High Court refuses to postpone calculation of compensation award

The High Court has refused to postpone the calculation of a multi-million personal injury award until the Lord Chancellor, Ken Clarke, decides whether to cut the discount rate.

Spurred on by the threat of a judicial review from the Association of Personal Injury Lawyers, the MoJ announced earlier this month that Clarke would review the discount rate (see solicitorsjournal.com, 15 November 2010).

The rate has been 2.5 per cent since 2001, though the average yield from gilts in the last three years has been just over one per cent. A cut of only one per cent could add hundreds of thousands of pounds to a large personal injury award.

The High Court heard that the case involved a 17-year-old boy who was only six when the car he was travelling in was hit by a car driving on the wrong side of the road.

The boy suffered moderate to severe brain damage, leading to serious learning difficulties, including problems with speech and language, which expert opinion said would prevent him from ever earning a wage.

Because his insurer was in 'run off', he would not be entitled to periodic payments.

Giving an ex tempore judgment in Love v Dewsbury (2010, unreported) Judge O'Brien said the court must apply the law as it stood and there were no special circumstances which justified not applying the existing discount rate.

Angela Nuttall, solicitor at Irwin Mitchell in London, acted for Love. She argued that the court had the power to reach a conclusion on damages but to leave the question of the discount rate open until Clarke announced his decision.

'The discount rate is particularly important in this case because it involves a young claimant with a long life expectancy,' she said.

Nuttall said a drop in the discount rate from 2.5 per cent to one per cent could increase Love's existing award of around £2.2m by 50 per cent.

She added that her client had been granted permission to appeal and they were considering what to do.