Discount Guidelines Should Be Followed

Barry v Ablerex Construction (Midlands) Ltd (CA TLR 3 April)

After a careful analysis of the speeches in the House of Lords, the trial judge had reduced the 3 per cent discount rate guideline formulated in Wells v Wells to 2 per cent. In allowing the defendants’ appeal and restoring the rate to 3 per cent the Court of Appeal said that while guidelines set by the House of Lords were not tramlines, there would be little point in the House laying down guidelines for lower courts unless it was intended that they should be followed. Three members of the House of Lords had clearly stated that the rates should not be altered until the Lord Chancellor set the rate under the Damages Act 1996. Even if this statement was not part of the decision, the court did not feel free to depart from an opinion so clearly expressed by the majority of the House of Lords. The court was told by counsel in the present appeal that the Lord Chancellor was thought to be settling the appropriate rate in about two months’ time and that delay itself gave an indication of the many factors which were appropriate to be taken into account. Meanwhile, the value of certainty to assist litigants to achieve realistic and fair settlements, and to avoid protracted and expensive trials would be completely undermined if the court were to apply different discount rates for different claimants without any rate having been set in the meantime by the Lord Chancellor.