Navigating the global liability defence agenda
Northern Ireland update
There have been several consultation processes in the last year or so, that have impacted upon, or have the potential to impact, the legal system in Northern Ireland. The Personal Injury Discount rate (PIDR) has been of great concern to insurers. Also, there was a consultation process which will impact upon the monetary jurisdiction of the county court system. Both are worthy of lengthy articles in and of themselves, but we have condensed into a summary below.
By way of needed background, the discount rate formally in Northern Ireland was 2.5% until the local devolved government in Northern Ireland and the Minister of Justice decided that the rate should be changed to -1.75%. One failed judicial review later, the personal injury discount rate was set at a temporary level of -1.75% in May 2021, pending the introduction of the Damages (Return on Investment) Bill which recently went through committee stage at the end of October 2021. In spite of objections from insurers, solicitors acting for insurers, and trade bodies, the rate was fixed and this gave rise to a test case being brought which was adjourned before Christmas and remains part-heard.
On 04 November 2021, the Justice Committee released its report following detailed scrutiny of the legislation in respect of re-setting personal injury discount rate in NI. The Committee is content with Bill as drafted and did not suggest any changes to the wording. The PIDR of -1.75% set this May under the current legislation and Wells v Wells principles is not, formally, part of the scrutiny of the new Bill, but the report states that the Committee is of the view that it [the Wells approach] no longer reflects how a claimant would be advised to invest their lump sum and therefore a new framework for setting the PIDR is needed [and the Committee also] understands the difficulties with the current rate in relation to potential over-compensation in many cases and the resultant economic and social ramifications.
The Damages (Return on Investment) Bill was given Royal Assent and enacted on 2 February 2022. Sections 1 and 2 of, and the Schedule to, the Act commenced on 10 February 2022 when the Government Actuary has 90 days within which to review the rate using the methodology prescribed in the Act. However, it is thought that the rate will be struck sooner than this and the hope is that this will reflect the current Scottish rate of -0.75% rather than the present interim rate.
Jurisdiction of County Court
A DOJ consultation from February 2021 concerned the proposal to increase the jurisdiction of the County Court (which hears personal injury, loss and damage claims of up to £30,000.00) to £60,000.00 or £100,000.00. The same consultation has also proposed whether to provide a statutory power to County Court judges to remove cases from the County Court to the High Court. This is still at a consultation stage at present, but any proposed increase would have a significant impact on personal injury, loss and damages claims brought in this jurisdiction.
Another DOJ consultation from July 2021 concerned the proposal to introduce a statutory duty for solicitors and insurers to seek court approval in cases involving a minor claimant. The vast majority of minors’ cases in this jurisdiction settle by way of a court approval, and parties to an action are obliged to obtain approval in both the High Court and County Court rules. The rationale behind the proposal appears to be pushed on by claimant representatives seeking to restrict pre-proceedings settlements being agreed without court approval.