There has been much in the news, both legal and general, about the announcement of the revision of the ‘discount rate’.  This is the notional rate of return of investments, after allowing for inflation, against which awards of damages intended to cover future loss or future expenditure are calculated, so that at the end of the intended period (and not before) the entire sum will be spent. The Lord Chancellor is required to review this from time to time as inflation, interest rates and the investment market changes.  It was last reviewed in 2001 and set at 2.5%.  Subsequent governments and Lord Chancellors have declined to review it again until now, despite the change in interest rates and in the economy more generally.  In the light of the change in the economy and markets it has now been set at minus 0.75%.

The press has headlined the consequence that this will have in greatly increasing the level of awards of damages.  It will.  It will also mean that a claimant will be able to invest damages in a low risk environment and have a greater chance of having enough cash to cover the expected expenses or the expected losses as they are incurred or suffered.

Take a 30 year old man.  The multiplier to be applied to an annual loss he will suffer, or expense he will incur, to calculate the capital sum he requires now in damages for such loss of expenditure for the remainder of his life is now increased from 29.60 to 71.43, more than doubling the capital sum which will be awarded.  The multiplier to apply to the annual loss of earnings to retirement at age 65 is increased from 20.78 to 38.71, slightly less than doubling the sum.  For an item of expenditure required because of injury for 10 years, the multiplier applied to the annual sum is increased from 8.86 to 10.386 – a modest increase – but if required for 30 years the increase is from 21.19 to 33.658, and if 50 years, it is increased from 28.71 to 60.711.

What this demonstrates is that the increase resulting from this change is modest where the period concerned is fairly short, but very substantial for longer periods.  Therefore for most (modest) claims, the increase in damages will be modest, but for large claims, where typically damages are awarded for a substantial period of loss or expenditure, the increase in damages will similarly be large.  However in large claims a substantial part of the claim, such as future care costs, will not be paid in a lump sum but will be satisfied by the payment of periodical payments, which is a specified annual sum increased annually for inflation, paid to the claimant for life or for the duration of the expenditure or loss.  These periodical payments are not affected by the change in discount rate, although the insurer making such payments (and to a lesser extent the NHSLA) will have in mind the discount rate factors in making future provision to cover the periodical payments.

For many years claimants have been undercompensated because of the unrealistically high discount rate.  The change will improve the chances of compensation being adequate, but the uproar from the insurers paying damages (and the NHSLA) will almost certainly ensure the planned review of discount rates and their application to personal injury damages will result before too long in an increased rate, and reduced burden, on insurers and the NHSLA, and a reduction in compensation for injured claimants.

The actuarial tables can be found here so that you can carry out your own comparisons.

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A useful reminder of the expert’s duty of care when a patient demands treatment, and an interesting example of a judge criticising an expert’s behaviour while not regarding it as fatally damaging the expert’s evidence, arose in the case of Holdsworth v Luton and Dunstable Hospital [2016] EWHC 3347.

The insistent patient

The claimant underwent repeated knee replacement surgery (unicompartment followed by total knee) for persisting joint pain and was left with severe and disabling chronic pain.  Her case was that no reasonably competent surgeon would have carried out the first replacement surgery on her given her presenting circumstances.  The judge accepted the defendant’s evidence that the claimant had made it abundantly clear to the surgeon that she was intent upon having knee replacement surgery which she saw as the solution to her pain.  That fact however was irrelevant to the issue of whether the surgeon’s decision to carry out the surgery was negligent.

“But I stress (and it needs to be stressed) that the mere fact that a patient is insistent about receiving a certain type of treatment does not and cannot, of itself, justify such treatment being provided.  The mode of treatment must always be a clinical decision based upon a clinical assessment as well, of course, of taking into account the patient’s wishes.”

Excused inexcusable behaviour

Seeking to revise a joint statement (following a joint discussion) setting out the expert’s view after signing off on it is extremely unwise and unprofessional behaviour, whatever the excuse or explanation.  It throws serious doubt at the reliability of the expert’s opinion and demonstrates the expert’s lack of understanding of the role and importance of the whole process of the joint discussion and production of the joint statement.  One of the experts in Holdsworth did precisely this, then appeared to get away with it, but in the end had his expert opinion rejected by the judge.

“I bear in mind the justifiable criticisms which are made of Professor X in the way in which he dealt with revision of the experts’ joint statement after he had signed it off. I find his explanation of dyslexia as a reason for attaching his signature to the original joint statement, the contents of which he did not agree, somewhat baffling. I should record that Professor X was clearly embarrassed about the way in which he had dealt with the joint statement. However, I should equally make it clear that in evaluating the respective merits of the experts’ opinion, I do not attach any weight to his somewhat unprofessional approach to the preparation and revision of the joint statement. The reality is that, in the main, the views he expressed in evidence were properly reflected in the original draft of the joint statement.”

Failing to demonstrate independence of thought or failing to comply with the duty to assist the court is usually fatal to the expert’s credibility and the expert’s standing as an expert.  In Holdsworth the judge concluded that the opposing expert had become ‘an advocate in the cause’ in expressing his very positive view of the chances of success of the joint replacement surgery.  In some cases that would be enough to see that expert’s evidence rejected for all purposes.  However on important issues in dispute the judge still accepted the expert’s opinion because “I am satisfied that, in the main, he was giving his genuinely held opinion to the Court and doing his best to assist the Court.  In particular, the Court is bound to be impressed by his candour that he himself would not have carried out [the initial joint replacement surgery] in these circumstances.”

Moral

Two surprising escapes from disaster for the experts involved, but not escapes from serious criticism.  In 9 cases out of 10 the judge would have responded very differently and much less favourably to the credibility of the experts in the light of such criticism.

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