Court of Appeal Reserve Judgment on CICA Discount Rate

News | Sun 10th Dec, 2017

The Court of Appeal has finished hearing arguments as to whether the CICA was right to apply the Lord Chancellor’s Prescribed Discount Rate in assessing future care costs in a pre-tariff case under the 1990 Scheme. The rate had been used even though the CICA is not subject to the Damages Act 1996, under which the rate is set.

The CICA tribunal applied the then 2.5% Discount Rate prescribed by the Lord Chancellor under the Damages Act 1996, even though the Damages Act does not apply to the CICA. The award was to a brain damaged young man who needs the award to provide life- long care. The agreed evidence of the former government actuary before the tribunal in 2012 was that in order to provide for full compensation the CICA needed to apply Discount Rates of 0% for RPI related losses and minus 1.5% for earnings related losses. This meant that the award that the CICA made was £5.6 million instead of the £16 million that was needed to provide full compensation under the scheme. The effect of the award is that it will run out by the time the now 28 year old claimant is 48, only halfway through his remaining expected life, and he and those caring for him will not be able to afford any care for the rest of his life.
In April 2015 Mr Justice Jay upheld the decision of the CICA on judicial review. After hearing arguments on 5th December 2017 Lord Justice Patten and Lord Justice Sales reserved their judgment. It is anticipated that it will be handed down soon.
 
Grahame Aldous QC and Laura Begley of 9 Gough Chambers are acting for the Claimant.

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