'No loss' and 'lost years' considered under the new discount rate

31 May 2017

In our comprehensive update on the discount rate adjustment (published 28 February 2017), we proposed that the advent of negative discount rates would result in a “no loss” outcome for accommodation claims under the Roberts v Johnston (R v J) formula. That did not mean the formula or the principles underpinning it were no longer the right approach, however. 

In this judgment handed down on the 25 May, the judge adopted the “no loss” approach awarding nil damages, notwithstanding the need to acquire alternative property. A significant sum was awarded to allow adaptation of a notional new property which is a separate issue to the capital cost. Separately, a lost years claim was permitted. Both these heads of loss are likely to be subject to appeal.

The judgment dealt with a number of heads of future loss. The approach to the a lost years claim for a 24 year old claimant injured at birth is interesting and we understand likely to be subject to appeal alongside the Roberts v Johnstone outcome. In this note we focus on those two heads of damage as well as the approach to future loss of earnings, future care and Deputy/Court of Protection costs.

The case itself provides an insight into the new scale of quantum awards post the rate change. The claimant was awarded £7.93million, plus Periodical Payment Orders (PPOs) for care and case management of £293,117. Using the parties’ multipliers of 55.06 and 52.95 respectively a capitalised value would have been between £24.07million and £23.45million. This indicates that these damages points, and particularly assessing the annual loss, are more important than ever, given that they will be subject to the new rate multipliers.

Click here to read the full update on this case as prepared by the Severe Brain Injury Subject Matter Expert Group (within BLM's Catastrophic Injury Practice Group).

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

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