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Discounting Your Chickens: Resiling From a Settlement Due to a Change in Discount Rate - Lauren Seager, Queen Square Chambers

09/03/18. A year on from the change in discount rate and it is still a topical discussion. It had immediate implications for many claims but it became clear in October 2017 that the reverberations were still being felt. With the likelihood of a further change and the promise of more regular reviews, practitioners need to be mindful of the impact that it can have on claims. This is particularly apparent in cases where court approval of a settlement is required under CPR 21.

In Revill v Damiani [2017] EWHC 2630 (QB) Mr Justice Dingman permitted the Defendant to resile from a settlement agreement reached in a protected party claim just before the discount rate change. Whilst it may be unusual for parties to seek to void such an agreement, this case serves as a reminder that where a court is yet to approve a settlement in a child or protected party claim, neither party is bound to abide by it.

The claim arose out of a road traffic accident which occurred in April 2015. The Claimant suffered a severe traumatic brain injury resulting in a lack of capacity. He therefore became a protected party under CPR 21. His claim included future losses such as care and treatment.

At a joint settlement meeting in February 2017 an agreement on damages was reached. The future losses agreed were based on the then discount rate of 2.5%. However, counsel for the Claimant noted that as any change in discount rate would substantially affect the quantum of the claim, he would find it difficult to approve the settlement figure (as required by the CPR) based on the current calculations if there were such a change. Thus the parties agreed that if the discount rate was reduced then the future losses would...

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