Damages (Personal Injury) Order 2017 — House of Lords, 2017-07-18
Topic: Law and Crime
Edward Faulks (Conservative, Centre-right): My Lords, I congratulate my noble friend Lord Hodgson on bringing these matters to the attention of the House. I ought to preface my few comments by declaring an interest: I am a practising barrister and much of my practice is concerned with the application of the discount rate in calculating damages. Some of my clients will benefit from this and others will not, but I hope to be able to stand back to make a few general comments about the appropriateness —or, I fear, the lack of it—of the proposed changes As several noble Lords have pointed out, this came about in rather unusual circumstances. The noble Baroness, Lady Kramer, is quite right: it is adherence to a formula which is inappropriate. There may be some internal mathematical integrity about the exercise, but it bears little relation to the proper approach to the assessment of damages. We approach them on the basis that there should be full compensation, and nothing that I say should derogate from that—we think that claimants ought to be properly compensated—but how do we assess what the compensation should be It has always been said that by giving a claimant a lump sum, the one thing you are certain about is that the damages will be inappropriate. Either the sum will be too much, because the claimant dies earlier than expected, or it will not be enough. Either way, that is undesirable. That is one reason why judges often said that it would be much better for there to be periodical payments. From about 1996, periodical payments became part of the picture. With great respect, I rather disagree with the noble Lord, Lord Beecham, who seemed rather to distance himself from the advantages of periodical payments. Perhaps he did not—he was referring to the Law Society’s dislike of the overreliance on periodical payments If we are to approach the assessment of compensation on the basis that claimants should not be taking too much by way of risk, surely periodical payments offer a significant advantage. For example, the largest head of damage is often the future cost of care for a badly damaged claimant. Most claimants nowadays will seek periodical payments. Sometimes the cost may be £100,000 or even £200,000 for a long life, and life expectation has been increasing, particularly for brain-damaged babies and others severely affected. Periodical payments provide security, but if claimants are now to say, "No, I would prefer to have a lump sum", they are, as it were, saying, "I do not want the security provided by periodical payments". What then is the sense of awarding damages on the basis that they are an entirely risk-free investor? That simply does not make any sense The noble Lord, Lord Beecham, referred to the often somewhat unedifying disputes that exist between claimants’ lawyers on the one hand and insurers on the other. I distance myself from that and concentrate on the position of the NHS. The noble Baroness, Lady Kramer, referred to the MoD. The NHS will feel the effects of this measure very considerably. Speaking to a colleague of mine, a schedule of damages was priced before the discount rate operation at £9 million. It is now £23.5 million. Very often a standard brain-damaged baby case might have been on a lump sum calculation £10 million; it is now going to be £30 million. That is partly because life expectation of those claimants has vastly increased, but it is a result of the discount rate alteration.