Discount rates of +0.5% or +1.8% to be applied dependent on whether award period is greater than 20 years
As the review of the discount rates in England, Wales and Scotland remain ongoing, the States of Jersey have moved to conclude their review of the discount rate, with the unanimous approval of the Draft Damages (Jersey) Law.
During the concluding debate, the Chief Minister of Jersey, John Le Fondre stated that the Draft Law was 'critical' and the Draft Law would ensure that plaintiffs received the correct level of compensation.
The Draft Law provides for the setting of a new two-tiered discount rate, and also creating a statutory power to award damages by way of a Periodical Payment Order to cover future care costs and lost earnings.
The Draft Law brings Jersey into line with England, Wales and Scotland by introducing a statutory discount rate and PPOs.
The discount rates provided by the approved Draft Law are as follows:
- +0.5% - where the lump sum is to cover a period of up to 20 years
- +1.8% - where the damages will cover a period of more than 20 years (applicable to the whole of the award, not just the costs arising after the first 20 years).
The Corporate Services Scrutiny Panel provided five recommendations relating to the Draft Law, including bringing forward the proposed debate in relation to the setting of Regulations " relating to the setting of the rate in future" from 12 months after passage to 3 months.
The application of the dual rate method has not been applied previously with any jurisdiction of the United Kingdom.
The Civil Liability Act and the Damages (Investment Returns and Periodical Payments) (Scotland) Bill do provide for the setting of dual rates, and we will be watching with great interest as to whether this will be considered in England, Wales and Scotland during their respective reviews.
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