Damages

Personal injuries - damages - discount rate applicable in assessing lump sum for future pecuniary loss - 3% discount rate mandatory and no reduction for impact of higher rate tax on fundWarren v Northern General Hospital Trust: CA (Stuart-Smith, Mummery and Tuckey LJJ): 4 April 2000The claimant brought an action against the hospital for damages for cerebral palsy resulting from delay in treating foetal distress at birth.

The hospital admitted liability.

In assessing damages for future pecuniary loss, the judge refused to reduce from 3% to 2% the discount rate laid down in Wells v Wells [1998] Gazette, 16 September; [1999] 1 AC 345 because of the lower interest rates now available from index-linked government securities.

He awarded the claimant 3.1 million, including a sum in respect of pain, suffering and loss of amenity.

The claimant appealed on the ground that the judge ought to have reduced the discount rate.

It was further contended on appeal that the multiplier should be increased, or the discount rate be reduced, to counteract the effect of higher rate tax.Stephen Irwin QC and Robin Oppenheim (instructed by Irwin Mitchell, Sheffield) for the claimant.

Philip Havers QC and Mary O'Rourke (instructed by Trowers & Hamlins) for the hospital.Held, dismissing the appeal, that courts were bound to apply the 3% discount rate laid down in Wells v Wells until the Lord Chancellor had set a new rate under the s.1 of the Damages Act 1996; that, in any event, the reduction in the return rate of index-linked government securities alone was not a sufficient change of economic circumstances to justify a change in rate; and that since higher rate tax would only reduce the compensating fund to within 0.5% of 3%, it was not a 'very exceptional case' so as to justify the court increasing the multiplier or reducing the discount rate.