Rodney Nelson-Jones on calculating interest for personal injury claims

In personal injury cases, the standard rate of interest on general damages for pain and suffering and loss of amenities was fixed at 2% per annum by the House of Lords in Birkett v Hayes [1982] 1 WLR 816; (1982) 2 All ER 70).


This has been confirmed as appropriate by the Court of Appeal in Lawrence v Chief Constable of Staffordshire [2000] The Times, 25 July.


The appropriate rate of interest for special damages is the rate, over the period for which the interest is awarded, which is payable on the court special account. This rate was reduced to 6% per annum on 1 February 2002. Interest since June 1987 has been paid daily on a 1/365th basis, even in a leap year such as 1992.


In cases of continuing special damages, half the appropriate rate from the date of injury to the date of trial is awarded. In cases where the special damages have ceased and are thus limited to a finite period, there are conflicting Court of Appeal decisions as to whether the award should be half the appropriate rate from injury to trial (Dexter v Courtaulds [1984] 1 All ER 70) or the full special account rate from a date within the period to which the special damages are limited (Prokop v DHSS [1985] CLY 1037). The House of Lords has confirmed that DSS benefit should be disregarded when calculating interest on special damages (Wadey v Surrey County Council [2000] 1 WLR 820 (HL).


The relevant rates since 1965 are set out in the White Book at note 7.0.15 as set out in table 3 below. (Table 1 (attached spreadsheet at bottom of page) records the total of these rates from January 1983.) In the left column of table 3 is shown the month from the first day of which interest is assumed to run. The right column shows the percentage interest accumulated from the first day of each month to 1 October 2003.


Continued use may be made of this table by adding to the figures therein 1/365th of the special account rate from 1 October 2003 onwards. Precision may be attained using table 2, which gives the accumulated total of days at the end of each of the next six months.


Suppose that interest runs from 1 February 2000 to 13 December 2003. The total to the end of September 2003 is 24.%. If the rate remains at 6% per annum, the grand total from 1 February 2000 to 13 December 2003 will be 24 + 1.2 = 25.2%.


These tables should assist all those concerned with interest since 1983 to make calculations fluently. The listed rates provide the base for a calculation from 1965. Although the tables' primary application is to interest on special damages in personal injury cases, they are equally applicable to any other case in which the special account is used in calculating interest.


Rodney Nelson-Jones is a partner at City-based law firm Field Fisher Waterhouse


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