News
When Roberts -v- Johnstone shuts the door on property
The advent of periodical payments, with reduced lump sums, has brought accommodation claims into sharper focus. In cases where life expectancy is short, the problem is particularly acute, since the Roberts -v- Johnstone calculation yields little by way of damages compared to the capital required. The problem is aggravated in cases where the Claimant lives in an area of high property prices.
The case of Ryan St George -v- The Home Office illustrates both the problem and a solution.
To find out more, download our Briefing Note by clicking here: Ryan St George -v- The Home Office.
Ian Gunn 1st June 2010
Compulsory employer's pension contributions and future care claims
The Employers' Duties (Implementation) Regulations 2010 (SI 2010 No.4) sets out a detailed timetable for the introduction of compulsory pension contributions by employers.
Large employers (120,000+ employees) are first in line, and are required to start making contributions from 1st October 2012. However, employers with less than 50 employees, which will cover directly employed care teams, are on a phased implementation timetable, starting on 1st August 2014 and ending on 1st February 2016, depending on the last two letters of the employers PAYE scheme.
New employers are given slightly longer to comply. The timetable below shows the implementation dates for PAYE income first payable from 1st April 2012:
Between 1st April 2012 and 31st March 2013 - 1st March 2016
Between 1st April 2013 and 31st December 2013 - 1st May 2016
Between 1st January 2013 and 30th September 2014 - 1st June 2016
Between 1st October 2014 and 30th June 2015 - 1st August 2016
Between 1st July 2015 and 31st March 2016 - 1st September 2016
Contribution rates will start at 1% (from 2012), rising to 2% in October 2016 and 3% by 2017.
I am sure that you will have great fun drafting Schedules in light of such straightforward implementation terms!
Ian Gunn 4th March 2010
Deputy's powers to pursue Local Authority for care funding
On 10th January 2010, Senior Judge Lush handed down Judgment in the matter of Reeves, following insistence from the Local Authority that an application be made be made to clarify whether the Deputy had a right to seek statutory funding when the Claimant had received compensation for future care.
To find out more, download our Briefing Note by clicking here: Deputy's power to pursue.
Mike Hurst 10th February 2010
Department of Health Consultation on issues concerning charging arrangements for Residential Social Care
On 29th January 2010, the Department of Health published "Charging arrangements for residential social care: consulting on issues concerning the current charging arrangements for residential social care". This consultation seeks views on potential amendments to the law and regulations in order that damages for personal injury may be taken into account for the assessment of residential care.
National Assistance (Assessment of Resources) Regulations 1992 (the "charging regulations");
The National Assistance (Residential Accommodation) (Additional Payments and Assessment of Resources) (Amendment) (England) Regulations 2001;
The National Assistance (residential Accommodation) (Relevant Contributions) (England) Regulations 2001; and
The Charges for Residential Accommodation Guidance (CRAG).
These amendments would mean that personal injury damages identifiable as being specifically for future care could be taken into account by the Local Authority in a means assessment, regardless as to whether they are held in trust or under the Order of the Court. Clearly, such a significant change to the treatment of capital derived from a claim in respect of personal injury for residential care would also have a knock-on effect on the treatment of damages for domiciliary care, as Fairer Charging adopts the treatment of capital directly from CRAG.
Government policy is that in general personal injury compensation awards should be disregarded in the financial assessment of people for residential charging and other purposes. An amendment was made to the Income Support (General) Regulations in 2008 to ensure that money from such awards is not taken into account in the gap between it being paid and it being placed in a disregarded location, eg, a personal injury trust. The amendment introduced a 52 week disregard (the “grace period”) for personal injury compensation awards to give people time to place the money in a disregarded location. A consequential amendment was made to the charging regulations to reflect the change to the Income Support (General) Regulations.
However, in some cases a personal injury compensation award will include an amount specifically identified as being to cover the cost of care. Disregarding the care element of a personal injury award has the effect, in principle, that the local authority may have to pay for care when the resident has already been awarded money specifically intended for the purpose. If this happens it would reduce the resources local authorities have to spend on other people in need of social care.
We have already modified the amendment creating a grace period in the charging regulations. However, that modification is limited in scope. This is because the current regulations only allow local authorities to take account of the care element of a personal injury award until it is placed in a disregarded source such as a personal injury trust or annuity; once in a trust or annuity all the money must be disregarded. Also, they do not allow local authorities to take into account such an award including the care element of the award if that money consists of capital which is administered on behalf of a person by the courts or which can only be disposed of by court order or direction.
Ministers have agreed to consult to seek views on a wider amendment to enable authorities to take account of the care element of any personal injury compensation award in all circumstances.
Whether or not the ability to assess damages would be retrospective is unclear, as is how this would would work in cases where the Claimant has not recovered all of their needs from the Defendant (due to liability or causation issues). Furthermore, whilst with periodical payments one must identify what the payments are for, the same cannot be said for a conventional lump sum. If there is a global settlement and no future care element is specifically identified, then it is possible that all of the award must be disregarded (as is the case currently under the 52-week disregard).
The consultation period runs until 23rd April 2010.
Download the consultation paper by clicking here: DoH consultation document
Richard Cropper 1st February 2010
2009 ASHE 6115 Data Released
On the 12th November 2009 the ONS published the 2009 First Release of the ASHE data.
Of course, this is now allows the recalculation of periodical payments linked to ASHE 6115.
The following table summarises the nominal growth rates and the real, that is above the RPI, growth in the earnings of care assistants and home carers at the 60th percentile and above:
| Percentile | |||||
| 60th | 70th | 75th | 80th | 90th | |
| Nominal | 2.28% | 2.41% | 2.72% | 2.47% | 3.68% |
| Real | 3.52% | 3.66% | 3.97% | 3.72% | 4.94% |
These figures clearly illustrate why the Thompstone 'indexation' cases were so important and something that we have been so passionate about. With RPI-linked periodical payments, Claimants needing the most skilled and experienced carers would have found themselves almost 5% short in this year alone.
For a more detailed analysis of the data, please look at our INDEXATION page.
Richard Cropper 12th November 2009
Deputy's Security Bond - Setting the appropriate level of cover
On 15th October 2009, judgment was handed down in the case of H. This was a test case concerning the need for, and amount of, a security bond for a financial deputy.
To find out more, download our Briefing Note by clicking here: Deputy's Security Bond.
Ian Gunn 23rd October 2009
The Proposed Reclassification of ASHE 6115
We have been made aware of the potential reclassification of the Standard Occupations Classification (SOC) unit group 6115, which is used in the Annual Survey of Hours and Earnings (ASHE).
To find out more about the potential issues and implications, download our Briefing Note written with Dr Victoria Wass by clicking here: The Potential Reclassification of ASHE 6115.
Dr Victoria Wass and Richard Cropper 25th September 2009
New Guidance and Regulations on Direct Payments in England
From 9th November new guidance and regulations come into force in respect of Direct Payments.
The broad effect of these changes is to extend the system of Direct Payments to include people who lack the capacity to consent to the making of Direct Payments and to remove the exclusions that currently apply to people who are subject to various provisions of the Mental Health Legislation.
To find out more, download our Briefing Note by clicking here: Direct Payments in England.
Mike Hurst 17th September 2009
Green Paper on Care Published
The Government Green Paper on the Future of Care in England and Wales was published on 14th July 2009. At the same time the Government announced a consultation period, during which interested parties are invited to comment, which will run until 13th November 2009.
To find out more about the proposals and how they may impact in the world of personal injury litigation, download our Briefing Note by clicking here: Shaping the Future of Care Together Briefing Note.
Mike Hurst 3rd August 2009
Special Account Interest Rate Falls to 0.5% pa Gross
From 1st July 2009, the interest rate applied to funds held on Special Account is to fall to just 0.5% per annum, before taxation. This is likely to further impact on Claimants' ability to achieve a 2.5% per annum real and net return. Whilst the Lord Chancellor and the Ministry of Justice continue to refuse to provide information with regard to the discount rate, the issue was raised in the House of Commons on 30th April 2009.
To find out how, download our Briefing Note by clicking here: Special Account Interest Rate.
Richard Cropper 26th June 2009
Is a Change in the Discount Rate Imminent - Take 2?
Further to my posting in respect of the above on 1st April 2009, I have now had this further response from the Ministry of Justice to our Freedom of Information request: MoJ FOI Response 8th May 2009.
We are presently taking legal advice with regard to this response and will update the website with any further developments in due course.
Ian Gunn 25th May 2009
The Department of Health Publish 2009 CRAG
On 6th April 2009 the Department of Health published Local Authority Circular (DH) (2009) 3, revised Charging Regulations and 2009 CRAG. These revised documents have implications on the treatment of personal injury damages. To find out how, download out Briefing Note by clicking here: LAC (2009)(3) and 2009 CRAG.
Mike Hurst 17th April 2009
Is a Change in the Discount Rate Imminent?
For the avoidance of any doubt, the Directors of PFP are not aware of any firm reason to expect a change in the discount rate.
In November 2008, I put the following questions to the Ministry of Justice:
"When did the Lord Chancellor last review the discount rate under Section 1 of the Damages Act 1996, and what evidence was placed before him?
We are expecting contact from the Ministry of Justice during the course of the next few days to confirm whether such information is held and may be released, in accordance with the Freedom of Information Act. A further bulletin will be issued here in due course.
We have no reason to believe that there is any link whatsoever between our Freedom of Information Act request and any review of the discount rate by the Lord Chancellor. That is not to say that we would be surprised if the discount rate was reduced. If the reasoning behind setting the discount rate at 2.5% per annum remains appropriate, then the status quo is hard to justify. In addition, articles such as those that appear in this edition of JPIL will tend to give the rumour credibility.
If we do receive any concrete information, we will publish it here on our website.
Ian Gunn 1st April 2009
Interim Payment Applications and Periodical Payments
On 4th March 2009, the Court of Appeal heard the case of Benjamin Eeles. The decision to overturn a further interim payment of £1.2 million awarded at first instance has been reported in some quarters as being down to a fettering of the trial judge's ability to award damages in the form of periodical payments. Apparently, the result of this is that financial advice will be required for a substantial interim payment application.
This simply does not seem to be the case on actual reading of the judgment.
To download our Briefing Note, please click here: Interim Payments and Periodical Payments
Ian Gunn 1st April 2009
OPG Announces Special Account Rate Reduction
On 26th January 2009, Office Notice 01/09 was released to all staff at the OPG confirming that the gross interest rate on Special Account is to be reduced from 6% per annum to 3% per annum. In addition, a letter has been sent to all Deputies from Karen Wheeler, Accountant General of the Supreme Court, which states:
"As Accountant General of the Supreme Court, I am responsible for the safekeeping and administration of those funds, through the Court Funds Office (CFO). The Lord Chancellor, with the agreement of the Treasury, sets the interest paid on client accounts. In light of recent movements in the Bank of England rate it is necessary to reduce the level of interest paid on the special account. From 1 February 2009 the special account rate will be 3%. The person you represent will continue to benefit from the safeguards provided by the special account.
"It may be necessary to make further reductions to our rates in the future. Any future changes will be published on the CFO website (http://www.courtfunds.gov.uk/) and reflected in your six monthly account statement."
Clearly, this step will impact on every Protected Beneficiary, as (virtually) everyone will have funds held on Special Account. Our thoughts on the implications of this action are set out in our Briefing Note. To download our Briefing Note, please click here: Special Account Rate Cut
Richard Cropper 2nd February 2009
The Discount Rate and PFP's Freedom of Information Request
It is interesting to note that even though the financial world has changed beyond all recognition since 27th July 2001, the Lord Chancellor has n0t considered it necessary to exercise his power under section 1 of the Damages Act 1996 to alter the discount rate.
Indeed, whist we would expect that such action will have been considered, we are not aware as to what information was relied upon to reach the decision to leave the discount rate at 2.5% or when such a decision was made.
Consequently, on the 27th November 2008, I sent the following letter to the Ministry of Justice: Letter to the MoJ
On the 30th January 2009, I received the following response: Letter from the MoJ
I am a bit confused about how past information used to reach past decisions to leave the discount rate at 2.5% can be considered "information [that] relates to the formulation or development of government policy", indeed one would have thought that transparency would be helpful for the market in this respect. All I can do is ask.
I will post any further information obtained here on the NEWS page.
Ian Gunn 30th January 2009
Briefing Notes to previous NEWS items can be found in the LIBRARY section
