The 2015/16 edition of “Facts and Figures”, a collection of essential and invaluable reference materials which assist in calculating special damages claims, was published about a month before the latest Judicial College guidelines for the assessment of general damages. In contrast with the objective data and tables in the body of the text, the foreword, however, is far more subjective and highlights several matters which the editor judges, in very much his own view, as being potentially open to challenge or change. These include the applicable discount rate and the calculation of accommodation awards.
Robin de Wilde QC has been the editor in chief of “Facts and Figures” since it was first published in 1996. His foreword to the 20th edition, written after the General Election, sardonically records that “The cherished and much admired Mr Grayling has departed!” It also refers to him as “the Insurer’s [sic] Friend”. Presumably he earns this description as a result of decisions taken when he was Secretary of State for Justice, such as: cutting the scope of civil legal aid, introducing fixed recoverable costs in low value injury claims, ending the recovery of success fees and ATE insurance premiums, banning the payment of referral fees and of cash inducements for personal injury leads.
There is no overt criticism of Mr Grayling with regard to the setting of the discount rate for future losses. However, the text notes that nothing has changed since the rate was set at 2.5% in 2001 by one of his predecessors, Lord Irvine, and poses the (clearly rhetorical) question “is anyone actually using the Ogden Tables in the present climate at all?” Reference is made to the relatively recent Bermudian case of Thomson v Thomson (June 2015) in which the Supreme Court of Bermuda selected negative and separate discount rates for prices and earnings-related losses. The case has several noteworthy features.
- The first is that the discount rate is a matter of common law in that jurisdiction, in which the Damages Act 1996 does not apply. The judgment therefore has no formal weight in England and Wales and is analogous with the Guernsey claim Helmot v Simon, heard by the Judicial Committee of the Privy Council (JCPC) in 2012. The UK’s former Government Actuary, Chris Daykin, gave evidence about the rate for the claimants in both Thomson and Helmot.
- Second is that the court had no power to order periodical payments (as had been the case in Guernsey in Helmot). Chief Justice Kawaley pointed this out at the beginning of his 45 page judgment and again towards the end, where he made this observation.
“If, which is far from clear, lowering the discount rate to an extent which is burdensome for insurance companies would result in a rise in insurance premiums to the prejudice of ordinary consumers these are concerns which it would be more appropriate for the Executive and ultimately the Legislature to resolve. Empowering the courts to make periodical payments is one obvious option and empowering the Executive to fix a standard discount rate is another (less straightforward) option).”
- Third, and possibly of most interest to compensators, is that the claimant in Thomson had returned to live permanently in the UK some years after her accident in Bermuda. The Court therefore assessed the rate(s) of discount it would allow – as a matter of Bermudian common law – for her future losses arising in England and Wales. The rates were -0.5% and -2.5% for prices and earnings-related losses respectively.
- The fourth feature is that any appeal in Thomson would lie to the JCPC because Bermuda is a UK overseas territory. It is not known if any appeal has been lodged nor, if it was, whether the JCPC would necessarily be bound by its own reasoning in Helmot, given that the cases arose in different jurisdictions.
The foreword also explicitly criticises the calculation of accommodation awards as set down by the Court of Appeal in 1988 in Roberts v Johnstone. This calculation, of which the discount rate is a key element, is described as “…a misguided decision in the Court of Appeal …[and]… not only wrong, but does not reflect the real financial consequences. It needs to be re-argued …” There is more than a shade of déjà vu surrounding this opinion, given that the calculation has been criticised by academics for some time and was the subject of a report from the Civil Justice Council in 2010.
Nevertheless, the Roberts calculation remains valid despite the various and sustained attacks on it, including this most recent one. Any alternatives to the calculation that have been proposed are themselves flawed to some extent, which may partly explain why it has lasted for 27 years. The Roberts calculation is probably the only element of the approach adopted by the courts in the 1970s and 1980s to calculating damages awards in high value injury cases which remains in place more than a generation later.
On the basis that what does not kill me makes me stronger, the enduring calculation in Roberts could just about be linked to Friedrich Nietzsche, who first coined the phrase. An even more tenuous link might also be made to singer Kelly Clarkson and to pop band One Republic, both of whom had huge worldwide hits with different songs based on his famous quotation. We have no idea if the editorial team at “Facts and Figures” would include themselves among the fans of either act.
About the Author
Alistair Kinley is BLM’s Director of Policy & Government Affairs.
Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.
He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).