Rachel Henry

The Scottish Civil Justice Council (SCJC) is to prepare court rules on the practicalities of imposable PPOs before Part 2 of the 2019 Act is implemented. It has not yet set any timeframe for completion of this work, meaning that for the time being Scottish ministers are unable to prepare the required commencement order that would bring Part 2 into force.

The lack of impetus in the production by the SCJC of court rules on imposable PPOs is evident from their 2021/22 programme, published as part of its 2020/21 annual report, in which no mention is made of this work.

A PPO, currently only available in Scotland with the agreement of both parties, is sometimes an effective solution in providing accurate compensation in instalments on a real-life mortality basis rather than an actuarially projected one. The impact of the ongoing absence of imposable PPOs in Scotland is exacerbated by the current Scottish minus 0.75 per cent personal injury discount rate (PIDR) especially when compared to the current minus 0.25 per cent PIDR in England & Wales.

To illustrate the difference in lump sum terms, let us assume that a catastrophically injured 17-year-old man needs future care for life at £150,000 per year. On the minus 0.25 per cent PIDR for England & Wales, the award for future care using the current 8th edition of the Ogden Tables would be £11.5 million (on a full liability basis). Using minus 0.75 per cent for Scotland and the same Ogden Tables, the same award would be £13.9m: a difference of £2.4m in one case (albeit a very serious one). Despite the lump sum figure being lower for England & Wales, the courts there may currently impose a PPO. The PIDRs in both jurisdictions are not due for standard review until 2024, underlining further the need for imposable PPOs to become available in Scotland at the earliest opportunity.

When imposable PPOs are introduced to Scotland, the court will be obliged to consider imposition in all personal injury cases involving future pecuniary loss. The court is legislatively directed to “have special regard to the pursuer’s needs and preferences” when deciding whether to make an award by PPO in whole or part as opposed to as a lump sum. Further, because future pecuniary loss is not ring-fenced for Scottish Damages-Based Agreement (DBA) success fee purposes, if an award exceeds £1m then, before awarding damages as a lump sum instead of via a PPO, the court must be satisfied that that is in the pursuer’s “best interests” (a similar provision applies to pre-litigation settlements with an independent actuary required to certify the point on the claimant’s best interests).

These points aside, the Scottish PPO provisions (when drafted) should, in essence, be suited to the different civil procedure regime in Scotland but otherwise reflect the rules made under the enabling legislation in England & Wales (Courts Act 2003, ss 100 and 101) and the way in which PPOs have come to be used in practice there.

Rachel Henry is a partner at BLM in Scotland