Discount rate judicial review hearing

Damages Act 1996 – ABI’s judicial review of Lord Chancellor’s decision to set a discount rate by 31 January 2017 – decision expected on Friday 20 January

The Lord Chancellor had explained in a statement issued on 7 December that she would announce her decision about the discount rate for calculating pecuniary future losses in personal injury claims by 31 January. Within a fortnight of that, ABI indicated that it would challenge that by way of judicial review. The hearing on permission and interim relief took place today, 19 January.

The first element of ABI’s challenge was to argue that there was a breach of its legitimate expectation that the earlier consultations would be concluded (the Ministry of Justice’s 2012 and 2013 consultations on the matter had not concluded and no ‘response to consultation’ had been by issued by the Ministry despite both consultation papers including clear representations that this would happen) and that stakeholders’ views would be taken into account before any decision about the discount rate was made.

Its second argument was that the Lord Chancellor should make transitional arrangements when setting any new rate so as to avoid the otherwise unlawful retrospective effect of any decision about the rate. The power in s1(3) of the Damages Act 1996 to set different rates for different types of case was argued to allow for such an approach. ABI also argued that an exercise of the power that did not make such transitional provision would be unlawful. Evidence from ABI with regard to the potential retrospective effect was submitted to the court on an entirely confidential basis.

Baker J made it clear at the outset of the hearing that he hoped to deal with permission for the judicial review on the day. There was also an application for interim relief; in effect requesting a stay so that the Lord Chancellor should not take any decision until the outcome of this judicial review (if permitted) was established. After the lunch break, the judge indicated that he might like to reflect further overnight before giving his judgment. Thus arrangements were provisionally made for a resumption on 09:30 on Friday 20 January. He was alive to the need to move quickly given the fact that the Lord Chancellor’s decision is due a week on Tuesday at the very latest.

He dispensed with hearing from the Lord Chancellor and APIL on the first ground above and heard their submissions on retrospectivity only. [It was not entirely clear if this decision gives any clue as to the judge’s thinking on the first ground]. The argument for the Lord Chancellor was that the subject matter was all about the principle of full compensation and this principle would not be changed in the current exercise, whether retrospectively or otherwise. APIL’s concerns included difficulties about resolving current cases (whether at JSMs or trials) if there was delay much beyond the 31 January date set by the Lord Chancellor.

The hearing concluded with the judge confirming that he would, as had been provisionally arranged, give judgment on the permission and interim relief points at 09:30 on Friday 20 January.


About the Author

akAlistair 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).

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