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In an unreported English case in which Kennedys was instructed by the defendant insurer, the absence of a personal injury discount rate (PIDR) in Romania was a key factor underpinning the claimant’s claim.
The claimant sought to apply a minus 3% PIDR for earnings based future losses on the basis that wage inflation in Eastern Europe – where the claimant resided - was much higher than in the UK and, therefore, justified a departure from the England and Wales PIDR. The claimant also argued that the lack of services in Romania meant that his claim for all future care, case management and therapies should be based on them being provided from the UK.
The proposed minus 3% rate was not agreed to by the defendant and the claimant did not disclose any supporting expert evidence to support their pleaded position.
The parties achieved resolution at a joint settlement meeting (JSM), and the claim ultimately settled for a sum equivalent to 18% of the pleaded case, which was approved by the Court.
Background
The claim arose from a road traffic accident in August 2018 in which the claimant suffered lower limb trauma and a traumatic brain injury. At the time of the accident the claimant was living in the UK. ‘But for’ the accident, he had always intended to return to Romania.
Following treatment by the NHS, and an extended stay in a UK rehabilitation unit, the claimant returned to Romania to live with his family.
The claimant’s solicitors attempted to implement a UK style multi-disciplinary team to provide the claimant with integrated care in Romania with no success. Unlike the UK, Romania does not have the infrastructure to allow practitioners from across health and social care to come together around the needs of an individual.
The claim was delayed at various stages by an evolving mental capacity issue but the parties were able to arrange a JSM for late 2023.
The day before the JSM, the claimant’s solicitors served an updated schedule of loss which advanced a case that earnings based future losses were subject to a minus 3% PIDR. They did not provide any evidence in support whether from an independent financial advisor or economist (for the purpose of the JSM or subsequently).
The schedule did not seek to amend the future loss of earnings claim, which the claimant conceded already included inflationary pay increases as part of the calculation in the multiplicand and as such the PIDR claim was not presented on a “head of loss approach”.
The defendant’s counter-schedule conceded damages of 8% of the pleaded claim. A view was taken that the costs of investigating the equivalent PIDR in Romania would be substantial and the JSM should proceed without delay, notwithstanding the lack of evidence as two earlier JSMs had been cancelled.
Comment
Despite the last minute challenges, the claim ultimately settled for a sum equivalent to 18% of the pleaded case, which was approved in December 2023. During the approval hearing no mention of a reduced PIDR and there was no comment from the approving Judge on that element of the claim.
Whilst we are all awaiting the outcome of the England and Wales PIDR review, the case illustrates that claimant solicitors may increasingly look to displace the England and Wales PIDR in countries where their client resides and where the economic outlook might be less favourable. However, in doing so, it is our view the multiplicands need to reflect the ‘local’ costs rather than the hybrid model adopted in the claimant’s schedule of loss. Ultimately this will continue to be something to consider on a case by case basis.
United Kingdom