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Civil Law of Damages: Damages for Wrongful Death: A Consultation Paper

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CHAPTER 5: GENERAL OBSERVATIONS

The UK is not moving towards a "compensation culture" driven by a significant increase in litigation… however, there is ample evidence that risk aversion is becoming an insidious problem: House of Commons Select Committee on Constitutional Affairs, Report on Compensation Culture, March 2006

5.01 In recent years there has been concern about the development of a compensation culture and a linked concern about fear of litigation leading to greater risk-aversion and the curtailing some activities. Such concerns should be kept in mind. However, they should not stand in the way of action to reform the law to ensure that it makes appropriate provision for compensating those who suffer serious harm, including the most serious of all - loss of life.

5.02 This paper has not considered whether the law should make appropriate provision, which is taken as a given. Informed by the SLC's report and the views expressed by stakeholders, it has instead attempted to focus on what provision is appropriate, and how it can best be secured. In so doing, it has taken as its starting point the established principle - reiterated in the SLC report - that " awards of damages are compensatory in nature, not punitive: the aim is to put the victim - or his family - in the position in which he would have been had he not been injured, so far as money can achieve this".

(E) Other recommendations

5.03 Against that background, the focus has been on four particular aspects of the SLC's report. These relate to recommendations 4, 11(a), 12 and 15 which, taking account of the views expressed by stakeholders, appear to the Scottish Government to be especially significant and potentially contentious. That is not to say that the other recommendations lack significance, and the Government would welcome comment on any / all of them, not least where comments are supported by evidence / experience.

5.04 That is true of recommendations proposing reform. For example, it seems that some stakeholders have concerns about recommendation 13(b) that damages for non-patrimonial loss should be called a "grief and companionship award".

5.05 It is also true of aspects where, after contemplating reform, the SLC report made recommendations in favour of the status quo. Amongst those are recommendation 6 on continuing the limits on an executor's right to sue for patrimonial loss; recommendation 9 on continuing to provide that no other condition besides mesothelioma should preserve a relative's right to claim for non-patrimonial damages after a victim has settled his own claim; recommendation 10 on continuing the limitations on type of patrimonial loss for which a relative may seek damages; and recommendation 13(a) where, though supporting a move in the general direction of tariff-type approach for determining the multiplicand for patrimonial loss, the option of a tariff system for non-patrimonial loss is rejected.

QUESTION 5

Do you have any comments in relation to other recommendations made in the SLC report, besides those addressed in chapters 3 and 4?

Please provide any comments

(F) Financial Implications

5.06 As the SLC report deals entirely with recommendations on the law in relation to financial redress, it seems likely that it would have financial implications. All else being equal ( i.e. if there were not significant savings in process), if the SLC report's recommendations were to lead to an aggregate decrease in the amount being paid in damages to pursuers ( e.g. victims and their relatives), there would be a corresponding financial gain for defenders. It seems very likely, however, that it would lead to an aggregate increase in awards and a corresponding financial loss for defenders.

5.07 In most cases, the additional financial loss would not be wholly, or even mainly, incurred by the wrongdoer per se. Where the fault arises in the public sector, for example an NHS organisation, a local authority, or a nationalised industry 16, the cost could often ultimately fall to the taxpayer. In other circumstances, if the fault was the responsibility of a private citizen or a private sector business, the cost could often fall on insurance companies and, ultimately, on their policyholders, whether that be home insurance, car insurance, employers liability insurance or public liability insurance.

5.08 The fact that the ultimate cost may fall on those who were entirely innocent of any wrongdoing, i.e. ordinary taxpayers and insurance policyholders, helps to underscore the importance of ensuring that the law strikes a proper balance.

5.09 However, assessing that proper balance is made more problematic by the lack of availability of data in this field. This is partly because, by definition, actions in the civil law arena relate to the dealings of private entities and generally do not involve the State (particularly as, even though they are generally lodged in court, the overwhelming majority of personal injury actions are settled out of court).

5.10 What it may be possible to deduce, however, at least at a theoretical level, is that the major beneficiaries under the proposed scheme, particularly its approach to the surviving partner's own income, could be comparatively high-earners. The tables attached at the end of this chapter represent an attempt to illustrate, for a range of deceased / survivor income combinations:

Table 1 - the multiplicands which may arise under the current approach 17

Table 2 - the multiplicands which may arise under the recommended approach

Table 3 - the difference between the two sets of multiplicands.

5.11 On the assumption that the tables interpret the impact broadly correctly, they appear to show that no pursuer would have a lower multiplicand than at present, that pursuers with comparatively modest incomes would benefit from a modest increase in multiplicand ( e.g. a surviving widow earning £20,000 would in virtually all cases see the multiplicand rise by £5,000) and that pursuers with comparatively very high incomes would benefit from a high increase in multiplicand ( e.g. a surviving widow earning £120,000, whose deceased husband had earned the same amount, could see the multiplicand rise by £30,000).

Question 6 form graphic

5.12 As regards the overall financial implications of the recommendations, the SLC report did not address that aspect in detail and, as explained above, there appears to be a dearth of independent or comprehensive data about volume and value of claims under the current approach. This makes it problematic to estimate the volume and value of claims under the recommended approach (although there would appear to be little reason to anticipate a significant change from the current volume, whatever that is). The partial Business and Regulatory Impact Assessment, which is issued as part of this consultation exercise, nevertheless attempts to address the issue and seek information from stakeholders.

(G) Equality and Diversity

5.13 Although the working assumption at this point is that those who benefit financially to the greatest extent would be high-earning surviving partners, there would nevertheless be some financial benefit for pursuers on relatively modest incomes. The corresponding losses would be spread primarily across ordinary taxpayers and insurance policyholders. At this stage, it does not appear that the recommendations in the round would have a significant positive or negative impact on equality and diversity issues, nor on any of the particular equality groups (age, disability, gender, race, sexual orientation, and religion & belief).

Question 7 form graphic

TABLE I) ACTUAL MULTIPLICAND UNDER CURRENT SYSTEM (AS INTERPRETED BY SLC, WITH FIXED 25% DEDUCTION FROM JOINT INCOME, PRIOR TO DEDUCTION OF SURVIVOR'S INCOME)

Deceased's Net Income

Survivor's Net Income

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

110000

120000

0

0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

90000

10000

0

5000

12500

20000

27500

35000

42500

50000

57500

65000

72500

80000

87500

20000

0

2500

10000

17500

25000

32500

40000

47500

55000

62500

70000

77500

85000

30000

0

0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

40000

0

0

5000

12500

20000

27500

35000

42500

50000

57500

65000

72500

80000

50000

0

0

2500

10000

17500

25000

32500

40000

47500

55000

62500

70000

77500

60000

0

0

0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

70000

0

0

0

5000

12500

20000

27500

35000

42500

50000

57500

65000

72500

80000

0

0

0

2500

10000

17500

25000

32500

40000

47500

55000

62500

70000

90000

0

0

0

0

7500

15000

22500

30000

37500

45000

52500

60000

67500

100000

0

0

0

0

5000

12500

20000

27500

35000

42500

50000

57500

65000

110000

0

0

0

0

2500

10000

17500

25000

32500

40000

47500

55000

62500

120000

0

0

0

0

0

7500

15000

22500

30000

37500

45000

52500

60000

Multiplicand = 75% joint net income - survivor's net income

NB the multiplicand would be lower if, under the current system, courts were actually deducting a proportion greater than the 25% assumed in the report.

TABLE II) ACTUALMULTIPLICAND UNDER PROPOSED SYSTEM

Deceased's Net Income
Survivor's Net Income

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

110000

120000

0

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

10000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

20000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

30000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

40000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

50000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

60000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

70000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

80000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

90000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

100000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

110000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

120000

0

0.0

7500

15000

22500

30000

37500

45000

52500

60000

67500

75000

82500

Multiplicand = 75% of deceased's net income

TABLE III) DIFFERENCE INMULTIPLICAND UNDER PROPOSED SYSTEM

Deceased's Net Income

Survivor's Net Income

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

110000

120000

0

0

0

0

0

0

0

0

0

0

0

0

0

0

10000

0

+2500

+2500

+2500

+2500

+2500

+2500

+2500

+2500

+2500

+2500

+2500

+2500

20000

0

+5000

+5000

+5000

+5000

+5000

+5000

+5000

+5000

+5000

+5000

+5000

+5000

30000

0

+7500

+7500

+7500

+7500

+7500

+7500

+7500

+7500

+7500

+7500

+7500

+7500

40000

0

+7500

+10000

+10000

+10000

+10000

+10000

+10000

+10000

+10000

+10000

+10000

+10000

50000

0

+7500

+12500

+12500

+12500

+12500

+12500

+12500

+12500

+12500

+12500

+12500

+12500

60000

0

+7500

+15000

+15000

+15000

+15000

+15000

+15000

+15000

+15000

+15000

+15000

+15000

70000

0

+7500

+15000

+17500

+17500

+17500

+17500

+17500

+17500

+17500

+17500

+17500

+17500

80000

0

+7500

+15000

+20000

+20000

+20000

+20000

+20000

+20000

+20000

+20000

+20000

+20000

90000

0

+7500

+15000

+22500

+22500

+22500

+22500

+22500

+22500

+22500

+22500

+22500

+22500

100000

0

+7500

+15000

+22500

+25000

+25000

+25000

+25000

+25000

+25000

+25000

+25000

+25000

110000

0

+7500

+15000

+22500

+27500

+27500

+27500

+27500

+27500

+27500

+27500

+27500

+27500

120000

0

+7500

+15000

+22500

+30000

+30000

+30000

+30000

+30000

+30000

+30000

+30000

+30000

NB the difference would be higher if, under the current system, courts were deducting a proportion greater than the 25% assumed in the report.