Jersey Discount Rate Legislation Approved

Since September 2017, when the former Lord Chancellor forecasted that the personal injury discount rate would rise to between 0% and 1% (reported here), we have monitored the influence of distinct jurisdictions and devolved powers, such as Jersey and Scotland, on rate reform in England and Wales.

In edition 254 of BC Disease News (here), we discussed that the States of Jersey had published a report, called the Draft Damages (Jersey) Law 201 (the ‘Draft Law’). This recommended the introduction of a dual-rate regime, which would reduce lump sum personal injury damages to the following extent:

  • A 0.5% discount on the entire settlement, where the single lump sum covers a period of up to 20 years; and
  • A 1.8% discount on the entire settlement, where the single lump sum covers a period in excess of 20 years.

The ‘Draft Law’ also confers a statutory power to courts to make a periodical payment order (PPO), if it is ‘appropriate’ to do so.

On Wednesday of last week, it was announced that the ‘Draft Law’ had been approved by the States of Jersey without objection.[i]

Chief Minister of Jersey, Senator John Le Fondré, explained that this ‘critical’ piece of legislation was required ‘in the shortest possible time frame’ and ‘will now provide a sound basis for setting a discount rate and for allowing periodic payment orders’.[ii]

Senator Le Fondré also revealed, last week, that he would be assessing 5 recommendations, set out by the Corporate Services Scrutiny Committee, which would tighten the control of any future changes to the discount rate. The Committee has also called for Regulations to be published, by May 2019, which provide further detail on how discount rate amendment is managed.

The UK Parliament spent most of 2018 debating and amending Part 2 of the draft Civil Liability Bill, which establishes how the rate will be set in future in England and Wales. In edition 257 (here), shortly after the Civil Liability Act 2018 was passed, we reported that the latest date for Lord Chancellor and Secretary of State for Justice, The Rt Hon David Gauke MP, to establish a new rate, is 7 August 2019.

Updates on the Lord Chancellor’s progress with the ‘first review’ and subsequent ‘rate determination’ can be expected in due course.

In related news, it has been reported that the landmark Royal Court of Jersey case: X Children v The Minister for Health (2018) [featured in editions 237 (here) and 239 (here)] has settled out of court for an undisclosed fee.[iii]

Here, the £238 million claim valuation had been inflated by a (–)3.75% discount rate and we had been awaiting the publication of full-text judgment to observe the expert opinion of economists, actuaries and accountants on claimant attitudes to investments, which affect rate calculation. We also expected to read supplementary submissions on an intervention, led by the Attorney General, which advised that damages would be more effectively awarded by way of PPO than lump sum.

 

[i] Krysta Eaves, ‘Damages Law gets unanimous approval’ (30 January 2019 Jersey Evening Post) <https://jerseyeveningpost.com/news/2019/01/30/damages-law-gets-unanimous-approval/> accessed 4 February 2019. 

[ii] ‘Damages law approved by Jersey States’ (30 January 2019 ITV) <https://www.itv.com/news/channel/2019-01-30/damages-law-approved-by-jersey-states/> accessed 4 February 2019.

[iii] Ibid at 1.