On 13th June, 2018 a Bill for the introduction of the Damages Act 2018 (“the Act”) was introduced by Gibraltar’s Legislature, to make new provision in relation to the return on investment of damages for personal injury and for guidelines relating to the assessment of general damages in personal injury cases.
A Gibraltar rate of return
The Bill highlights a new rate of return, meaning a new basis of assessment will need to be implemented by the Minister. This will have a direct impact on awards granted to injured parties and paid out by insurers. Setting a high rate creates a risk that compensation may not be adequate for an injured person to meet their expected future financial losses, such as medical and care costs. The Bill does not provide the court with the discretion to apply a different rate in exceptional circumstances.
In my view, a local rate of return is a prudent approach by Government, but the basis of assessment must be rational. In a similar vein, the rate should complement the 100% compensation principle. The Minister will be entrusted with establishing a fair compensating balance in Gibraltar. Hence, the Minister (when forming such basis) and the Court should be able to place insurers and those who have been unlawfully injured at the heart of the personal injury system.
In Gibraltar the England & Wales Guidelines (“E&W Guidelines”) are followed. However, in 2016 the judiciary nudged the legislature in Bernal v Riley [2016 Gib LR 314], when Justice Jack confirmed that the method of assessment of general damages for personal injuries in Gibraltar was too low and unsuited for the jurisdiction, as Gibraltar’s economy and standard of living was distinguishable to England & Wales. It was held that the Supreme Court should follow the Northern Irish Guidelines which award higher awards. This was echoed again in Walker v Ormrod Electricity Supply Co Ltd (2017) (unreported).
Developing a Gibraltar guideline makes sense, but in the absence of Gibraltar guidelines, we will have to use the E&W guidelines. This beckons the question: when will these guidelines be developed? In the absence of Gibraltar guidelines, we have to use the E&W guidelines, which are substantially less than the Northern Irish meaning claimants will lose money.
However, for now the Bill provides us with certainty, as we can inform our clients that the E&W guidelines will be adopted, in absence of our own guidelines or the Northern Irish. I see this as beneficial as we will know for certain the maximum award a client will get. As such, this will avoid the need to litigate, reducing legal fees.
Going forward, the Act can improve the quality of our legal system, restoring any lost credibility in the process. But the right balance must be achieved for claimants and defendants to mitigate any detriment.
Daniel Bula, Trainee Barrister