Note for Claimants*
- On 20th March 2017 the discount rate changed from 2.5% to -0.75%. The life multiplier for a 7 year old child with a life expectancy to age 60 changed overnight from 29 to 65, more than doubling the capital value of a future loss claim.
- This good news brought an as yet unresolved problem for accommodation claims. For nearly 30 years, since March 1988, the standard approach to valuing the cost of accommodation was that set out by the Court of Appeal in Roberts v Johnstone. If you were living in a house worth £200,000 and you needed to move to a house costing £500,000 the court would not give you the ‘windfall’ of the additional capital, £300,000. Damages are supposed to run out on the day you die but the asset would survive you. Instead you were entitled to compensation for the loss of the use of the additional capital. The discount rate was used to assessed the annual value of the loss. Therefore where the required capital sum was £300,000 the annual value (multiplicand) would be £7,500. This would be multiplied by the life multiplier, so using the figures above, £7,500 x 29 would give an R v. J award of £217,500.
- There were many problems with R v J. The biggest was in cases of limited life expectancy where the award would be far too small to fund the purchase of a property. There were ways around this, including a claim for the cost of adaptations which were awarded in full. Therefore in a case with limited life expectancy you would achieve a bigger award by buying a small house and spending a lot on adaptations than by buying a bigger house and spending very little on adaptations.