Litigation Litigator's View 14/2/00

Elizabeth Melville on changes to PI awards' interest rate. Elizabeth Melville is a barrister at Old Square Chambers.

Claimants in personal injury cases could soon see an increase in the levels of compensation awarded for future financial losses, such as lost earnings and the cost of nursing care, if a recent decision in the Newcastle District Registry is anything to go by.

The case of Neville v Teams Roofing Ltd, which was heard between 12 and 18 January 2000, concerned a 29-year-old man who had suffered brain damage when he fell 40ft through a roof at work.

Mr Recorder Nolan QC, sitting as a deputy High Court judge, accepted the argument of the claimant's counsel, Matthias Kelly QC, that the interest rate to be adopted when selecting the multiplier for future loss was 2 per cent, rather than the 3 per cent which has applied since the decision in Wells v Wells [1998].

Kelly argued that since the decision in Wells, the rate of return on index-linked government stock has continuously fallen and the judge accepted that the rate of 3 per cent decided in Wells was not set in stone. The effect of the judge's decision was to increase Neville's award by £95,000.

This is the first award in the UK to depart from the 3 per cent rate, despite the Ogden Working Party's recommendation in April last year that the appropriate rate of return is 2 per cent. The defendant was given leave to appeal.

The decision comes at a time when damages for non-financial loss in personal injury cases (for "pain, suffering and loss of amenity") are under review.

On 19 April 1999, the Law Commission published its report number 257 recommending the level of compensation for non-financial losses should be increased by between 50 and 100 per cent and in a few weeks time the Court of Appeal is due to hear a number of appeals on this point. (see forthcoming case)

In Neville, although the judge awarded general damages of £80,000, stating that he was constrained to do so by the authorities, he said that had he not been so constrained he would have doubled that part of the award to £160,000. The claimant has leave to appeal this part of the decision.