The Scottish Law Commission: Discussion Paper on Damages for Personal Injury (No.174) – February 2022 – Part 1

Damages for Personal Injury

Introduction:

Earlier this year (on 23^rd February 2022), the Scottish Law Commission published a Discussion Paper on Damages for Personal Injury (The Discussion Paper). This is amid the Scottish Law Commission’s Tenth Programme of Law Reform, against the backdrop of a five-year programme, which runs from 2018 – 2022. There has been widespread input from the legal profession, as well as additional interested parties, including the public. The Consultation period ended on 15^th June 2022 and the findings will thereafter form the basis of a Report. The objective of this Discussion Paper surrounds determining whether law reform is required in light of recent case law, together with socio-economic changes. A link to the Report can be found here – Scottish Law Commission: Discussion Paper on Damages for Personal Injury

To summarise, there are four topics within the Discussion Paper:

1. Damages awarded in respect of services, provided to and by the injured person;
2. Deductions from awards of damages;
3. Provisional damages, particularly in the context of asbestos-related cases;
4. Management of damages for personal injury awards to children.

Lady Paton, Chair of the Scottish Law Commission and lead Commissioner on this project, said:

“It is important that the law on damages for personal injury is fair and reflects modern society; and also that it operates in a clear, consistent and transparent way. When someone is injured through another person’s negligence, it is crucial that damages can be assessed in a way that is equitable to both parties in order to enable them to move forward. This Discussion Paper examines four specific areas of the law of damages in order to suggest some ways in which it may be modernised so that it is fit for today’s society.”

Review of the Legislation

The main legislation within this area, which the Discussion Paper proposes should be reviewed, are the Administration of Justice Act 1982 and the Children (Scotland) Act 1995. Three of the above-noted topics arise within the confines of the 1982 Act, namely:

1. Damages awarded in respect of services, provided to and by the injured person (sections 8 and 9);
2. Deductions from awards of damages (section 10);
3. Awards of provisional damages (section 12).

The 1982 Act includes recommendations which were made by an earlier Discussion Paper published in 1978, titled: “Report, Damages for Personal Injuries” (Report on (1) Admissibility of Claims for Services and (2) Admissible Deductions) (“the 1978 Report”). Interestingly, the current Discussion Paper takes cognisance of the conclusions arrived at within the 1978 Report and analyses to what extent are said conclusions suitable in the present day.

Similarly, the reasons behind the review of the 1982 provisions are varied and include the need to simplify provisions which are deemed inordinately complex and ambiguous. This has been evident within recent case law over many years. Further to this and to expand upon the above, significant societal change has taken place since the enactment of the 1982 Act. As such, the Commission are of the view that reform is thereby essential in this area. As the Discussion Paper suggests, this appears to be the consensus reached within various legal systems, including Scotland, England and Wales. There is also concern that uncertainty within these realms is likely to give rise to an increase in litigation costs. Importantly, the Discussion Paper highlights that damages do not fall within powers reserved to Westminster (Scotland Act 1998, Schedule 5). As such, the Scottish Parliament has legislative competence in respect of the proposals in the Discussion Paper. In the Scottish Law Commission’s view, this would also be compatible with the European Convention on Human Rights (s 29(2)(d) of the 1998 Act).  

Damages awarded in respect of services, provided to and by the injured person

The relevant provisions which regulate services claims are sections 8 and 9 of the Administration of Justice Act 1982. Section 8 applies to assistance provided to an injured person; section 9 applies to services which an injured person is unable to provide – as a result of their injuries. These provisions cover the ‘necessary services… rendered to the injured person by a relative in consequence of the injuries in question’ (section 8) and an ‘inability of the injured person to render… personal services’ (section 9). Section 8(3) deals with future services. What constitutes ‘personal services’ is defined in s9(3). In contrast, there is no definition of ‘necessary services’. However, from case law and legal literature, such services are taken to include assistance in respect of personal care, household activities such as cooking and cleaning, shopping, and emotional support.

In particular, the Discussion Paper considers whether services claims should be restricted to family members. The current legislation is only applicable to family members, subject to the exception of where services are rendered by a friend of the injured person, in which case this must be outlined within contract. The definition of “relative” can be found by reference to section 13 of the 1982 Act. The Discussion Paper describes that the underlying parliamentary intention behind this definition stems from who would be entitled to claim for loss of society in fatal accident claims. Indeed, the definition of “relative” has been expanded over time to accommodate the ever-changing societal framework. For example, the Civil Partnership Act 2004, Marriage and Civil Partnership (Scotland) Act 2014, and the Family Law (Scotland) Act 2006. The resultant conclusion is two-fold: should the definition of “relative” be broader and in any case, should services claims go beyond family members?  

Further questions which follow include: should the assessment of damages be stipulated within legislation, or should this be a matter of discretion for the court? In addition, if the answer to this is legislation, should the current statutory test continue to apply? This is in reference to s8(1): “such sum as represents reasonable remuneration for those services and repayment of reasonable expenses incurred in connection therewith”. Alternatively, would reasonable notional costs be a more effective approach?

Deductions from awards of damages

The principle in Delict of restitutio in integrum (Latin translating to “restoring to original position”) is the overarching aim in this area within the law in both Scotland, and England and Wales. That is, an award of damages is intended to place the injured party in the position they would have been in, but for the negligence. The responsible person should compensate the injured person, and there should be no additional obligations beyond this point. It follows that compensation should not result in betterment, which would have the effect of enhancing the financial position of the injured party. The assessment of damages for personal injuries is laid out within section 10 of the 1982 Act. As highlighted by the Discussion Paper, there is no equivalent legislation in England and Wales in respect of the Administration of Justice Act 1982. Instead, the law in this area derives from common law. It is noted that the following shall not be taken account of in relation to deductions:

Section 10 (i) ”any remuneration or earnings from employment;

(ii) any [F2contribution-based jobseeker’s allowance (payable under the Jobseekers Act 1995)];

(iii) any benefit referred to in paragraph (c) above [at s.10(c) payable in respect of any period prior to the date of the award of damages;

(iv)any payment of a benevolent character made to the injured person or to any relative of his by the responsible person following on the injuries in question, where such a payment is made directly and not through a trust or other fund from which the injured person or his relatives have benefited or may benefit.”

In addition to s10, the present stance regarding deducting social security benefits can be found within the Social Security (Recovery of Benefits) Act 1997 (“the 1997 Act”). There are three heads of compensation outlined within the 1997 Act, at Schedule 2. These are as follows:

1. Compensation for earnings lost during the relevant period;
2. Compensation for cost of care incurred during the relevant period; and
3. Compensation for loss of mobility during the relevant period.

There is an obligation to make repayment to the state in respect of the total amount of the social security benefits within this list, yet only throughout the “relevant period”. The “relevant period” runs from five years following the date of injury. If settlement is reached prior to this point, then the “relevant period” ceases at the date of settlement. These benefits are then recovered by the Compensation Recovery Unit (CRU) within the Department of Work and Pensions (DWP). We are aware of this in our work at Gildeas when we receive the “CRU” letter, which outlines whether there are any recoverable benefits for a particular claim. It should also be noted that deductions made are required to be “like-for-like”. This means that any benefits listed alongside loss of earnings, for example, are able to be deducted for compensation for loss of earnings. Therefore, they cannot be deducted from one of the other heads of compensation. Moreover, deductions cannot be made from a head of compensation which is not listed within Schedule 2. Importantly, damages in respect of solatium cannot be subject to deductions. As the Discussion Paper notes, this area is less of a concern in terms of reform, although suggestions are nevertheless invited by the Commission. The Discussion Paper does note issues in connection with Universal Credit, as there is no breakdown provided by the CRU letter in this regard.

Permanent Health Schemes

In particular, there is contention within this area, and diverging approaches can be observed with reference to both Scottish and English authorities. In Lewicki v Brown & Root Wimpey Highland Fabricators Ltd 1996, the Court of Session held that such payments should not be deducted. Similarly, in Cantwell v Criminal Injuries Compensation Board 2000, the House of Lords held that deductions should not be made to pension payments upon retirement. Whereas in Gaca v Pirelli General plc 2004, the Court of Appeal held that such payments should be deducted. Opponents of the judgement in Lewicki cite the alleged “double recovery” and therefore not consistent with the concept of reparation. For example, whilst an Employer would make contribution to the PHI scheme, if they were the wrongdoer and subsequently found to be liable, then they would have an obligation to make payment of damages for the full extent of wage loss. However, proponents of Lewicki assert that an insurance exception has been included within the 1982 Act (section 10(a). This is founded upon the long-standing ideal which provides that where an insurance policy has been put in place by an individual, this benefit should not be removed from them. Similarly, there is unjustness in an Employer being required to pay a reduced sum in damages. The Commission invites comment on the above and specifically, whether reform is required against the backdrop of s10(a).

Part 2 of the Discussion Paper will be uploaded on Monday 28th November.

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