HL Deb 28 October 1992 vol 539 cc1192-202

8.2 p.m.

Lord Macaulay of Bragar

My Lords, I beg to move that this Bill be now read a second time.

It may be helpful if I explain briefly something of the background and purpose of the Bill. The purpose of the Bill is to give effect to the recommendations of the Scottish Law Commission contained in its report The Effect of Death on Damages which was published earlier this year. The Bill makes amendments to the Damages (Scotland) Act 1976 to deal with a pressing concern about the unintended effect of that legislation on claims which arise in particular from terminal industrial diseases and asbestos-induced disease.

The report published by the Scottish Law Commission followed a reference from the Secretary of State for Scotland who asked the commission: To consider the case for amending the law on damages in Scotland having regard to the possibility that there may be an incentive inherent in the present law for a defender to postpone making a settlement or reaching proof until after the death of the pursuer in order to minimise the amount of compensation paid". As I have indicated, the reference to the commission reflected a growing concern in legal circles and in the public mind about the effects of the Damages (Scotland) Act 1976 on claims arising from terminal industrial diseases.

There are currently two main heads of damages under which an injured person has a right to claim. First, he is entitled to claim compensation for what is known as patrimonial loss, which is essentially an actual money loss and comprises such items as loss of past or future earnings and the outlay of medical expenses. The second main head of damages is known as solatium. This is compensation for pain and suffering, loss of faculties and amenities or loss of expectation of life.

Under the present law in Scotland, if the injured person dies before his or her claim is resolved, the right to claim damages by way of compensation for patrimonial loss suffered before death is transmitted to the executor. However—and this is the main point of the Bill—no claim can be made by the executor for patrimonial loss attributable to any period after the injured person's death, and the right to claim damages by way of solatium is completely extinguished on the death of the injured person.

Where the injured person dies as a result of injury, certain relatives may claim compensation for the loss they suffered through the death. Again, there are two heads of damages. The first is damages for certain forms of patrimonial loss—that is, money loss—comprising compensation for loss of support suffered since the death or likely to be suffered as a result of the death of the victim; payment in respect of reasonable funeral expenses; and payment of a reasonable sum in respect of the loss of personal services. The second head of damages available to the relatives covers non-patrimonial loss arising from deprivation of the deceased's society. Such an award is known as a "loss of society award" and, as the law presently stands, may be claimed by the deceased's immediate family. Under this head, compensation is given for grief caused by the death and for distress in contemplating the suffering of the deceased before death.

It will be appreciated from this brief summary that this is a complex area of the law. The principal criticism of the present law—and that which this Bill seeks to remedy—is that the injured persons's claim for solatium—that is, for pain and suffering and so on—is extinguished by death and cannot be taken up by an executor. The immediate family, who would normally inherit the injured person's estate, are therefore deprived of any benefit that they might otherwise have had from the solatium claim to which the deceased would have been entitled in a settled case during his or her lifetime.

Of course, as I have indicated, the deceased's claim for patrimonial loss to the date of death is not lost and, where death is attributable to the injury, new claims, including a loss of society claim, emerge which the deceased's relatives can pursue in their own right. Despite the claims available to the relatives which I have outlined, the injured person's family is at present and in practice likely to be worse off as a result of his or her untimely death. The main reason for this discrepancy is that, contrary to the expectations when the Damages (Scotland) Act 1976 was enacted, loss of society awards to relatives tend to be less generous than awards of solatium to the surviving victims for serious injury.

Many believe that the present law encourages prolonged negotiations or legal proceedings where the defender has reason to anticipate the imminent death of the claimant. In preparing its report the Scottish Law Commission did not find any actual evidence that this had happened, but nevertheless concluded that the existing law could produce unjust and inequitable results for the relatives.

The principal change which the Bill, if enacted, would make to the present law of damages in Scotland is set out in Clause 3. This would enable the deceased's right to solatium to transmit to his executor for the benefit of the deceased's estate. Such a claim would be competent over and above any claim that relatives would be able to bring in their own right. By enabling the claim for solatium to transmit to the deceased's executor, the Bill would remove what has been perceived to be an injustice in the present law in Scotland and, indeed, as I understand it, it will bring the law into line with that in England which has existed for some time. It would also relieve claimants from the anxiety that they presently face from the harrowing knowledge that, if their claims are not settled before they die, their dependants will be financially worse off.

If I may illustrate this by way of an example, it might help to put into perspective what the Bill seeks to achieve. A man has worked for a large number of years in a working environment where asbestos has been widely used as an insulating material. He later becomes ill, finding difficulty with breathing and becoming tired after minimal exertion. After examination he is diagnosed as suffering from mesothelioma and that the likely cause of this is the inhalation of asbestos dust. The injured person then raises an action against his employers or former employers for damages. However, it is the tragic nature of such an illness that once the illness has been diagnosed death is invariably inevitable, sometimes within a predictably short period.

Your Lordships will appreciate that the gathering of evidence over a large number of years and the preparation of a case by both the pursuer and the defender—that is, the victim and his employer or employers—can take some time to complete. Let us take the case where the injured person dies before a settlement for damages is made or agreed. The deceased's executor can recover damages for financial loss incurred prior to the death of the injured person and the family may claim compensation for the loss of society they have suffered through the death and for the loss of future financial support. However, the injured person's right—by then the deceased's—when alive to claim damages for his pain and suffering is terminated on his death and that substantial element of compensation dies with the victim. It follows that the overall result is that the family may receive considerably less than would have been paid if the injured person had survived to obtain decree or settlement of his own claim. Such a situation may clearly create an incentive for anyone defending a claim for damages to delay or prolong litigation where the claimant is expected to die.

Clause 3 of the Bill, by enabling the claim for solatium to transmit to the injured person's executor, removes that incentive and should therefore lead in such cases to the estates of the families of deceased persons receiving larger awards for damages than they would at present.

The Bill retains, but seeks to clarify, the non-patrimonial award, presently known as a loss of society award in Section 1(4) of the Damages (Scotland) Act 1976, for relatives of a deceased person. The loss of society award remains available to relatives over and above the transmission to the executor of a right to claim solatium which the deceased would have received had he survived. The loss of society award was conceived as being different from the traditional concept of solatium—for pain and suffering—for dependants. When the concept was introduced under the Damages (Scotland) Act in 1976, itself based on a Scottish Law Commission report, it was envisaged that the award would be made for reasons other than assuaging the grief and sorrow of the claimant and that its basis would be much wider. The underlying assumption was that the wider basis would encourage the courts to make more generous awards. In practice, this has not happened.

When a person dies through injury his immediate family may be said to sustain non-patrimonial injury in three ways. First, where to their knowledge the injured person has undergone suffering before death, they experience distress and anxiety in contemplating that suffering. Secondly, they suffer grief and sorrow at the death. Thirdly, they are deprived of the person's society and guidance in the future. Compensation is, however, provided in the Damages (Scotland) Act 1976 only for the deprivation of the deceased's society. Notwithstanding the terms of the 1976 Act, all three sources of injury to feelings which I have outlined have probably in practice been taken into account by the court in most cases when awards are made for loss of society. Clause 1 of the Bill, by itemising these three elements, therefore seeks to provide a secure legislative foundation for the assessment of awards. In assessing an award the court will not be required to ascribe specifically any part of the award to any of the three elements—the stress and anxiety, grief and sorrow, and loss of non-patrimonial benefit—set out in the clause. But if the Bill passes, the award can be scrutinised in the light of the legislative foundation set out in the Bill.

A consequence of enacting Clause 1 is that it will no longer be appropriate to refer to a "loss of society award". The Bill accordingly provides for the removal of the reference to "loss of society" in the 1976 Act. More significantly, it is hoped that the very fact of reformulating the award may act as an incentive to the courts to make more generous awards than at present apply.

Clause 2 of the Bill inserts a new section into the Damages (Scotland) Act 1976 and provides that the non-patrimonial award available to relatives of the deceased injured person shall be transmitted to the executor of the relative on his or her death. Clause 2 also re-enacts the present law with regard to the transmissibility of the relative's right to damages for loss of support and funeral expenses under Section 1(3) of the 1976 Act.

Under the present law loss of expectation of life attracts a small conventional award of solatium. Awareness of that loss by the injured person is not currently a prerequisite for entitlement to the award. This provision creates difficulties if claims for solatium are to be allowed to survive, as the Bill provides for. The executor to whom the right transmits would have the task of having to prove the extent of the deceased's suffering in disputed cases. This may be a difficult task on occasions in the absence of evidence from the deceased; and the shorter the period of survival after injury the more difficult it is likely to be. Clause 5 of the Bill therefore provides that no damages by way of solatium for loss of expectation of life shall be recoverable except where the expectation of life has been reduced and the injured person was or is likely to become aware of that reduction. Under the provisions proposed in Clause 5, the courts would, in assessing solatium, be required to have regard to the extent to which the injured person has suffered or is likely to suffer as a consequence of that awareness. Such loss would be compensated as an aspect of pain and suffering and claims for solatium in that regard will survive accordingly.

Those are the principal provisions of the Bill. Its other provisions are in the main of a technical nature which your Lordships may consider could most appropriately be considered at a later stage if your Lordships agree that the Bill receive a Second Reading today.

I should like to raise one final important matter. The provisions in the Bill relating to the transmissibility to the deceased's executor of rights to solatium have effect only where death occurs after the date of commencement of the Bill. As I mentioned earlier, some of those who have contracted asbestos-related diseases will have only a very short time to live. Indeed there may be some who will not live to see the enactment of this Bill which I have introduced with the express purpose of providing some benefit to them and their family. To ensure that as many families as possible will benefit from the provisions of the Act, I propose to bring forward an amendment at Committee stage which, if accepted by your Lordships, will enable the new rights of transmissibility to executors to apply in cases where the death of the injured person occurred on or after the date of the introduction of the Bill—namely,16th July 1992—provided that these rights cannot be exercised if the claim is time barred, or has been settled, or judicially determined.

In all such legislation there must be a cut-off point which is normally the date of the passing of the legislation. Because of the nature of the diseases we are dealing with in this legislation I have thought it proper to introduce an element of retrospection which, among other things, will ease the burden on surviving victims and their families. I should advise your Lordships that I have held discussions with the noble and learned Lords, the Minister of State, Lord Fraser of Carmyllie, and the Lord Advocate, Lord Rodger of Earlsferry, who have informed me that they would support the principle of such an amendment. I hope that my amendment will gain your Lordships' support when it is brought forward in Committee.

In providing for the transmission of solatium to an executor of the deceased injured person and in reformulating the present loss of society award and allowing it to be transmitted to the executor of a deceased relative, the Bill will significantly improve the financial position of those unfortunate enough to lose a close family member through personal injury. By enabling a claim for solatium to transmit to the executor of the victim, the provisions of the Bill will help to relieve the added anxiety which he or she and the immediate family suffer in the knowledge that if the victim dies before the action for damages is settled or completed his family will be worse off. The report of the Scottish Law Commission on which the Bill's provisions are based has been widely welcomed and supported. I trust that the Bill will receive the support of your Lordships' House.

Moved, That the Bill be now read a second time.—(Lord Macaulay of Bragar.)

8.21 p.m.

Lord Cocks of Hartcliffe

My Lords, I rise briefly to thank my noble friend Lord Macaulay of Bragar for introducing and moving the Second Reading of the Bill and taking us through its provisions. In another place I was sponsored by one of the major trade unions which has been involved in this field, especially in the asbestos-related diseases to which my noble friend referred. We should place on record not only personal gratitude but also the gratitude of many of the trade union members, particularly the full-time trade union officers who have had to deal with these very harrowing cases mentioned by my noble friend. I should like to point out how very much it is appreciated that the law is being brought into line with that which applies in the rest of the country and that this anomalous situation will be remedied.

I welcome my noble friend's suggestion about an amendment to be tabled in Committee. I hope that will be carried through. Given the background to the Bill, I am sure that your Lordships will wish to ensure that it passes through the House with the maximum speed.

8.22 p.m.

Lord Carmichael of Kelvingrove

My Lords, I rise merely to say that the Bill before us has, so far as I know, been brought forward by the Scottish Law Commission, is supported by two distinguished QCs, and I understand that my noble friend Lord Macaulay of Bragar and the noble and learned Lord the Lord Advocate also support it. Therefore, it is difficult for someone like myself as a non-legal person to make any comment on the Bill. However, I think that the explanation given by my noble friend Lord Macaulay will be a great help to laymen such as myself. As my noble friend said, the Bill covers a complex area of law. Listening to the speech, inevitably, a great deal of it seemed to be what I think we would call "lawyers' speak" in terms of people like me.

There is but one point I should like to raise. Again, it is possible that it may become even more complicated. As a layman, it seems to me that there is a possibility of a great deal of legal discussion. I have in mind Clause 5 as regards the solatium for loss of expectation of life. That struck me as being a matter which could raise a great deal of argument, discussion and debate. Of course, there may be legal precedents for it and if the noble and learned Lord the Lord Advocate or my noble friend tells me so, then I shall accept it. However, I imagine that there must be a point at which the person who is claiming the damages becomes aware of the fact that he is likely to die relatively soon. I should like some clarification on that point. At what stage will this add or subtract from the final decision as regards the award given by the tribunal of the court? As I said, there may be a simple way of assessing the situation, but it seems to me to be one of the points that could cause a great deal of disturbance.

Otherwise, all the information that I have received from the Law Society and from some of the trade unions is that the Bill represents an advance on what we already have. I am very pleased that my noble friend Lord Macaulay has introduced it. Apart from the explanation to which I referred, I am happy that the Bill should proceed to the statute book.

8.25 p.m.

The Lord Advocate (Lord Rodger of Earlsferry)

My Lords, the Government warmly welcome the Bill. I should like to thank the noble Lord, Lord Macaulay of Bragar, for his part in bringing the proceedings before the House tonight. It was largely as a result of representations from asbestosis sufferers, their families, representatives and support groups, and indeed from the trade unions to which the noble Lord, Lord Cocks, referred, that the then Secretary of State for Scotland asked the Scottish Law Commission to consider the problem.

As the noble Lord, Lord Macaulay, made clear, the Bill, which is based on the recommendations of the Scottish Law Commission, will help improve the situation of those unfortunate enough to suffer from those dreadful industrial diseases—in particular, asbestos-induced diseases. However, I believe that it is right to point out that it will have a wider effect and that it will also help other people as its provisions can even apply, for example, to a simple case where someone dies after suffering pain due to injuries resulting from a car crash where the victim survives for some length of time. The Bill has a wider ambit, but undoubtedly the pressure came from the source that was indicated.

The Bill is designed to deal with certain specific matters which were considered by the Scottish Law Commission in that recent report. Like that report, the Bill is not meant to cover other wider issues in the law of damages. The main provision of the Bill is in Clause 3 which makes it possible for an executor to pursue a claim for damages for pain and suffering experienced by a victim before his death. I shall concentrate on this aspect in my remarks. My aim is simply to give some indication of the general context of the Bill.

In respect of the remarks made by the noble Lord, Lord Carmichael, I believe it is right to add that Clause 5 seeks to deal with what is a very difficult head of damages; and, indeed, with the acuteness of the layman looking at the problem, the noble Lord has actually pointed out the very area which is most difficult and which has always given difficulty to the courts when assessing that particular head of damages. I say that because, for the very reason indicated by the noble Lord, it is difficult for a court to put a figure upon what the damages should be for the loss of expectation of life. One of the aspects of that difficulty is, for example, to decide to what extent the award should be made only when the person has been aware of the fact that he is losing life. That kind of aspect is dealt with in Clause 5. As I said, it is a difficult area and the clause is designed to try to clarify that aspect of the law.

I turn now to Clause 3 and the rest of the Bill. The first thing which may strike your Lordships—and it has already been referred to by the noble Lord, Lord Carmichael—is that the Bill is couched in rather complex and legal language. But although there are dry technicalities, the issues at stake are very important and affect the every-day lives of many men and women. Even in very legal language, the Bill is tackling an important and sensitive issue.

It may seem somewhat surprising to your Lordships that Parliament is being asked to make an important change of principle in the law of damages which was set down as recently—I use the word "recently" as lawyers would—as 16 years ago. The reason behind that is that the provisions adopted in 1976 have given rise to criticism in practice. The key point is that under the 1976 Act any right to damages for pain and suffering dies with the victim and cannot be pursued by the victim's executor. That is a very strict and absolute rule. It means that even where the victim has raised proceedings for damages in respect of pain and suffering, his executor cannot pursue those aspects of the claim.

It is this provision which gave rise to the suspicion mentioned by the noble Lord, Lord Macaulay, that defenders and their insurers could delay cases in the hope that the victim would die. I have to say that the Law Commission did not find any evidence that that actually happened, but clearly there is a potential inducement here. It is right to notice that that problem did not really exist in Scots law before 1976. Under the law which applied before 1976 an executor could pursue a claim for past pain and suffering in cases where the victim had raised proceedings before his death. It was the 1976 Act which changed that. So in allowing executors to continue such proceedings raised by victims, the provisions of Clauses 3 and 4 of this Bill really just restore Scots law to the position that existed before 1976 and remove a specific problem created at that time.

Actually, the Bill goes further and indeed it goes beyond anything which existed in Scotland before 1976. Clause 4 specifically allows an executor to raise an action for damages for pain and suffering even though the victim had not done so during his lifetime. Before 1976 the Scottish courts held that suffering of this kind was really personal to the victim and that, if he had not begun proceedings, then his executor should not be able to do so since in effect none of the beneficiaries of such a claim would themselves have suffered pain. Clearly there is some force in that argument and the Scottish Law Commission has rehearsed the issues on both sides of it, but in the end they have rightly said that it is simply a matter of policy. They have recommended that the policy be to allow executors to pursue all such claims, whether or not the deceased had begun proceedings.

As I have already indicated, the Government accept the Commission's closely-argued recommendations. However defensible the present provision may be as a matter of pure legal theory, there is no doubt that relatives of victims who have suffered grievous pain find it frankly offensive that the law seems to set that pain and suffering at nought just because the victim has died.

As has already been indicated to your Lordships, the position adopted by Scots law has also come to be compared unfavourably with that in English law. While in 1976 the Scottish Law Commission deliberately enacted a provision which was different from the comparable English law, a change introduced in an English statute in 1982 considerably improved the position of English relatives of a victim who died. The result therefore was to increase the gap between the damages which could be recovered, on the same facts, by the executor in an English action and by the executor in a Scottish action. Not surprisingly, therefore, especially in the sphere of asbestosis and other industrial diseases, especially where unions were involved in such matters, and where similar claims could arise in England and Wales or in Scotland, pressure grew for Scottish and English cases to be dealt with on a broadly similar, though not actually identical, footing. This Bill meets those concerns.

There is one other point which I would mention, and it has already been raised by the noble Lord, Lord Macaulay. He indicated that he has discussed with my noble and learned friend Lord Fraser and myself his wish to introduce a clause allowing the new rules of transmissibility to apply where the injured person has died since the date of introduction of the Bill. I think it is right that I should say a few words about that aspect.

My right honourable friend the Secretary of State has received a number of representations arguing that the Bill is somewhat unsatisfactory in its present form, in that it will mean that where a claimant dies after enactment his estate will enjoy the benefits of the Bill, but where the claimant has died prior to enactment, his estate will not. It has been suggested that such a state of affairs will lead to resentment and added distress for families who are continuing their claims for compensation under the previous rules and who are denied the benefits of the new provisions because of lack of retrospection.

I think it is right to say that we all deeply sympathise with such families. It is also right to say that, unfortunately, there is no easy and neat solution which will guarantee fairness in every case. Whether there is retrospective provision or not, I fear there will always be a degree of unfairness to someone where one case is viewed against another.

In seeking a solution which is fair not only to pursuers but to defenders, it is necessary to bear a number of factors in mind. First, it would be wrong in principle to reopen cases where a settlement has been reached either by agreement or by judicial determination. Secondly, to allow, say, the new rules to apply to any case which has not been settled or judicially determined, irrespective of when death occurred, would be a major departure from the legal principle that like cases should be treated in the same way. Such wide-ranging retrospection could produce unfairness where those who have brought forward and settled their claims quickly are penalised, whereas those who have delayed doing so could be rewarded. That would not seem to be fair or acceptable.

However, as a means of ensuring that as many families as possible can benefit from the new rules while keeping within the acceptable bounds of legal policy, we felt able to indicate to the noble Lord, Lord Macaulay, that we would support an amendment to the Bill, as he has indicated. This would provide that, if the Bill passes into law, the new provisions relating to transmissibility of rights to executors will apply where the death of the person concerned occurred on or after the date when the Bill was introduced into your Lordships' House (16th July 1992), provided of course that those rights cannot be exercised if the claim is time-barred or has been settled or judicially determined.

I can confirm to your Lordships' House that such a degree of retrospection would be of a type which is not unfamiliar and would not be objectionable in terms of legal principles. It also means that all the victims who are alive today can be sure that, if the Bill is enacted, their estates will be entitled to benefit from its provisions. Although I have touched on only a few points, the Government have considered the Bill as a whole, and I am happy to commend it to your Lordships' House.

8.37 p.m.

Lord Macaulay of Bragar

My Lords, I am grateful to the noble Lords who have made a contribution to the debate from the various aspects of their experience. I agree with the noble Lord, Lord Carmichael, that perhaps Clause 5 raises some difficult problems. That will be looked at closely again in the light of the observations he has made. Although this Bill is a short one, it is important, as must be obvious from what the noble and learned Lord the Lord Advocate has said. It will represent a progressive step forward in Scots law, and I ask your Lordships to give the Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

House adjourned at twenty-two minutes before nine o'clock.