The two stage test for full and final damages - implications for pleural plaques and beyond

Following on the heels of William Wales v The Advocate General in August 2015, another pleural plaques award has been made by the Court of Session.

Harris v The Advocate General as representing the Ministry of Defence [2016] CSOH 49 is the second reported pleural plaques case of the Scottish Courts since the Damages (Asbestos Related Conditions) (Scotland) Act 2009 came in to force. This act made pleural plaques an actionable harm in Scotland after the House of Lords ruled in Rothwell v Chemical & Insulating co Ltd and another [2008] 1 AC 281 that, certainly in England and Wales, they were not capable of giving rise to a claim for damages. Pleural plaques are a scarring of the lungs which in the vast majority of cases cause no disability.

We look at this recent case and consider the impact it is likely to have on the valuation of pleural plaques claims, as well as the wider implications.

Harris the Facts

Mr Harris was employed by the Ministry of Defence (the MoD) as a boiler maker from 1961 until 1977. During his employment, he was exposed to asbestos dust and fibres and, as a result, developed pleural plaques. The MoD admitted liability and so the proof (trial) was restricted to quantum.

Parties agreed the evidence of Consultant Physician Dr Dorward that, in terms of potential future injury, Mr Harris had:

• a 5% increased risk of developing pleural mesothelioma (a terminal cancer); and
• a 0.2% risk of developing asbestos-related lung cancer.

Parties were also agreed that the value of Mr Harris' claim today if he had either of these conditions would be £66,000 for solatium (general damages) and £13,500 for services (care). Also relevant to Mr Harris' calculation of the claim was his annual income of £16,369.

Provisional and Full and Final Damages

The awards in Wales and Harris differ in that Mr Wales was awarded provisional damages and Mr Harris was awarded damages on a full and final basis. However, as below, the valuation in the Wales case was still of importance in assisting the court in assessing Mr Harris' claim. In Wales, Lord Pentland considered that the appropriate bracket for provisional damages in pleural plaques today should be between £5,500 and £9,000. He accordingly awarded Mr Wales £8,500, towards the higher end, due to the level of his anxiety.

The effect of a provisional award is that, if Mr Wales develops a more serious condition as a result of his asbestos exposure (in that case restricted to mesothelioma), unlike Mr Harris, he is entitled to return to court to seek further damages.

In Harris, both parties were agreed that, with a full and final award, Mr Harris was entitled to be compensated for the future risk of developing mesothelioma or asbestos-related lung cancer. Where they disagreed was on how to calculate that risk.

Calculating Damages

(i)The Two-Stage Test

The approach suggested by Mr Harris was that which had been proposed by Smith LJ in Rothwell v Chemical & Insulating Company Ltd [2006] ICR 1458 (before it reached the House of Lords).

In that case, Smith LJ took the view that where a claimant sought a full and final award, there should not be a standard uplift on provisional damages. Rather, the award should be based on the percentage risk to that claimant of developing a more serious condition, adjusted to take account of the fact the claimant was receiving the award early.

The approach was applied in practice by Mr Harris as:

Stage 1 _ Assessment of solatium for pleural plaques alone _ Counsel for Mr Harris suggested a figure of £7,500, having regard to the bracket set down by Lord Pentland in Wales. It was submitted that Mr Harris was not as anxious as Mr Wales but "had the anxiety brought home to him" in respect of his condition by the death of a relative.

Stage 2 _ Adding a figure for the future risk _ Mr Harris' Counsel added together the two percentage risks of Mr Harris developing mesothelioma or asbestos-related lung cancer (i.e. 5.2%). He then applied that percentage to the overall hypothetical award Mr Harris would be entitled to today if had he either condition, reducing the sums to reflect early payment. This resulted in a figure of £7,316 which, when added to the Stage 1 figure, totalled £14,816, net of interest.

(ii)A global award to reflect all injuries actual or potential

The MoD argued there was no need to carry out a two-stage assessment of solatium _ Smith LJ's approach was only one approach, and in other cases the courts had been satisfied to make global awards without applying a two-stage test. It was argued the correct way to value the award was to identify a range of values, and value the case in that range based on the age, level of anxiety, and risk of future illness. The MoD referred in particular to a similar case where the plaintiff was awarded £7,150 (Hooper v Prescott [2005] 2 QR 22).

Counsel for the MoD argued there was a "very slim possibility" of Mr Harris developing mesothelioma or asbestos-related lung cancer and so the appropriate award for future loss was 5% of one year's financial loss (£600) and services (care) at £500. The MoD therefore invited the court to award a total £8,600 net of interest.

Decision

Ultimately, Lord Boyd of Duncansby preferred the methodology applied by Mr Harris' Counsel and awarded £14,816, exclusive of interest. He was content that any concern of over compensation was adequately addressed by the deductions made in Mr Harris' calculation. The judge did, however, appear to accept that there may be other cases where application of this approach may result in over compensation and variation would therefore be required.

Implications

Harris affirms the approach in William Wales v The Advocate General for Scotland that awards between £5,500 and £9,000 are appropriate for solatium. Although not binding in other cases and indeed it may be appealed, Harris provides some direction to parties in predicting the level of award likely to be made for both provisional damages and the solatium aspect of full and final awards in pleural plaques cases.

However, if this approach is followed in other cases, the future risk element of final awards will be less predictable as the value of each case will very much depend on a claimant's circumstances. Along with evidence of the claimant's financial position, medical evidence may be required to address both life expectancy and the risk of the development of other conditions.

The time taken to resolve these claims may increase and costs involved may become disproportionate to the value of the claim.

The sanctioning of this approach to calculating full and final damages in pleural plaques cases may impact other types of claim. The same approach may well be adopted in other personal injury cases where there is a risk of serious deterioration in the future, or a risk of the development of another condition. It will, however, be interesting to see how the matter is dealt with where the overall percentage risk is considerably higher than 5.2% and therefore, the potential for 'over compensation' greater.

In the past, pleural plaques claims were, in the main, relatively straightforward to resolve; but the endorsement of the 'two-stage test' may unearth other issues going forward which will require consideration in the Scottish Courts.