Book reviews: June 2022

Kirsty O'Donnell

PUBLISHER: LAW BRIEF PUBLISHING
ISBN: 978-1914608155
PRICE: £39.99

We do not know what the future holds. Or, as Doris Day once sang, the future’s not ours to see. However, the personal injury lawyer cannot afford to adopt Doris’s “que sera sera” approach to the quantification and application of damages for future losses.

This helpful text provides practical guidance for those advising clients (both pursuers and defenders) on the settlement of claims involving significant elements of future losses, such as care costs, case management etc. O’Donnell analyses the advantages and disadvantages of periodical payment orders (“PPOs”) in comparison to lump sum awards. 

The principle of 100% compensation means that the injured party should receive damages to cover all past and future losses, in accordance with his needs until the day of his death. Not a penny more. Not a penny less. However, the main uncertainties for future losses are (i) life expectancy, and (ii) investment risk. Where the pursuer settles on a lump sum basis and dies before or after her predicted life expectancy she will have been overcompensated or undercompensated. In analysing investment risk, does the pursuer require to make riskier investments of the lump sum award in order to beat inflation?

As explained in this book, PPOs can reduce these uncertainties. As PPOs are paid annually until death, the funds required for (for example) care costs will be available each year until date of death. The risk of the damages being exhausted prematurely is removed. The risk of overcompensation is removed. The annual payments will be spent on the care costs, equipment etc required for that year. There will be no need to invest them. Further, the annual payments can be index linked. This will allow for (for example) increased rates of pay for care workers in future years.

O’Donnell takes as her starting point the judicial consideration of the benefits of PPOs in D’s Parent and Guardian v Greater Glasgow Health Board [2011] CSOH 99. While PPOs have been available as a negotiated settlement option for some time, it seems that they have not been widely used in Scotland. This may be set to change. The Damages (Investment Returns and Periodical Payment) (Scotland) Act 2019 was implemented in part on 1 July 2019. Part 2 of the Act deals with the application of PPOs. It will give the courts the power to require parties to consider the use of PPOs, and even for the courts to impose a PPO against parties’ wishes (if in the pursuer’s best interests). 

The second part of this text sets out practical considerations for agents advising clients on PPOs. The author’s recommendations include seeking expert advice from an IFA and an actuary. Together, they can provide a “value for money report” in which the value of the lump sum award is compared to the value of the PPO. The author notes that the practice might develop whereby defenders make both lump sum offers and PPO offers. 

One element of uncertainty does remain. As at the time of publication of this text (October 2021) and writing this review (March 2022), part 2 of the Act was not yet in force. However, the practitioner with a copy of this text will be well placed to advise on PPOs whenever the court rules relating to part 2 will be published – and before.

David McNaughtan QC, Compass Chambers