Isle Of Man Treasury Announce New Personal Injury Discount Rate – Litigation, Mediation & Arbitration – Isle of Man – Mondaq News Alerts
Isle of Man: Isle Of Man Treasury Announce New Personal Injury Discount Rate
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The Isle of Man Treasury has announced that a new discount rate
will be applicable to personal injury compensation awarded by the
Isle of Man Courts. The new discount rate will see a decrease from
+2.5 to -0.25%1
The Discount Rate is the figure which is ordinarily used when
calculating lump sum compensation payments for future losses in
high value personal injury claims. It is designed to reflect the
rate of return to be expected upon investment of the compensation
awarded and is calculated using a rate aimed to put the claimant in
the same financial position as if they had not been injured.
The decision to dramatically reduce the Isle of Man discount
rate follows a review of the UK Ministry of Justice’s
consultation into the methodology on which the old rate was based2 and
advice from the UK Government Actuary Department in relation to
factors specific to the Isle of Man.
The discount rate was last set by Treasury in 2014. It was
challenged in the High Court3 in 2017 on the basis that
the rate of 2.5% was said to no longer reflect the rate of return
which might be achieved upon investment of a lump sum award.
However, the challenge failed with the Court confirming that the
rate set by Treasury would be upheld by the Courts and only
departed from in exceptional cases where the specific facts of the
case meant that a different rate would be more appropriate, until
such time that it was amended by Treasury. The case in question was
not considered exceptional.
The new discount rate of -0.25% came in to operation on 17 June
2020, following approval of The Damages (Personal Injury) (Assumed
Rate of Return) Order 2020 by Tynwald on 16 June 2020 and will
apply to all future awards which compensate for future loss.
The reduction will substantially increase the sums which may be
awarded in high value cases involving a significant degree of
future losses.
A copy of The Damages (Personal Injury) (Assumed Rate of Return)
Order 2020 can be found here.
Footnotes
1 The Damages (Personal Injury) (Assumed Rate of Return)
Order 2020
2
https://www.gov.uk/government/consultations/setting-the-personal-injury-discount-rate-government-actuarys-advice-to-the-lord-chancellor
3 De Yoxall v Moore [4 August 2015] ORD 2009/17
(Unreported)
Originally published by Appleby, July 2020
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