The Ogden Tables 7th Edition Update
The Scottish (and English) courts are routinely referred to tables of actuarial multipliers, the Ogden Tables, which are used to calculate certain heads of claim, particularly future loss of earnings. This tends to be the single biggest element of most claims for personal injuries and death. The 7th edition of the Ogden Tables was published on 10 October 2011. Aside from updating figures on predicted mortality rates, some of the most important new information is contained within the introduction to the Tables.
Since 2001, on the basis of a decision made by the UK government, a global discount rate of 2.5% has been applied to all multipliers to reflect the real value of money in the UK. However, the authors of the 7thedition of the tables make it clear, with particular reference to a case heard in Guernsey in 2010, that they consider that this number is out of step with the present economic situation.
The Scottish Government has recently formed a consultation group to consider the issue. It is therefore likely that, within the next 6-9 months, the discount rate will be reduced, perhaps to around 0.5%. We have recent experience of a case where the other side attempted to argue for an alteration to -1%.
To give the reader an idea of the potential effect of such a change, the basic multiplier (ignoring other deductible factors) to be applied for loss of earnings to a man of 30 up to a pension age 65 is presently 22.84. At a discount rate of 0.5%, this figure would increase to 31.15. The effect of this on awards of damages for loss of earnings will be very significant. Applying the revised multiplier to a yearly loss of £15,000 in this example would increase the claim by approximately £125,000. Once the rate is officially changed, the levels of damages paid will therefore increase in many cases.
In present cases, Defenders can continue to argue that the existing discount of 2.5% ought to apply. Senior QCs who we have discussed this with consider it highly unlikely that a single judge hearing a case in Scotland will ignore the existing law.
It is therefore important that companies defending personal injury claims at present use the time available over the coming months to attempt to progress matters which ought to be settled. It does however ‘take two to tango’, so we may see claimants and their agents digging in to wait for the changes.
For more information on this developing area of the law, please contact Neil Smith.