Hello and welcome to this webinar on the Ogden discount rate from on the implications off the Ogden discount rate. 2019. My name's Niki Carter on a claimant P I background. Let's take a look at what we're really discussing here. And that is the increase isn't a in the Pee I discount rate increased by no 0.5% on the 15th of July 2019 that we now have a new discount rate figure or minus, nor 20190.25% on that change, if you like, came about, I'm from originally a change we had in 2017. On that change moved the discount rate from what we had for many years, actually 2.5% and it went down to minus 0.75%. We need to talk about the date when the new rate will be relevant on. We need to talk about some of the implications that this change will bring. You know, you may remember that the sort p I world was thrown into disarray, really, by the surprise change in 2017 in March of 2017 toe a minus nor 20170.75% rate on you know that the iron argument really from the insurance industry waas that claimants were going to be substantially overcompensated, that it was gonna increase financial pressure on public services. I have large person injury liabilities, particularly the NHS was mentioned there. Waas An extensive review Onda We know now that the mechanism, if you like for changing the discount rate, is enshrined in the Civil Liability Act so that the argument is that there will be proper are considered reviews on the future. On the basis off, um, are considered assessment of what the rate should be in the future, rather than the rather surprising sort of knee jerk change that came about in 2017. So we'll talk about the new rate that we're now dealing with on a number of things we need to talk about. One is, you know, whether that's going to affect how, if you like, that's going to a baked part. 36 offers our acceptance of those off withdrawal of those offers, potentially in the light of the new right. Ah, thought about settlements. Call approval of settlements, renegotiation, perhaps of settlements in the light of the rate on all. Does this change affect our calculations and the calculations that we're going to carry out in relation to accommodation claims? We know that there are problems and the problems since 2017 with using the traditional formula for working those losses out. I buy the Roberts and Johnstone formula. How does the new rate if if a tall changed that issue and also a bit of a look, if you like at periodical payments on the implications are for periodical payments and the desire, ability, let's say of periodical payments in the light of the new rate, in addition, will have a quick word about costs on Duthie relevance, if you like, of any cost budget reviews that we might need to consider in the light of the new rate. One sort of interesting thing that I think arises about this is that we know that investment advice is generally no given to claimants during the litigation. On that, the cost of that advice, in any event, wouldn't be recoverable. We've got various authorities for that page and Plymouth hospitals from back in 2004 I'm reaffirmed again in the rt a case of Eagle and chambers in 2004 by the Court of Appeal. So we know the investment advice on the cost of that is generally not something payments are gonna have the benefit off. Claimants and their advisers are gonna make investment decisions based on meeting the claimants long term needs that complex care treatment on equipment on they have to factor in the distinct possibility that the claimant lay well outlive the life expectancy predicted during the course of the kind. That's a risk, really, for any claimant adviser. And really, it's inherent, isn't it? In the courts approach toe life expectancy stats that about half of all claimants will live longer than has been predicted. But prudent claimants, of course, will need to plan for that possibility. That fact that risk, if you like on the need to plan for it, shouldn't really be conflated with the different concept of an appetite for investment risk. And I think that's where you know, over many years things have gone wrong. That that abiding fear, if you like from claimants in order to have enough money to see out their life expectancy to make the needs that I have, is not the same as any other investors. Appetite. If you like for risk, it's an extra factor that changes things. Even periodical payment orders, of course, don't fully protect claimants from the life expectancy risk, as they're typically only gonna provide for one or two of the heads of future loss. So that's a lot of full proof protection. Either. We need to talk a little bit about timing, um, the change in the rate wars informed by a public call for evidence and that call took into account a wide range of views Person injury lawyers, insurers, investment experts on public bodies on the new rate comes into force on the faith or came into force, we should say now, on the fifth of August of 2019 under the Civil Liability Act, the new person injury discount rate is going to be reviewed within a five year period, with future reviews advised by an expert panel on record required. We know that now, within five years of the last, So the idea, you know, if you like that, we have another period off 16 years with the discount right in place that doesn't get changed, is not going to happen. We know that prior to the distance Civil Liability Act, there were no fixed intervals for periods during which the discount rates to be set. So we had a 16 year gap if you like. The last rate was set in 2001 and it changed for the first time in 2017. So, to some extent, within a five year period gives a certain amount off security in knowing that they'll be formalized basis for change off the right. What it doesn't do, of course, is give us any information about when that might be. One of the things that off course has changed is that in recent months, because we all knew the rate was likely to change by the 5th August on, that was a statutory timetable. Negotiations may have stalled on various cases on, of course, all of that now gets reopened. One practical matters. The the slide you're looking at reminds you is just as in 2017 the organ Tables has published didn't actually provide the relevant column, so that was, in fact, no column to show the numbers for a minus Northway to 5% rate on the Government Factories Department have now published supplementary tables. You'll remember back in 2017 when the rate changed to minus 0.75%. Exactly the same thing happened on supplementary tables had to be rushed out to cover that particular figure. I guess it does have a bit of a clue to the idea that nobody was actually expecting the rate to go to minus 0.25% if they had been. One assumes that the columns would have been included already by the government actuaries. The supplementary tables provide all the tables. The new ones are multiplies in the seventh edition of the Ogden tables, with the addition of columns of multipliers calculated at rates off minus 0.25% current right Onda, the previous one off minus are not went 75%. The multiplies have been calculated using exactly the same mortality rates on the other assumptions that underlie the tables in the seventh edition, so nothing else has changed the multipliers. Other rates of discount are the same as those published in the center tradition on the supplementary tables issued in March 2017. The other tables are factors in the explanatory notes haven't been revised at all on. We know, of course, that we are not yet going to receive Organ eight on Indeed, no word about when that is likely to happen. So, aside from the rate changing to a minus 9.25% we know we don't expect this point anyway. There are no other changes in the tables that we have toe get our minds around if you like. The minus no 0.25% rate doesn't restore the Robertson just own Robertson Johnstone. I should say sorry methodology for assessing future accommodation claims on We're still in a position where we're waiting for tests. Litigation to explore viable alternatives will say much more about that in a moment. But of course the reality is was still in a minus discount rate game. Consequently, the Roberts and Johnstone traditional way of calculating accommodation costs doesn't work. It didn't work at minus 0.75% and it doesn't work up minus 9.25%. It doesn't work. Therefore, we're still trying to work out what to test. Investigation might be coming forward and will say more about that in just a moment. The damages Act 1996 does provide for a challenge to the discount rate at sexual one sub. To certainly case law suggests that, in fact, that's only likely to happen in very exceptional cases. Eso you know, we can't expect that challenges to that rates are going to be realistically something that the courts are going to entertain. One of the things that's always been said about the often tables is that they provide a level off certainty for parties when calculating losses on it seems extremely unlikely that they allowance, if you like, for a challenge to the discount rate under the damages act would actually happen, subsection one off. That act doesn't, however, prevent the court taking a different rate of account of returning to account if any party to the proceeding shows that it's more appropriate. And again, we know from case law cases like Warriner and Warriner that went to the Court of Appeal after the 2001 rate change that an application to introduce actuarial evidence for a different rate was rejected and it was in that case that the court said this is going to be very unusual on rare, exceptional for the provision, Toe ever replies. Although it's there, technically, we know in reality it's unlikely that they will be realistic challenges allowed by the court to the rate. One example, I guess, are where we should point out that the court was prepared to consider are something different if you like, in terms of rate is the case or Marsh on the Ministry of Justice from 2017 on that case really tackled the discount rate changing between trial on the handing down of judgment on. In fact, remember, that was the change from 2.5% Tu minus north 0.75%. The courts heard arguments as to delay in the trial. It was suggested that the losses, having arisen during a positive discount rates period was important. Ah decision was sort under the Damages Act provisions, and it was held that the rate that applied to damages was that applicable, hand down on the judgment. In other words, the new negative discount rate on the court said the application of the new rate is simply the operation off the law. It's no more serendipitous than the fact that the old rapes there for many years to the benefit generally off defendants on, certainly in cases like the Privy Council case, off cadets, car rentals and Pinder from 2019 on that really concerned that correct. Use that case of the organ tables. Three different courts produced three different calculations of Los unbelievably on that was on appeal from the Bahamas on the matter had been heard twice, while the discount rate was at 25%. It came before the board in October 2018 under the latest rate. While not binding pendency to suggest that provide support that appeals post a discount rate change are to be decided at the rate which pertained at the date off the original trial. So when rates change, they're bound to bay these difficulties in trying to sort out what's the rate where the change happens over the course of the trial, or, of course, where there's been an appeal. One of things we need to tackle is what what steps that we all need to think about taking what things that we need to look at with the discount rate change happening in August of 2019 on you know one of those things will be the sort of review for a while. Parties or part 36 offers Unlu. Look at whether the Part 36 offer reflects the appropriate value of the case. A review of any non apart 36 offers called bank offers. In other words, offers that don't comply with Part 36 off the civil procedure rules any ongoing negotiations pending settlements. Settlements that are are looking to be resolved if you like the on going negotiations, but happening, these now need to be pressed ahead with We know the story. We know the right changing. There's no reason for any delay. She edges of loss, of course, of many need to be reviewed and will need to look at that in just a moment. Have a think about amending any costs budgets because with significant changes to schedules of lost amendments to the cost budget. Going to be realistic issues if effectively having a think having a look at the status off interim payments. So the idea whether or not interim payments that already been received properly accurately reflect the claimants expectations in relation to damages in the future. Remember, there's no any retrospective effect off the discount rate change that that's not the case. But all those issues that were risen on a case that we just looked at offers in various shapes and forms. Schedules of losses are all going to need to be revisited to try and work out. What's the situation? Do we need to change our proposals? Do we need to withdraw Part 36 offers? Do we need to accept office? We thought we might need to reject. What is it that we need to do next? Let's take a look now, at the effect, if you like on a part 36 proposals, you know, I've made the point. Of course, that Part 36 offer is going to need to be considered a fresh from a defendant point of view defendants. Because, of course, the rate has increased not as much as insurers hoped, but it has increased it. This really means that defendants are going to need to look closely at the Rome Heart, 36 offers, on the basis those offers may now be too generous on Well, we'll look at some examples in a moment off the difference that the rate change may have made off course. We know that provided a part 36 offer remains open. The other side can accept it as a right, even if the period for acceptance has ended. You know, of course, one option with the new part 36 rule in its current form, ER, is that a party may build in, if you like a self destruct button to their part 36 which will automatically expires after a certain period. If that hasn't been done, the offer is still then available. The cost consequences, of course, which follow after expiry of the relevant period that 21 days are going to need to be determined by the court unless agreed. So for claimants going to want to come along at pick up a Part 36 offer that's being on the table for longer than 21 days. The issue then is you can either agree, costs the costs arrangement with your opponent. All the court will need to do so. We know, of course, that if it's the other way around and it's a defendant late acceptance of a claimants part 36 offer, you know, what is the story for dependent comes along and accept late. Does that inevitably mean indemnity costs for the claimant? Well, cases like Parsa on Dear Smith from earlier this year actually say no. Actually, if defendants have accepted an offer Part 36 offer, which is now a manifest undervalue, it's unclear whether the court would apply the usual order in the present environment. Whether discount rate is increasing on, consequently, that musicals awards decrease the greater risk of adverse costs. Consequences really weighs on the claimants hump who might have rejected, for example, defendant Part 36 office under the old right, which now become dangerous for claimants under the new rate. So no question that Compensate Er's are gonna be reviewing their part. 36 offer us withdrawing effectively, any that might overcompensate to try and prevent claimants accepting them out of time or potentially to vary them downwards to avoid losing the cost protection for preceding cost protection. The rate change also creates some uncertainty for cases settled prior to the announcement, but still requiring court approval where the compensated may decide that actually the figure they have prepared to offer, they can no longer recommend that figure on. It's possible that there will be test cases during this transition period where claimants are recommending the original settlement and defendants actively challenging approval off the outdated terms. Effectively, it's it's almost a reverse. Well, it isn't reverse actually off what happened in early 2017 where many climate advisers was seeking to re negotiate region, re negotiate settlements in an upward direction as a precondition off recommending approval. I, I think the other are possible consequence of unite of this change is that there is a possibility off MAWR split trial applications in an attempt to avoid the difficulties that are going to be caused by this uncertainty in cases like brakes on CEF holdings from a couple of years ago. What we saw in that case is the Court of Appeal, confirming that the usual consequence consequences should apply where the claimant accepts the defendant's offer after expiry off that offer in cases like breaks will look a couple of other examples in a moment. The story, of course, Waas that the claimants argument was that their prognosis was so uncertain at the time the off the was made, they couldn't accepted the offer at the time it was made in any event just to give a bit of an idea of the facts in this one. The accident happened in January 2010. Proceedings were pursued with a orthopedic reports with a fairly unfavorable prognosis in January 2012 and it was in September of 2000 and 12. That the defendants, part 36 offer off £50,000 was made in May 2013. The claim was actually stayed to allow further surgery to happen on. In April 2014 that state was lifted on the claim. Value increased just on over £240,000. In October 2014 that claimants orthopedic surgeon set up a much more optimistic view of the claimants future, and it was in June of 2015 that the claimant accepted the defendant's part. 36 offer may all way Back in September of 2012 the claimant asked for an order on the rule 36 13 75 that the defendant pays costs up to 2014 October. On the basis that prognosis wasn't certain until that time on, it was not unreasonable for the defendants, often not to be accepted until that time. It that was unsuccessful on the defendant appealed. The court appeal allowed the appeal on the basis it was important not to undermine the provision. For the purposes of Part 36 I made the point that lack of certainty and prognosis was just one of the risks of litigation. It was difficult to form of you at the time the offer was made. Are was just not enough to justify a departure from the normal rules. And I think it is important to know it's a case that was decided on its own facts on that where the climate could demonstrate the usual rules would cause an injustice on opposite result could be reached in cases like SG and Hewitt. I'm from 2012 concerning a child. The course repair made the opposite decision on the basis that it would have been unjust for the usual cost consequences to apply Clearly. This case of Briggs identifies the tactical advantage often early offer for defendants on the need to take care when considering early offers for the claimant. The claimants representatives need to keep early office at the forefront of their mind when thinking about future conduct in order to minimize risks of that kind. Um, certainly just a reminder of the Rule 36 13 sub four sub B where a part 36 offer is accepted after expiry of the relevant period. The liability for costs has to be determined by the court unless the parties are in agreement on in land. Campbell, on the Ministry of Defense of another P I action are the court took the view that there was no reason to depart from the usual costal following late acceptance of a Part 36 offer that a claimant should be awarded his costs up to the date in which your for expired with your free in the instant case, the claimant to pay the Ministry of Defense costs from the period from the date of expiry of the offer to the date off acceptance. That case was another case on where the issue was uncertainty about the claimants future on the claimant, arguing that when the offer was made, he couldn't quantify his future losses, and it wasn't known at that point what his future employment prospects might bay. Although no stay had been sorts interesting this one, I think, come to the detail the claimants submitted. That stay had effectively being obtained as they had been delaying exchange of the experts report until after a decision was made about the claimants future in the armed services. Hey maintained it was only one. All those elements were clear that it was appropriate that he could or would have any possibility off accepting that offer. The cost consequences of acceptance of a Part 36 offer are set out in Rule 36 13 sub five. So where we know that there's been that late acceptance, the rule says the parties that can't agree liability for costs the court must, unless it considers unjust to do so, make an order that the claimant be awarded costs up to the date on which the period expired on the offerings should pay the offer US costs from the period from the date of expiry of the period to the date off acceptance. So we know that that's the default if you like costs rule. What becomes clear from those cases we've seen is if the climate genuinely thought that it was a completely speculative exercise in order to try my way up the Part 36 offer at the time it was made. They should have applied for formal stay to stop the defendant running up costs on, you know, because that's the default costs order. The court went on to say that the burden on the claimant was formidable to get past the usual order. The claimant was the one who had the burden of establishing if you like the unusual circumstances and it didn't work in long along Campbell for the claimant. The claimant, the court decided, should pay the defendant's cost from the last day experience the offer. February 2019. I mentioned the SG and Hewitt case on the reason. I think it's important to mention at this point because of the exception issue is that the in that case, the court decided that they court should depart from the normal costs rule in order to give way to the particular features of case off. A young boy had suffered frontal lobe damage in an arty A at the age of six on, the experts were unable to predict the impact of a brain injury until he fully matured. So on the those facts In that particular case, the court took the view that a different order walls appropriate s. So I think it's important to note that a different order is possible. If there's a really clear and obvious good reason why the offer can be accepted at the time. Being clear with your opponent is obviously vital in that regard, um called a bank or norm Part 36 offer as well. Certainly certainly we've said we've got to consider Part 36 office but also called bank offers. For example, ah, 40 year old female has a multiplier minus nor 400.75% off 26.52 retiring at 65. That same claimant has a multiplier off took only 21.41 out of 1% rate. Now that's on an annual salary of £20,000. That's a drop off over £100,000 before any adjustments are taken into account. Now that was what everybody expected. The rate to change to 1%. We know that's not what's happened on. We now need to look at example off the difference between the minus nor 10.75% right on the right we have Now. On this time we've got a 30 year old male annual financial cross, the 50,000 under the existing minus nor 300.75% rate. He'd be awarded to 2,000,935 £100,500 under the new rate minus nor 0.25 he'd be awarded two 1,000,005 165,000, 250,000 difference over £370,000 on that I think hammers home. Really? The reason why we need to look a fresh at part 36 office that been made to us all that we're making that is a significant difference. Um, the problem that the new rate brings as the old rate brought in minus numbers is that the Roberts and Johnstone formula the traditional formula for calculating the cost if you like loss of income from the capital expended on the purchase of a new of new accommodation doesn't work. The claimant owes the defendant money at north 0.75% using this calculation and still owes the claimant of the defendants are in money in the new minus not nor 0.25% column the JR and shackled Teaching hospital case confirmed it. If you look at the table, I've prepared giving an example. You see the nonsense that was brought about once the rate came into minus figures on, you know, crazily for a cost of suitable accommodation. We see that even at minus nor 0.75% the claimant owes the defendant money when needing to purchase alternative accommodation. It's a situation that cannot continue. Swift and Carpenter was a case went to court for last year. There was an accommodation claim off over £900,000. The court took the view that we're bound by the decision in Robertson Johnstone. They took the view that each alternative formulation would have resulted in some form or overcompensation on. They made no award for the purchase of special accommodation. Now we know that the course appeal is due to hear this case in the spring of 2020. The Court of Appeals made it clear it's a test case on. Then we'll all the available options before them for the benefit. How about the cases as well as this particular case on? They want a full review off all the alternatives to the Roberts and Johnstone formula. I mentioned the case of the previous case, Off Jr on the Sheffield Teaching Hospitals case. In that particular case, things were left in a very unsatisfactory state when again the claimant needed money for future accommodation on the court found itself bound by Roberts on Made a Neil Award. What we do know is that in JR the court did look at a number of alternatives. By the way, if you thinking that yesterday are surely was subject to an appeal, it waas. But the appeal was settled at the 11th hour, where offer walls accepted in respect of accommodation to June of around £800,000. We don't have if you like a authority, well, what the court should be doing. A number of ideas come along, and I've looked at a few of them, Really. These are the sort things we can expect to hear in the swift appeal. You know, could be a war be in the form of ah retail prices index index linked a pair of car payment order. Is that a possibility? Eso that the possibility that climate might perceive things in that back line but the difficulty is no. To avoid overcompensation, the court might cap the award when the accumulated payout reached the capital, some upon which the annual losses calculated, like a insurance policy limit if you like. So that's a possible argument. What about an interest free loan? Transferring the burden of capital deprivation from the claimant to the defendant? The only capital the claim would tie up is the value of their existing home, all the home. The court considers that they would have owned. But problems with this to what if property values fall on. There's insufficient capital to repay the loan. I'm from a defendant's perspective. Cash flow, disadvantages, more capital up front on a credit risk for the the defendant. You know, one of the issues really on it came up in a case called George and Pin it back in the seventies is that the court thought that claim it shouldn't be entitled to the capital cost of property because that's a windfall on their death. On that, they were either entitled to an additional mortgage interest on the additional costs or damages the loss of income on the capital. So there is a difficulty in trying to sort out what's appropriate. Interest only mortgages backed by P pose have been suggested puts the claimant in the same position as an interest re loan with the interest covered by P pose. No net financing costs. But there is problems with their problems with this, too. There are restricted supply mortgage product. It's then maybe preconditions to make it workable. What if the claim has got a poor credit history on? Can't have access to the bullet borrowing? The accommodation claim would have to be based on an actual property with an actual mortgage offer on those things tend to be time sensitive. So with all the options, there are problem issues. Are defendant to provide all the additional capital? The problem here is you got the windfall to the climate upon death seems simple, but the argument from the defendant would B that the claimants family would receive a significant windfall. One option, of course, is for rent to be covered by a PP o PSOE. Never, instead of purchase the rental of a property, the problems all difficulties in finding suitable rented accommodation. If there are adaptations to the property, private landlords might be very unwilling to let because, of course, of changes in the value of the property as a result of that one area which we touched on earlier. When we talk to this webinar, it's different rates for different heads of lots. So there is scope in the Civil Liability Act for the Lord Chancellor to set a different rate for earnings related losses on certainly in section tense of one's up. Four. The Lord Chancellor has the power to make an order that distinguished distinguishes, if you like between classes of case by reference to the description off whatever losses are concerned on. We saw in Privy Council case of Helmet and Simon in the guns he courts different rate being awarded for different heads of loss Again, we don't know what the courts be willing to go down that road, but that has to be a possibility. Um, P pose in the discount rate. Quick word about that. There must be an expectation that the decrease in the rate made lump sums larger are more attractive to claimants on whether they will be sufficiently attractive to claimants to overpower their present reasons for choosing P. Pio's life long injuries without independent mental capacity will only see with time stronger climate preference for lump sums. Every PP eyes has emerged in the context off a low discount rate. Some claimants are still going to want p pios, particularly extensive care needs. I'm particularly where there's the uncertainty of investment returns on. Given the linkage if you like are people, goes by the annual survey of ours and Earnings index to the real cost of people's future candidates. The discount rate increase reduces the potential lump sum award due to lower Ogden multiples. That's frank. So it may be that with the rate increasing, periodical payments might be MAWR attractive to claimants certainly cases like a jeweler and eastern power, the court said the act doesn't require AH judge to be assured of complete security and respect PPS payments. But proper remote approach must be reasonable. Security reasonable must mean reasonable When deciding what's reasonable security, a judge must in good sense take some core pissants off the alternative future periodical payments we've seen from a K school young on Bennett Naqura, most from last year. How certain how secure are periodical payments in this current climate, with all the uncertain political situations we have. But again, the bar seems to be quite low. The court are likely to be persuaded that P P o. It does have security attaching to it our core awarding damages future pecuniary loss In respect of P, I may, of course, order that damages wholly or partly take the form of periodical payments. That's something the court may decide for themselves. We know that the practice direction talks about the factors that the court will take into account on. They certainly will take into account the preferences off the parties on. The reasons for those preferences is something we've got to give careful thought to when we're deciding whether or not people here is the right way to proceed in the light off the current discount rate, we know that part seven multi track cases issued since April 2013 a subject to cost management. Largely, I put the exceptions on your slide, but largely that's the case. We have to consider the possibility that if more works needed, for example, rewriting a schedule or getting further financial advice, this needs to be factored into the cost budget on certainly the practice direction three e at our people in 76 I would suggest that those changes would be significant developments sufficient to justify a change in the cost budget summary. The new rate is relevant from the 5th August 2019. The review will be in the next five years. Future reviews will be advised by an expert panel. The Lord Chancellor published reasons for the future rate change on prior to the civil liability at reforms. There were no fixed intervals for the periods in which the discount rate be set on. The last word on this Scottish government actually has decided that the discount rate in Scotland remains unchanged off miners nor 0.75 sent on that follows a review of the right, which took place on the 27th of September in 2000 and 19. I hope that's been helpful, Webinar and thank you very much for listening
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