All change – new discount rate

On the 27th February 2017 the MOJ announced that the discount rate, previously set at 2.5%, would drop down to -0.75% with effect from the 20th March 2017.

Whilst a drop had been expected no one could have predicted such a massive decrease. 
The resultant effect will be a significant increase in respect of future losses in personal injury claims.

Whilst the government has imposed the change it has failed to provide amended Ogden tables to accompany the rate change. However, PI calculator has provided amended calculations to assist in the short term.

What does this change mean?

  • Claimants are likely to withdrawn part 36 offers.
  • Defendants are likely to try to accept part 36 offers before they are withdrawn.
  • JSM’s are likely to be postponed as Claimant’s seek to re-calculate and Defendant’s await the possibility of the discount rate being re-visited following potential judicial review.
  • There are likely to be arguments over the applicability of part 36 offers and whether they afford cost protection in the future.
  • Schedules and Counter-schedules will need to be re-drafted.
  • There may be arguments over the calculation of a -0.75 discount rate given that it is not as straight forward as averaging the rates for 0-.5% and -1%.
  • PPO’s are arguably redundant, as it would make little sense for a Claimant to choose a periodical payment when they could have a lump sum calculated on a negative discount rate.
  • Costs are likely to increase given that an increase in damages will make higher cost bills proportionate.
  • Insurance policies are likely to increase in cost to cover the additional financial liability.
  • What becomes of Table 27?

Does this impact on all future losses?

– It is unclear at present whether it applies to Roberts v Johnstone calculations for future accommodation costs. If it were to apply then this would lead to a negative outcome, which can’t have been intended given that the basis for altering the discount rate was to make future loss figures fairer for Claimants.

Conclusion

The imposition of a negative discount rate absent guidance will lead to uncertainty, increased costs and satellite litigation.

Come to our joint CIOT/STEP seminar with tax advice from Michael Sherry

Come to our free joint seminar on Monday March 20th 2017.

Venue: Brabners Solicitors Horton House, Exchange Flags Liverpool L2 3YL

Registration: 4.30pm
Seminar: 4.45pm – 5.45pm

We invite you to stay following the seminar and join us for drinks. RSVP to claire.labio@completecounsel.co.uk

Topics covered will include case studies on:

  • Non-domicile changes
  • IT/CGT – conditions A and B
  • IHT – previously domiciled residents
    – 15 year rule
    – Excluded property trusts
    – “Foreign owned”
  • Implementation
  • Pre-domicile planning? Now and in the future
  • Trusts – “protected” trusts
    – Other changes

Come to our Chronic Pain Seminar

Chronic pain is a controversial presentation in PI claims. Claimants often seek damages for what are said to be life-changing conditions, which are not always wholly explained by established pathology and which Defendants and insurers frequently dispute. Issues as to vulnerability and causation cause further complication.

Pro-Vide Law, in association with Complete Counsel, are presenting an interactive seminar on chronic pain at 2pm on Friday 5th May at The Doubletree Hilton Hotel, 6 Sir Thomas Street, Liverpool.

We have a great line up of Speakers to include Dr Andreas Goebel – Associate Professor at the Liverpool Walton Centre and Assistant Professor for Pain medicine at The University of Liverpool, Dr Eric Ghadiali – Clinical Neuropsychologist, Professor Gus Baker – Emeritus Professor and Clinical Neuropsychologist, and Barristers Charles Feeny and Tom Goodhead from Complete Counsel.

The seminar will explain the various pathologies which can be implicated in a chronic pain disorder by reference to a fictional case and discuss the criteria for diagnosing such a disorder. The alternative possibilities of a factitious disorder or malingering will be explored.

The seminar will include an interactive “hot tubbing session” where the experts will present conflicting views as to credibility, diagnosis and prognosis.

The audience will be given the opportunity to raise issues and questions with the experts. Spaces are limited for this event. Tickets are £35.00 per person.

Registration – 2:00pm
Seminar – 2:15 – 4:30pm

Seminar followed by drinks and a chance to discuss the issues.

To book a place, please email claire.labio@completecounsel.co.uk