The Damages (Scotland) Act 2011 is in force as of today, Thursday 7 July. The Act changes the way in which the damages in respect of wrongful deaths are calculated. Any wrongful death that occurs today or in the future will be covered by this Act.  Deaths which occurred before today are covered by previous legislation

Loss of Support

Loss of support can be claimed by a relative of the deceased who was dependent on the deceased.

The Old Regime

Before today, the usual rule was that damages for loss of support in these circumstances were calculated in line with a general formula set out in the case of Brown v Ferguson 1990 SLT 274.  The deceased’s net income would be added to his spouse or partner’s net income. Thereafter a percentage often in the region of 25% of this total would be deducted, along with the spouse or partner’s net income.

For example, imagine Mr Smith earns £50,000 (net) and Mrs Smith £40,000 (net).  Mr Smith dies and Mrs Smith is entitled to claim damages for loss of support.  The two salaries would be added together to give £90,000.  Thereafter 25% of this total (£22,500) would be deducted, leaving £67,500.  Mrs Smith’s net salary of £40,000 is also deducted from this total, leaving a final total of £27,500.

The New Regime

The Scottish Law Commission published a Report on Damages for Wrongful Death, which suggested there were difficulties with the old regime.  It was felt that the new regime needed to be simpler and clearer.  The view was also taken that the surviving spouse or partner’s income should be disregarded, in order to provide fairer results.

The rule under the new Act is that 75% of the deceased’s net income should be payable to his relatives in respect of loss of support.  So if we look at the Smiths’ situation again, Mrs Smith would receive 75% of £50,000 which is £37,500.

There exists an exception to this rule in the Act, however.  If the new formula would produce a “manifestly and materially unfair result” then the court may apply a different percentage.  How these words will be interpreted remains to be seen, but it is fair to say the test is high: the words “manifestly” and “materially” suggest only extreme cases will fall under the exception.

Loss of Life Expectancy

No general formula really existed in Scots law in relation to a person’s loss of life expectancy until the new Act was passed.

The rule under the Act equates to the loss of support rule above.  The court should take into account what the person would have earned from the expected date of death and the “notional” date of death (ie the date on which he would have been expected to live up to, had the injuries not been suffered).  The award should be 75% of that amount.

Again, there is an exception that if this formula would produce a manifestly and materially unfair result then the court can apply a different percentage.

Immediate Families and Relatives

The concept of “family” has evolved throughout the years.  The Act maintains the previous position that a deceased’s “immediate family” and “relative” may include a wider category of people than simply spouses and children, such as brothers, sisters, cohabitants and step-children among others.  One change the new Act makes is to include someone who accepted the deceased as a grandchild or grandparent.

Conclusion

It is fair to say that the new regime provides clarity.  The application of formulas with fixed percentages, laid down in an Act of Parliament, certainly makes life simpler.  However, insurers will be keen to see how the courts will interpret the exceptions in the Act.