This blog is by William Audland QC of 12 King’s Bench Walk.

Following a trial this summer, judgment is presently awaited on the following questions: (1) whether Jersey customary law permits the making of a PPO; and (2) the determination of the appropriate discount rates in Jersey. Judgment is awaited.

In a surprise development last week, the States of Jersey published the Draft Damages (Jersey) Law 201 which will:

  • set a statutory discount rate;
  • create a statutory power to award damages by way of a PPO to cover future care costs and lost earnings.

The discount rates proposed are expressly stated to have been:

  • informed by the consultation launched jointly by the MOJ and the Scottish Government into the discount rate, and which included detailed analysis by the UK Government Actuary’s Department into investment returns;
  • the product of a review conducted by the States of Jersey’s Senior Economist and the Director of Treasury Operations and Investments concluding that:
    • 15-year inflation data shows no long-term difference between inflation in Jersey and the UK respectively;
    • the UK Government Actuary’s Department’s analysis of investment returns in personal injury cases – to the effect that claimants in fact adopt a “low-risk” as opposed to a “very low-risk” strategy towards investment – was of equal validity in Jersey;
  • designed to fulfil the accepted principle of full compensation but acknowledged that there were differing views which had yet to be taken into account on certain issues (e.g. how to adjust for the management fees paid to investment managers and/or how to account for insurers’ concerns about the economics of the discount rate).

On that basis the appropriate discount rates would be:

  • where the lump sum is to cover a period of up to 20 years, +0.5%; and
  • where the damages will cover a period of more than 20 years, +1.8% (applicable to the whole of the award, not just the costs arising after the first 20 years).

From the date on which the Draft Law comes into force – that date being 7 days after the registration in the Royal Court if adopted by the States and sanctioned by the Privy Council – a court, including an appeal court, will apply the new provisions.

We will be keeping a keen eye on further developments in Jersey.

James Beeton Discount Rate, Periodical Payments

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