was highlighted as the settlement of claims usually on full and final basis, rather than on a provisional basis as had been expected. This resulted in barring any subsequent claims in the event of serious asbestos-related conditions developing.

1.21 In general, respondents felt that it was too early to assess the extent to which the Scottish Government's financial estimates were accurate regarding the number of additional claims, their average level of costs associated with these and the overall financial implications of the 2007 or the 2009 Acts.

1.22 Fourteen of the 19 respondents who expressed a view did not consider the Damages (Scotland) Act 2011 to be achieving its central aim of bringing greater clarity and accuracy to Scots law, so far as it relates to damages for fatal personal injuries, reducing requirements for potentially intrusive, protracted and costly investigations, and thereby facilitating the swift and fair settlement of claims.

1.23 The majority of those who commented highlighted negative impacts associated with the 2011 Act. In particular, insurance bodies considered there to be a lack of clarity due to the decision to remove the deduction of the surviving spousal income; ambiguity over what constitutes "manifestly unfair"; and knock-on delays in settlements of cases.

1.24 The majority view, largely amongst insurance bodies, was that all of the Scottish Government's financial estimates relating to the 2011 Act were inaccurate, with the financial implications much greater than predicted. However, it was generally agreed that more informed assessment is required and should be based on data from the records of several different solicitor firms.

Future legislative reform

1.25 The vast majority (93%) of those providing a view saw merit in reviewing the existing approach to periodical payments. These were envisaged as potentially a fair way to settle claims, particularly in serious, catastrophic cases, in order to ensure that pursuers do not outlive the care package put in place following their injury claim.

1.26 The large majority (88%) of those who provided a view considered that there would be merit in reviewing separately the existing approach to interest on damages for personal injury. Many respondents perceived there to be a current mis-match in the judicial and market interest rates, which provided an incentive to pursuers to delay settlement.