Lump sum damages

In 1998 the Forum decided to look at alternatives to the principle of lump sum damages. At present, no matter how uncertain the future of an injured person, the law provides that a court can only dispose of a case by awarding a lump sum payment (apart from being able to provide for a specific risk of developing a particular problem which can be dealt with by an order for provisional damages). This is most unsatisfactory in the case of catastrophically damaged people, particularly children, whose future financial needs are huge but uncertain in detail, and whose life expectancy is uncertain. The claimant may die early, so that his or her family inherit money provided by the NHS or another defendant for its care, or may outlive the expectation of life estimate, so that he or she becomes a charge on the state. This has become a more acute problem since a court decision in 1998 increased awards to such children to the £2-3 million range.

The parties are able to agree that part of a lump sum award is used or retained by a defendant to provide annuity or periodical payments under arrangements called “structured settlements”. But the court cannot order structured settlements, once agreed they cannot be altered, and current annuity rates are very low. So two questions arise. Should the Courts be given power to order a defendant to make periodical payments? Should a Court be able to alter its award in a particular case if circumstances change?

Adrian Whitfield QC was been asked by the Forum to investigate these and related problems. The working group prepared a paper for consultation and the consultation period finished in May 2000. Consultees responses are at present being reviewed and collated for presentation to the Forum at its September 2000 meeting.

Sarah Leigh
August 2000

Working Party