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States unanimously back new damages law

States unanimously back new damages law

Wednesday 30 January 2019

States unanimously back new damages law


A new law governing compensation payments for damages - which comes in the wake of a case against the States initially involving one of the largest claims in UK legal history - has been unanimously agreed by the island's politicians.

The damages law allows for various discount rates to be applied to compensation pay-outs as well as enabling the awards to be paid over a period of time, rather than in one lump-sum.

In the lead-up to the debate, the proposal garnered support from the island’s medical community who said that the prospective threat of substantial damages suits is driving up their insurance premiums.

The proposition for the new legislation was brought by Chief Minister who addressed the Chamber on the principles of the law ahead of yesterday’s vote. Chief Minister Senator John Le Fondré summarised the principles of the damages law to the Assembly, describing the legislation as "long overdue".

He said: “In lodging the draft law, we do not purport to address all the complexed and potentially contradictory positions that such legislation generates. What we have done is provide a sound, legal basis for setting a discount rate and for the imposition of periodic payment orders. We’ve acted in the public interest to reduce risk and uncertainty whilst providing this Assembly extensive powers to deal with the methodology for determining the discount rate in future and for determining the circumstances in which a PPO can be altered.”

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Pictured: Senator John Le Fondré, who argued in favour of the new damages law in the States.

This comes in the wake of the States themselves being a defendant in a lengthy and complicated trial where two siblings claimed they could have avoided a decade of “appalling” abuse if a former Health Minister had put them up for adoption as babies. 

This case, which was initially expected to be the one of the largest personal injury claims in UK legal history with the siblings claiming £100million each in compensation, preceded bringing this new legislation to temper the size and payment of compensation claims. 

The discount rates will apply as follows: 

  • where the compensation award covers a period of up to 20 years, a discount of 0.5% is applied;
  • where the compensation award covers a period of more than 20 years, a discount of 1.8% is applied.

The rationale behind the law is to restrict the possible income that can be earned on compensation sums. The proposition reads: “the claimant should be fully, but not overly, compensated for their loss.

“The court must determine the amount the injured person needs to cover their loss, but that calculation must include both the capital sum and income earned on that sum. If not, the injured person, or those who inherit their estate, may be over-compensated.” 

The law also provides a mechanism to drip-feed compensation awards rather than paying them in one lump sum. Called ‘periodical payment orders’, this allows “for damages to be paid periodically as opposed to being paid in a single lump sum” without the “need to worry about investment returns or life expectancy.” 

None of the States Members spoke against the proposition during yesterday’s debate, but there were calls from a handful of politicians to ensure that the required regulation is put in place to keep tabs on how this legislation is being used by the Court system.

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Pictured: Deputy Jess Perchard who argued that the new law had been rushed.

Despite voting in favour of the legislation, Deputy Jess Perchard expressed a number of concerns about the new damages law, including the “hasty” fashion in which it was brought through the drafting process whereby, she said, the Corporate Services Scrutiny Panel was put under “a great deal of pressure”. The Deputy also added that she was apprehensive about the States legislating these damages restrictions when they themselves have been the defendant in large-scale personal injury cases: "I have raised my concerns about the ethics of legislating as a defendant in the case. In this large law case that [the Chief Minister] referred to was one in which the States was the defendant and I do take issue with that on a kind of personal, moral level.”

Arising from these concerns, Deputy Jess Perchard urged her fellow representatives to continue to monitor the way this legislation is being implemented after it is passed by the Assembly.  

“It is absolutely essential that we keep our eagle eyes on developments of the regulations which Scrutiny have asked to be delivered within three months," Deputy Perchard advised.

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