Helmot v Simon

Helmot v Simon is a decision of which practitioners generally should be fully aware. What was in issue was the proper discount rate to adopt for the multiplier in assessing long term care for the young victim of a Guernsey road accident. English law has of course an immediate and incontrovertible answer; it is 2.5 per cent as specified, pursuant to the Damages Act 1996, by the Lord Chancellor. Guernsey, however, has no equivalent of our Damages Act and therefore no provision for a Lord Chancellor's discount rate. Guernsey must therefore fall back on the English common law which is generally followed and applied there. Indeed the Guernsey Court of Appeal is made up of lawyers from here. In Helmot v Simon the to us well-known Jonathan Sumption was the Presiding Judge, sitting with two silks, and the judgment, which is, as one would expect, an impressive and closely reasoned one, is his.

I can state the decision shortly. Because the real net rate of return on index-linked gilts in Guernsey was found to have fallen to 0.5 per cent, rounded down to the nearest half per cent (the figures are at para.24 of the judgment), this figure formed the starting point. Then, because the Guernsey rate of average earnings inflation was found to exceed the related Guernsey rate of price inflation by 2 per cent, this reduced the discount rate further to a negative, minus 1.5 per cent, on earnings-related losses, viz., on the Claimant's own lost earnings and on the cost of employing his carers.

So why should we care about what happens in Guernsey? There is English law and there is Guernsey law and the two need not meet. To this I would say as follows.

It is known that, unsurprisingily, the Defendants in Helmot v Simon are appealing to the Judicial Committee of the Privy Council. On the appeal I consider that there is a good chance that Jonathan Sumption and his colleagues will find themselves affirmed. Apart from arguments from principle and from common sense, I would argue that the court's initial choice of the current rate, at 0.5 per cent, precisely reflects the choice of their Lordships in Wells v Wells before the Courts in England were hampered by the subsequent effective freezing of the rate by the Lord Chancellor, and I would then argue further that the following reduction down to minus 1.5 per cent precisely reflects the choice of the Court of Appeal in the Thompstone appeals in the context of periodical payments to which the rate set by the Lord Chancellor does not apply. 

If then there is affirmation of the Guernsey Court of Appeal's decision, we will have an uncomfortable disparity in decision between the Supreme Court and the Privy Council, a disparity which could be shown, on the facts of Helmot v Simon itself, to be in excess of £4,000,000. Seeing this, and also having in mind the anomalous and unsatisfactory gap between the value of a periodical payments award (unavailable in Guernsey) and a lump sum award, would there not be a chance that the Lord Chancellor's figure might, however belatedly, be changed?

There are now rumours that the Lord Chancellor has stated he will be considering a change to the discount rate. It does not appear that this line resulted from the impact of the Guernsey case, about which the Lord Chancellor may well know nothing, but seems to have been triggered by the Association of Personal Injury Lawyers (APIL) initiating against the Lord Chancellor proceedings for judicial review of the discount rate. This has prompted the Treasury Solicitor's Department to write to APIL's solicitors stating that the Lord Chancellor is prepared to undertake a review of the current discount rate and suggesting in the light of this response that APIL discontinue their judicial proceedings, but promising a review is not promising a reduction. Moreover, the Lord Chancellor, when Lord Irvine, took many years before setting a discount rate and I suspect that the Lord Chancellor, now Kenneth Clarke QC MP, may not be in any hurry to reset the rate. Also, were he to act quickly before the appeal to the Privy Council is determined, will he necessarily get the answer right?

Helmot v Simon highlights the folly of enacting legislation which moves decisions on legal matters from the knowledgeable courts to a Lord Chancellor who these days may have little or no experience in these matters and who, in the past, has let years go by without adjusting his decisions to changed economic circumstances.

Helmot v Simon judgment

Harvey McGregor QC
Hailsham Chambers
November 2010