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New law on awarding damages

30 January 2019

The States Assembly has approved the draft Damages Law, which allows for changes to the way damages payments are assessed and awarded to those who suffer serious, long-term injuries.

Jersey’s law requires that claimants receive full compensation for any loss suffered. If someone suffers an injury and cannot work again, they can claim for lost future income. If their injuries mean they need care and treatment in the future, the damages awarded will cover those costs.

The difficulty is that it is impossible to know exactly how much the claimant will need. Life expectancy and future care costs are particularly hard to predict, as the claimant's condition may worsen or improve.

Lump sum awards

A lump sum award must pay for care and compensate for loss over many years. Investing the award may increase its value over the years, but inflation will erode its value. The discount rate is the real rate of return that a claimant is predicted to receive on their lump sum, taking into account the predicted effect of inflation and investment return. It is a key factor for a court when calculating what a claimant needs to receive today, in order to meet future costs.

To date, the discount rate has been set by the Jersey courts on the basis of expert evidence and assumptions made in previous case-law, for instance the way claimants have invested large lump sum awards.

The new law sets a statutory discount rate using a realistic view of investment returns and long-term inflation. It upholds the principle of full compensation, while also reducing the risk of excessive awards that could affect the medical profession, public finances and the availability of insurance in Jersey.

Periodical Payment Orders

The law will also allow the court to award damages through Periodical Payment Orders. This means payments can be made annually, by the defendant or insurer, to cover care costs and lost earnings as they arise, rather than by making a single lump sum payment. This avoids the need to estimate life expectancy and to speculate on investment returns. It also eliminates the possibility that damages will run out before the claimant dies.

 Such awards can only be made where the court is sure that the future payments will be made, for example, if the claim is against the States or where payments by an insurance company are guaranteed by a reliable statutory compensation scheme.

Chief Minister, Senator John le Fondré, said “I am pleased this law has been approved by the States Assembly. I have been absolutely committed to ensuring this critical legislation was delivered in the shortest possible timeframe.

“It will now provide a sound basis for setting a discount rate and for allowing periodic payment orders. We have acted in the public interest to reduce risk and uncertainty, while continuing to safeguard the needs of people who have suffered injury, by ensuring they receive full compensation.”

The Law allows the Chief Minister to change the discount rate by Order, after consulting the Bailiff. ​

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