Case Alerts

Mrs Siu Lai Ho v Miss Seyi Adelekun [2019] EWCA Civ 1988

Case Background

The underlying accident occurred on 26/6/12 with the claim notified within the RTA Protocol on 15/1/14. Absent a liability admission the claim left the Protocol with Part 7 proceedings commenced on 7/1/15. The claim was allocated to the Fast Track. On 18/1/17 the Claimant applied for re-allocation to the Multi Track as the claim value had increased. That application was listed to be heard on 24/4/17. On 19/4/17 the Defendant made a Part 36 offer of £30,000. On 20/4/17 the Defendant chased a response to the offer and advised they consented to the re-allocation to Multi Track. On 21/4/17 the Claimant accepted the offer and attached a Tomlin Order. That draft Order provided for the Defendant to pay “the reasonable costs of the Claimant on the standard basis to be subject of detailed assessment if not agreed.”. The Defendant asserted fixed costs only were payable whereas the Claimant asserted that hourly rate/non fixed costs were payable.

Decision

The first Appeal was heard before His Honour Judge Wulwik. It was held that the fixed costs regime was not applicable. The basis of the decision was that the terms provided for in the agreed Tomlin Order were not consistent with an agreement to pay costs on the usual basis of fixed costs. It was further noted that by time of agreeing that Order the Defendant had agreed to re-allocation to the Multi Track and the costs provision in the Order was therefore entirely consistent with re-allocation to the Multi Track.

Dispute before the Court of Appeal

Both parties focussed upon the Defendant’s offer letter of 19/4/17 with neither party arguing before the Court that the Claimant’s response to that letter was a counter offer or that the Tomlin Order was important. The Claimant argued in the alternative the claim ought to have been re-allocated to the Multi Track.

The relevant part of the offer letter was as follows:

“If the offer is accepted within 21 days, our client will pay your client’s legal costs in accordance with Part 36 Rule 13 of the Civil Procedure Rules such costs to be subject to detailed assessment if not agreed.”

The Claimant placed reliance upon the reference to CPR 36.13 and particularly the words “such costs to be subject to detailed assessment if not agreed”. It was said the reference to CPR 36.13 rather than CPR 36.20 indicated an offer for conventional costs not fixed costs with such confirmed by the following wording. It was further said that the case circumstances supported that as logical, namely the agreement to re-allocate to the Multi Track.

Decision

The Court decided that the offer letter did not offer to pay anything other than fixed costs.

• It was held that a reference to CPR 36.13 rather than CPR 36.20 was not of “any great significance”. The standard form N242A similarly contains a reference to CPR 36.13 and none to CPR 36.20. What matters more is that CPR 36.13 itself highlights that CPR 36.20 applies to a claim formerly under the RTA Protocol. If the offer letter had stopped at “Part 36 Rule 13 of the Civil Procedure Rules” there could have been no real question of the matter being removed from fixed costs.
• It was held that the Defendant was intending to make a compliant Part 36 offer. The letter would not however have contained a valid Part 36 offer if it proposed anything other than fixed costs as the “self-contained procedural code” of Part 36 makes it plain that fixed costs are to apply.
• It was held that the reference to “detailed assessment” was far from ideal but not wholly inapposite as the fixed costs regime does involve an assessment of some kind. It would not therefore displace fixed costs where other indications suggested fixed costs.
• It was held that it was inherently improbable that a reasonable recipient of the letter would have believed the letter to offer conventional rather than fixed costs on the basis that fixed costs could be expected to be It was held that the fixed costs regime is designed to ensure that both parties begin and end the proceedings with the expectation that fixed costs will be paid.
• The Court finally decided that it was not appropriate to re-allocate the claim to the Multi Track as there was not jurisdiction to do so in this case and such would run counter to the agreement of the parties for payment of fixed costs.

Comment

The case will provide a sigh of relief to those Defendants who have settled claims on less than clear terms. The Court did however conclude with a clear warning to Defendants that it would be wise to take note of: “For the future, a defendant wishing to make a Part 36 offer on the basis that the fixed costs regime will apply would, of course, be well-advised to refer in the offer to CPR 36.20, and not CPR 36.13, and to omit any reference to the costs being assessed.” As noted above the precedent form N242A refers only to CPR 36.13 not CPR 36.20.

A final point of interest concerned the disapplication of fixed costs where the matter is re-allocated to the Multi Track from Fast Track. The Court of Appeal seems to cast doubt upon the view that in such cases fixed costs are disapplied entirely. Rather the Court suggested the “more natural” interpretation may be that fixed costs apply up to re-allocation to Multi Track with conventional costs thereafter. While re-allocating is not common it is not unknown by any means and may present the Defendant with the benefit of limiting costs in part at least to fixed costs in such cases.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Chris White, Associate & Technical Director

T: 0113 4681 659   |   M: 07557 430 241   |   E: chris.white@plexuslaw.co.uk

Jonathon Tetley, Partner

T: 0113 4681 642   |   M: 07879 424 806   |   E: jonathon.tetley@plexuslaw.co.uk

 

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

Global Assets Advisory Services Ltd v Grandlane Developments Limited [2019] EWCA Civ 1764

Issue

The case concerned the Court’s ability to award an interim payment in respect of costs following settlement of a claim pursuant to a Part 36 offer. The position had previously been, following the High Court decision in Finnegan, that the Court lacked jurisdiction to award an interim costs payment in such circumstances. The basis being that Part 36 was a complete code, Part 36 did not provide any mechanism by which the Court could make such an Order and CPR 44.2 was only relevant in circumstances where the Court was making a costs Order (compared to the automatic deemed Order made following Part 36 acceptance).

Law

The power for the Court to order a payment on account of costs is contained within Civil Procedure Rule 44.2(8) which provides:

“Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.”

The question was whether that Rule could be invoked in Part 36 acceptance cases.

Decision

The Court found that there was no reason why the power under CPR 44.2(8) should be restricted solely to circumstances in which the Court has physically made a costs Order rather than one being deemed to be made. In both circumstances it was held that the Court had made the Order, a deemed Order was still an Order of the Court but achieved through a proportionate and resource saving route. It was considered that the rationale for an interim payment, namely to permit a receiving party to recover part of their expenditure ahead of any assessment, was the same whether or not the Order was deemed to have been made. It was decided that the wording of CPR 44.2(8) also could not form the basis of a distinction between cases in which the application for an interim payment was heard by the Trial Judge or not. It applies whether or not it is the Trial Judge hearing an application for an interim payment.

The Court noted that although a “self contained procedural code” there was nothing within Part 36 to suggest it is entirely freestanding and that all costs consequences of a Part 36 offer are to be found solely within Part 36 itself. Given the ability to look outside Part 36 itself the Court considered that there was no conflict or tension present in the Rules. Part 36 gives the entitlement to costs and CPR 44.2(8) creates the jurisdiction to award an interim payment in respect of those costs.

Comment

Going forward paying parties will no longer be able to rely upon the Finnegan decision in order to avoid making a payment on account of costs in cases that settle pursuant to a Part 36 acceptance. This decision may once again result in a flurry of applications for interim payments by Claimants at the conclusion of the case. Those applications are in the main very likely to succeed. The presumption in the Rule is that a payment “will” be ordered unless there is “good reason” not to do so. While there is no guidance as to what constitutes good reason it is likely to be considered a high bar and therefore rarely indulged. Defendants should be very cautious indeed in declining interim payments as an application is likely to swiftly follow with a costs liability likely to attach. In the generality of cases a prompt interim costs payment is no bad thing as it does mitigate interest on costs that otherwise accrues at an almost punitive rate of 8% per annum.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Chris White, Associate & Technical Director

T: 0113 4681 659   |   M: 07557 430 241   |   E: chris.white@plexuslaw.co.uk

Jonathon Tetley, Partner

T: 0113 4681 642   |   M: 07879 424 806   |   E: jonathon.tetley@plexuslaw.co.uk

 

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

 

Philip Aldred v Master Tyreese Sulay Alieu Cham [2019] EWCA Civ 1780

Issue

The case concerned the recoverability of the cost of an advice from Counsel obtained in respect to the settlement of an RTA claim where the Claimant was a minor. The claim was subject to the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents. The claim fell out of the Protocol as liability was denied. It was then settled prior to Court proceedings with Part 8 approval proceedings commenced. As a result the costs to be recovered by the Claimant were fixed.

Law

The costs were fixed in accordance with CPR45.29C with the provision as to disbursements set out at CPR45.29I, which states (as far as is relevant to the present matter):

(1)   Subject to paragraphs (2A) to (2E), the court:

         (a)   may allow a claim for a disbursement of a type mentioned in paragraphs (2) or (3); but

         (b)   will not allow a claim for any other type of disbursement.

(2)   In a claim started under the RTA Protocol, the EL/PL Protocol or the Pre-Action Protocol for Resolution of Package Travel Claims, the disbursements referred to in paragraph (1) are:

         (h)   any other disbursement reasonably incurred due to a particular feature of the dispute.

Decision

The Court considered the term “particular feature of the dispute” and decided that the fact that in any case the Claimant was a child or unable to speak English is nothing to do with the dispute itself. Age and linguistic ability are all characteristics of the Claimant regardless of the dispute. They are not generated by or linked in any way to the dispute itself so cannot be said to be a particular feature of that dispute.

In the present case the advice of Counsel was necessitated by the Claimant’s age and not by any particular feature of the dispute. It was therefore not held to fall within the scope of the rule.

The Court went on to consider whether the fee would be recoverable if they were wrong on the feature of the dispute. The Court considered that if the item of work done by Counsel is deemed to be within the fixed costs (profit costs) in Table 6B the fee of Counsel will not be recoverable in addition. It was considered that was the case for the “vast majority of counsel’s fees”. The Court finding that this item of specific work must be deemed as already included within Table 6B and therefore no separate charge could be recovered. The basis for such being it is an item of work that arises in thousands of claims, it is a routine step and so must be deemed included in Table 6B.

The Appeal was allowed with the Counsel fee disallowed.

Comment

The case puts to rest the question of whether the advice of Counsel for approval is recoverable in these fixed costs cases. It however, goes much further and will be of great assistance to those routinely handling fixed costs work for Defendants (be that RTA, EL or PL claims).

The case specifically references language difficulties as not being a feature of the dispute. Going forward claims for interpreter fees, which can often be substantial, should be disallowed.

The case further supports the view that routine work that often arises in a claim must be deemed to be provided for in the fixed costs (profit costs) tables. Therefore the frequent use of Counsel in such claims to settle Particulars, advise and so on should be argued as provided for within the Table and thus should not attract an additional disbursement.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Chris White, Associate & Technical Director

T: 0113 4681 659   |   M: 07557 430 241   |   E: chris.white@plexuslaw.co.uk

Jonathon Tetley, Partner

T: 0113 4681 642   |   M: 07879 424 806   |   E: jonathon.tetley@plexuslaw.co.uk

 

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

 

 

 

 

 

The Court of Appeal addresses whether QOCS can be disapplied in certain types of claims

The Court of Appeal’s decision in the case of Andrea Brown v The Commissioner of Police of the Metropolis & The Chief Constable of Greater Manchester Police [2019] EWCA Civ 1724 provides long awaited judicial guidance regarding proper interpretation of the ‘mixed claim’ exception found at CPR 44.16(2)(b) of the Qualified One-Way Costs Shifting regime (‘QOCS’). In Brown, the Court of Appeal judges found that QOCS protection does not automatically shield a Claimant from an adverse costs order in proceedings that encompass both a claim for damages for personal injury and a claim other than a claim for damages for personal injury, a so called ‘mixed claim’.

The QOCS regime provides costs neutrality in claims for personal injury damages ensuring that an injured Claimants’ liability to pay costs does not exceed the sum of the damages and interest they recover in the proceedings. The decision in Brown does not seek to depart from this core principle but does offer a straightforward interpretation of the meaning of the ‘mixed claim’ QOCS exception. There had previously been opposing views on whether such a claim attracted QOCS protection or not.

In the first instance decision of Brown back in 2016, the Claimant was awarded £9,000 in damages for her successful claims for damages under the Data Protection Act, Human Rights Act and for misuse of private information. Her other claims included a claim for damages for personal injury which failed. The Claimant consequently failed to beat the Defendants’ Part 36 offer of £18,000. The trial Judge however granted the Claimant QOCS protection against the Defendant’s costs (over the sum that she recovered), on the basis that her injury followed as a consequence of each of her other claims. The Defendants appealed.

Drawing authority from the prior decisions of Jeffrey v Commissioner of the Metropolis [2017] EWHC 1505 (QB) and Siddiqui v The Chancellor, Masters and Scholars of the University of Oxford [2018] EWHC 536 (QB), the Court of Appeal found that the proper interpretation of CPR 44.16(2)(b) was that QOCS protection only applies to claims for damages for personal injury and not other types of claims meaning there was ‘no justification for allowing claims which are not claims for damages for personal injury (such as, for example, the data protection or police misconduct claims which were successful in the present case) to attract automatic QOCS protection’ (paragraph 32).

For the purpose of QOCS, the meaning of a claim for damages for personal injury was distinguished as being not just a claim limited to pain and suffering but including all other claims consequential upon the personal injury such as medical treatment costs, accommodation adaptions and loss of earnings. This finding dealt with arguments advanced by the Claimant that by limiting QOCS to claims for personal injury only, there would be a restriction to Claimants seeking access to justice. It was only claims not consequential or dependent upon the incurring of a personal injury that the ‘mixed claim’ QOCS exemption is likely to catch – such as claims for vehicle damage and alternative vehicle hire in road traffic accident cases or data protection act and police misconduct claims in Brown.

The Court of Appeal specifically found that there was nothing to indicate that automatic costs protection in respect of claims for non-personal injury damages was ever intended or required. To extend protection to such claims would require amendment to the CPR. In a recent consultation paper, the Ministry of Justice is not at present convinced that this is currently justified.

Applying or disapplying QOCS protection in mixed claims will ultimately fall to the judge’s discretion on costs with the impetus being on preserving costs neutrality in proceedings that ‘can fairly be described in the round as a personal injury case’ (paragraph 57) thus upholding the principles and intentions of QOCS. However, the judgment warns that it would be wrong to conclude that such discretion ought to always be exercised in favour of Claimants given the potential for abuse of the QOCS regime by tacking on a claim for personal injury damages in a mixed claim regardless of its merits. It would appear a balancing act is now required by judges in applying their discretion to disapply QOCS or not in mixed claims.

The decision in Brown ought to give confidence to parties defending mixed claims that QOCS can be disapplied and costs (or costs over the damages sum if paid) can be recovered in the event that mixed claims are successfully defended. Further, those defending civil actions against police forces can be encouraged that when dealing with cases that involve both personal injury and non-personal injury elements, costs are capable of being awarded against losing Claimants. Even in cases where recovery of those costs is unlikely, securing a costs order against a Claimant, particularly where the Claimant may be pursuing multiple claims, can be of significant procedural benefit. Finally, those dealing with RTA cases should also take note of the judgment. Whilst emphasis was placed upon ensuring costs neutrality, in cases where a non-personal injury aspect of the case is exaggerated, but falls short of fundamental dishonesty, it will be at the discretion of the judge to make a finding on the issue of costs. One wonders if a challenge may arise in this type of case in the future, seeking to argue that where the exaggeration is significant, the underlying costs neutrality of QOCS should be removed and an adverse costs order made against the Claimant.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Andrew Steel, Partner

T: 0161 245 7965   |   M: 07557 232 419   |   E: andrew.steel@plexuslaw.co.uk

Fred Adams, Solicitor

T: 0161 245 7970   |   M: 07786 333 655   |   E: fred.adams@plexuslaw.co.uk

 

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

Esther Odewale v London Borough of Tower Hamlets, HHJ Baucher, 10/10/19

Overview

The Claimant (C) alleged she had suffered serious injuries after tripping on a defective pavement in February 2014. The claim had a pleaded value of up to £200,000 and C sought to recover in excess of £140,000 in costs. Primary liability had been admitted.

In her judgment HHJ Baucher concluded that C’s claim was fundamentally dishonest for the purposes of both s.57 of the Criminal Justice and Courts Act 2015 (CJCA 2015) and CPR 44.16. Further, HHJ Baucher ordered that covert surveillance footage obtained by D and relied upon at trial must be served upon the Department for Work and Pensions (DWP). But for the dismissal of the claim, C would have been awarded the sum of £71,096.35, reduced to £53,322.26 after a finding of 25% contributory negligence.

The evidence upon which HHJ Baucher relied when finding that C had been fundamentally dishonest emphasises: the importance of ensuring comprehensive disclosure; and, the impact covert surveillance can have in undermining claims where it is suspected that exaggerated restrictions in mobility are being reported to medico-legal experts. Most notably, the case also demonstrates the potential evidential potency of reporting medical experts, where appropriate, recording their examinations of claimants.

Extent of Reported Symptoms

C relied upon having developed fibromyalgia/myofascial pain syndrome as a result of her injuries and claimed for losses including loss of earnings and care and assistance. At points during the litigation C had reported to experts that her symptoms were so severe that she struggled to open her refrigerator door and did not even have sufficient grip strength to hold a china cup.

On 20/08/16 C attended an examination with her reporting Pain Consultant, Dr Hanu-Cernat, and presented with such ‘high levels of pain grimacing and vocalising’ that Dr Hanu-Cernat could not clinically rely upon a number of the tests she carried out during her examination.

Disclosure – DWP Records

Disclosure of C’s DWP records had been obtained which documented that following her injury in February 2014 she had deemed it necessary to apply to the DWP for Personal Independence Payment (PIP). However, C’s first two PIP applications had been rejected. The third was also rejected initially but was granted following an appeal.

Analysing and contrasting C’s PIP applications revealed that within each subsequent application she had reported both an increasing number of different chronic health conditions and increasingly severe symptoms in respect of each condition. At one stage C had reported that she had to be accompanied when at home because she could fall over at any time, and, she even struggled to turn the pages of a book. Pivotally, within the applications C repeatedly reported that she was incapable of walking a distance of 200m.

Importantly, each of C’s PIP applications contained a declaration that C was obliged to inform the DWP should her symptoms improve, and, each application was supported by a signed statement of truth.

Footage of Medico-Legal Examination – Dr Peter Evans, Consultant Anaesthetist

Dr Peter Evans was instructed to report in respect of C’s alleged chronic pain. On 19/12//17 C attended his examination. Dr Evans, with C’s consent, recorded the component of his examination during which C was asked to demonstrate her range of movement and physical capabilities generally. The footage documented, amongst other things, C exhibiting grimacing when getting out of her chair and, pivotally, her struggling to walk the very short distance from one side of Dr Evan’s examination room to the other.

Covert Surveillance Footage

Surveillance operatives were instructed to obtain covert surveillance footage of C, deliberately timed so as to include C leaving her examination with Dr Evans. The footage documented C walking entirely normally from the examination to Hammersmith Station, a distance of approximately half a mile, in around 10 minutes without stopping, only a short time after she had struggled to walk across Dr Evan’s examination room.

Trial

The four days trial involved oral evidence from experts in pain management and psychiatry. In summary C’s case included arguments that many of the inconsistencies in her reported symptoms were due to her having “good days and bad days”. This is, of course, an explanation which is all-to-often relied upon by claimants alleging chronic pain when they are presented with inconsistencies in their reporting and/or surveillance footage which undermines the restricted mobility upon which they rely. However, in respect of the surveillance footage obtained on 19/12/17, C could not rely upon a “good days and bad days” argument because D had the benefit of the examination footage obtained by Dr Evans prior to C walking the half a mile from Charing Cross Hospital to Hammersmith Station with apparent ease.

Under cross-examination C attempted to rely upon having taken a large dose of Tramadol immediately following her examination by Dr Evans and it having afforded her sufficient pain relief to walk as shown in the surveillance footage. Whilst giving evidence Dr Evans very easily debunked C’s explanation by explaining that, on a pharmacological basis, it was not possible for Tramadol to have had such an effect within the relevant timeframe.

Comments

Not only did the contrasting examination and surveillance footage undermine C’s claim per se, it also undermined the veracity of what C had been reporting to the DWP in order to obtain PIP payments over the last five years, including that she was unable to walk more than 200m. As above, HHJ Baucher ordered that the covert surveillance evidence in the case be served upon the DWP.

Fibromyalgia and myofascial pain syndrome are, by their very nature, diagnoses which depend almost entirely on the symptom’s claimants report to experts. In this case C’s DWP records were pivotal because they documented her painting a very different picture to the DWP in respect of the nature, cause and extent of her symptoms when compared to what was being reported to the medical experts in the case. Ensuring claimants disclose all relevant documents and reviewing them forensically is, of course, the cornerstone of properly defending personal injury claims.

This case also, once again, demonstrates the potential potency of covert surveillance evidence, especially in cases where claimants rely upon severe restrictions in mobility. In this case the surveillance evidence was fatal to C’s claim and resulted in D obtaining a declaration of fundamental dishonesty and, as follows, an order that Qualified One-Way Costs Shifting (QOCS) be disapplied, and, D obtaining an enforceable order that C pay its costs (subject to s.57(5) of the CJCA 2015). However, the novel aspect of this case is undoubtedly the examination footage obtained by Dr Evans. Without it the Court would have had to have heard from both C and Dr Evans in respect of C’s behaviour during her examination on 19^th December 2017 and reached its own conclusions. The examination footage meant C’s exaggerated pain behaviours during examination could actually be observed and contrasted with the surveillance footage.

There are, of course, certain areas of medical expertise, such as psychiatry, in which medico-legal experts would consider the filming of an examination to be inappropriate. However, in cases such as this which involve assertions of severe restrictions in mobility, defendants should consider enquiring if their preferred orthopaedic and/or pain management experts are willing to record appropriate parts of their examinations as they may later find the footage provides an invaluable contrast to any covert surveillance footage obtained.

The Defendant was represented by Mark Dyson, Partner, Plexus Law, London and by trial counsel James Rozier of Farrar’s Building.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contact at Plexus Law:

Mark Dyson, Partner

T: 020 8774 0758   |   M: 07879 400 511   |   E: mark.dyson@plexuslaw.co.uk

 

Whilst we take care to ensure that the material in this Case Alert is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Case alert do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Case Alert.

The Government Actuary Department has this morning announced that the Discount Rate in Scotland will remain at -0.75%, in his role as the ‘rate assessor’ (under the Damages (Investment Returns and Periodical Payments) (Scotland) Act 2019).

It had widely been predicted that Scotland would likely move to the same rate as England at -0.25. However, as the rate is likely to be in force for 5 years, the Actuary considered how the expected returns on investments have changed between December 2018 and June 2019. The new rate reflects a downturn in assumed returns (-0.38%) due to recent volatility in investment markets linked to short-term political and financial uncertainties. The rate is based on a return of RPI +0.50% pa. Had it been set under the mechanism in the previous Act (average yields on Index-Linked Gilts) the rate would have been in the region of RPI-2.0% to RPI-1.5% pa. So small comfort, but it could have been worse.

As expected the Actuary also assumed a passive investment approach. As we know, people are generally not that risk averse, and investments made and returns achieved are in reality generally more favourable. However, a more active investment approach was rejected as resulting in inconsistency, including the higher expenses incurred by such an approach. He has applied -0.75% adjustment for tax and costs of investment advice and management and a further -0.5% for further margin in relation to right of return.

Whilst provision is made for consultation by the Actuary under the Act, the Actuary chose not to do so. The Government Actuary has recommended that the Discount Rate is reviewed again when the consultation on the RPI (set to begin January 2020) is concluded. We recommend that appropriate representations are made in relation to this.

It is disappointing that this results in inconsistency between the rates in England and Scotland. We may see more forum shopping in high value/catastrophic actions as a result.

For your ease, a link to the full review and determination is available by clicking here.

To view/download as a PDF please click here.

If you would like to know more about this matter, please speak to your contacts at Plexus Law:

Cameron McNaught, Partner

T: 0131 3229 252   |   M: 07972 638 356   |   E: cameron.mcnaught@plexuslaw.co.uk

Laurie Traynor, Partner

T: 0131 3229 253   |   M: 07972 638 357   |   E: laurie.traynor@plexuslaw.co.uk

Whilst we take care to ensure that the material in this Legal Update is correct, it is made available for information only, and no representation is given as to its quality, accuracy, fitness for purpose, or usefulness. In particular, the contents of this Legal Update do not give specific legal advice, should not be relied on as doing so, are not a substitute for specific advice relevant to particular circumstances. Plexus Law accepts no responsibility for any loss which may arise from reliance on information or materials published in this Legal Update.