The High Court has settled what is claimed to be the first case following yesterday’s change to the discount rate, awarding a 10-year-old girl an increase of over £5.5m on her capitalised settlement of £3.8m.
On 16 March 2017, the High Court approved the agreed quantum settlement in the case of LMS v East Lancashire Hospitals NHS Trust, a cerebral palsy case, on the basis that the claimant was to recover 50% of the full value of her claim calculated at the new minus -0.75% discount rate.
According to the lawyers acting for the claimant, at a joint settlement meeting in January 2017, it was agreed that she would receive a lump sum of £1,320,575, periodical payments of £50,000 per annum to age 19 and thereafter for life £73,500 per annum, subject to court approval. The new discount rate increased the lump sum to £2,122,398.
The capitalised value of the joint settlement agreement was £3,772,500 under the old discount rate. The capitalised value of the approved award at the new rate was £9,296,673.
Michael Redfern QC of St John’s Buildings, counsel for the claimant, said: “The new discount rate is particularly important in cases where liability is apportioned. The large increase in lump sum awards is offset by lack of return on lump sum low-risk investment and the ability to keep pace with inflation.
“Periodical payments remain a paramount consideration in every case as they remain tax free, index linked, guaranteed and certain. They last for the claimant’s life, which is more than can be said for a lump sum award with little if any safe, low risk investment returns available.
“We welcome the new discount rate, the first change in 17 years, which addresses the actual lack of meaningful return on safe lump sum investment opportunities.”
The claimant’s solicitor, Leonie Millard of Forbes Solicitors in Accrington, added: “The benefit for the claimant, who was only entitled to recover 50% of her damages, from the new discount rate, is immense.
“It vastly improves the long-term future financial ability to meet her needs for the rest of her life, which is expected to be long. Her parents are comforted to know that there is funding to ensure that her needs are properly met when they are no longer around.”