Frameworks dismantled

“Asbestos-related pleural plaques are a personal injury which is not negligible”: Damages (Asbestos-related Conditions) (Scotland) Act 2009, s 1(1).

On 13 August last year, Lord Pentland issued his decision in the case of W v Advocate General for Scotland [2015] CSOH 111, the first Scottish case to quantify solatium for pleural plaques since Rothwell v Chemical & Insulating Co Ltd [2007] UKHL 39. This has now been followed by a decision issued by Lord Boyd on 31 March 2016, Harris v Advocate General for Scotland [2016] CSOH 49, which establishes a new two-stage approach to quantifying full and final damages for pleural plaques.

These landmark decisions will result in a significant reappraisal of the value of pleural plaques cases in Scotland, and how such cases are prepared. Both highlight the importance of assessing each case subjectively, to identify the distress caused by this actionable condition, and the risk of a more serious condition developing, rather than resorting to the convenience of matrixes contained within voluntary framework agreements, favoured by insurers and their representatives.

Rothwell and its consequences

Until the House of Lords decision in Rothwell, for more than 20 years courts throughout the United Kingdom had awarded damages for pleural plaques and associated anxiety. Their Lordships determined that pleural plaques do not in themselves constitute any injury capable of giving rise to a claim in damages in tort. The 2009 Act reversed Rothwell by declaring that asymptomatic pleural plaques amount to personal injury which is not negligible, and accordingly constitute actual harm for the purposes of an action of damages for personal injuries. The Northern Irish Assembly passed similar legislation in 2011.

Although the Scottish legislation came into force on 17 June 2009, it was immediately the subject of a challenge from the insurance industry. The insurers lost, but the effect of their challenge meant that many hundreds of pleural plaques cases were raised but could not be determined. As part of a solution to relieve the logjam of pleural plaques litigation, the Court of Session liaised with leading pursuers’ and defenders’ firms to agree a protocol, or direction, to determine the procedure for the disposal of those cases. As part of those meetings, separate framework agreements for settlement of Scottish pleural plaques cases were proposed.

The frameworks contained a matrix for valuing cases with reference to a pursuer’s age, and whether full and final or provisional damages were sought. They made no reference to levels of risk of developing mesothelioma or other serious asbestos-related conditions, or the subjective effects of the diagnosis on the individual. Although strictly voluntary and not binding on individual clients, the framework agreements are relied on by most insurers as the benchmark on which all pleural plaques cases in Scotland should be valued. In terms of said framework agreements, provisional damages for pursuers, regardless of age, were assessed at £4,000, with “full and final” damages assessed between £6,000 and 8,000.

W v Advocate General for Scotland [2015] CSOH 111

W, aged 69, an “intelligent and thoughtful man”, claimed provisional damages (preserving his right to return at a later date to seek further damages if diagnosed with mesothelioma) after being diagnosed with bilateral pleural plaques in November 2013 as a result of exposure to asbestos in the 60s and early 70s. Having grown up in a mining community, he had vivid recollection of the devastating effects of industrial lung disease, and found the idea of having suffered lung damage himself as particularly troubling. He was told he had approximately a 5% chance that the plaques could develop into something more sinister, but took little comfort from that, having had his confidence in medical prognosis dented by previous experience. His anxiety was “above average” but did not constitute a recognised psychiatric illness.

Rather than relying on the view expressed by the Court of Appeal in Rothwell [2006] ICR 1458, that provisional damages to reflect anxiety at the risk of sustaining a more serious injury should fall within the range of £4,000 to £6,000, which guidance was analogous to the then Judicial Studies Board Guidelines (8th ed), Lord Pentland instead considered more suitable authority would be provisional damages awards in a number of English cases pre-Rothwell: “my impression is that had it not been for the decision of the House of Lords, the current bracket in England & Wales for provisional damages for asymptomatic pleural plaques with associated moderate anxiety would have been between about £5,500 and £9,000” (para 34). W was awarded provisional damages of £8,500, more than double the recommended figure in terms of the voluntary framework agreements.

Contrary to fixed framework figures, the judgment confirms that the valuation of any individual case can fall within a broad band. Each case will be different. Age (life expectancy) of the pursuer is not the only relevant variable factor. While diagnosis alone is sufficient to sound in damages, where a pursuer is assessed as facing a risk of developing a more sinister condition, the door is opened for provisional damages, and where greater apprehension and anxiety are experienced, it is only reasonable that provisional damages should be increased to reflect that.

A similar subjective approach requires to be adopted where a pursuer chooses to accept a full and final settlement, where the potential variation in awards will be greater. Provisional damages require the courts to consider solatium only. Full and final settlement awards entitle the pursuer to damages, not only for the anxiety, distress and physical scars, but also for the risk of developing subsequent asbestos-related conditions.

Harris v Advocate General for Scotland [2016] CSOH 49

Roger Harris, aged 70 at proof, was employed as a boiler maker by the MOD between 1961 and 1970, when he was negligently exposed to asbestos dust and fibres. No other exposure was pled. Liability was admitted, and the case focused purely on the appropriate award for full and final damages in a pleural plaques claim. Medical evidence was agreed which stated that Harris had a 5% risk of developing mesothelioma, and in addition a 0.2% risk of developing asbestos-related lung cancer.

The Court of Appeal in Rothwell confirmed that full and final awards which preclude a claim should mesothelioma or some other disease result from the breach of duty, must fully reflect the risk that such a consequence will be suffered, even if that risk is relatively modest: judgment, para 104. The pursuer argued that the approach suggested by Lady Justice Smith in her dissenting judgment in Rothwell should be followed, namely that the quantum of damages should be expressed as the percentage risk of developing further conditions, multiplied by the damages that would be payable if the risk eventuated, discounted for accelerated receipt. This approach was accepted in its entirety by Lord Boyd, who agreed with the pursuer that a two-stage approach is appropriate to calculate full and final damages.

First, it is necessary to determine the appropriate provisional award of solatium. Using W as authority, the pursuer argued that an appropriate figure for solatium would be £7,500. That was accepted, thereby reinforcing W as the benchmark for quantum in pleural plaques cases.

Secondly, future risk should be assessed with reference to the cumulative risks the pursuer faced for malignant conditions. Adding the mesothelioma and lung cancer risks together provided a risk figure of 5.2%. Parties had agreed by joint minute figures for the level of solatium should Harris develop mesothelioma or lung cancer, as well as figures for annual pension loss and services. A multiplier was applied to the pecuniary loss heads which assumed the onset of the cancer at about halfway through the remaining life expectancy. That provided a final figure for damages should the risk eventuate, to which the 5.2% risk figure was then applied. The resultant figure was then discounted by 25% for early receipt. This produced a final figure for future risk of £7,316, which when added to the figure for solatium, and once interest to the date of judgment is calculated, will result in full and final damages approaching £15,500, approximately double the figure recommended by framework agreements for full and final settlement awards.

Frameworks no more

Following Harris, some defenders have been quick to claim that this will result in pleural plaques cases being subject to undue delay and expense. The truth is that these cases place pleural plaques, an actionable condition, in exactly the same category as any other personal injury action in which there is a future risk, where a medical report is a prerequisite of raising proceedings. The report is essential to assess the subjective effect of the condition and properly assess future risk, and also to allow clients to make an informed choice about whether to pursue provisional or full and final damages. Without this (along with other evidence of patrimonial losses), it will not be possible properly to value full and final settlement awards.

Insurers and their representatives have been vocal in their insistence that the interests of asbestos exposure victims in Scotland are best served by adhering to voluntary frameworks. These cases demonstrate otherwise. However, many insurers still refuse to depart from the framework figures when making settlement offers. While voluntary framework agreements may remain attractive to insurers and those dealing with such cases in significant volume to allow cases to be progressed with the minimum use of resource, the result is that claims may be significantly undersettled. This presents a risk for uninformed practitioners.

The courts, and not insurers, have responsibility for assessing levels of damages. The W and Harris cases have changed the landscape when it comes to quantifying pleural plaques damages, and it is difficult to see how it will now be possible for defenders or their insurers to continue to rely on frameworks as representing a reasonable and appropriate measure of damages in pleural plaques cases.