Rodney Nelson-Jones presents his annual update on calculating interest for personal injury claims.

The standard rate of interest on general damages for pain and suffering and loss of amenities in personal injury cases was fixed at 2% a year by the House of Lords in Birkett v Hayes [1982] 1 WLR 816, [1982] 2 All ER 70. This was confirmed as appropriate by the Court of Appeal in Lawrence v Chief Constable of Staffordshire (2000) The Times, 25 July. The appropriate rate of interest for special damages is the rate, over the period for which the interest is awarded, which is payable on the court special account. This rate was reduced to 6% a year on 1 February 2002. Interest since June 1987 has been paid daily on a 1/365th basis, even in a leap year such as 1992.

In cases of continuing special damages, half the appropriate rate from the date of injury to the date of trial is awarded. In cases where the special damages have ceased and are thus limited to a finite period, there are conflicting Court of Appeal decisions as to whether the award should be half the appropriate rate from injury to trial (Dexter v Courtaulds [1984] 1 All ER 70), or the full special account rate from a date within the period to which the special damages are limited (Prokop v DHSS [1985] CLY 1037). The Lords confirmed that Department of Work and Pensions benefit should be disregarded when calculating interest on special damages (Wadey v Surrey County Council [2000] 1 WLR 820 [HL]).

The relevant rates since 1965, which are conveniently set out at Note 7.0.9 in the White Book, are reproduced in table 3 (download tables below). Table 1 (download tables below) records the total of these rates from January 1987. In the left-hand column is shown the month from the first day of which interest is assumed to run. The right-hand columns show the percentage interest accumulated from the first day of each month to 1 October 2008.

Continued use can be made of this table by adding to the figures therein 1/365th of the special account rate from 1 October 2008 onwards. Precision may easily be attained through table 2 (download tables below), which records the accumulated total of days at the end of each of the next six months. Suppose that interest runs from 1 May 2000 to 13 December 2008. The total to the end of April 2000 is 52.30%. If the rate remains at 6% a year, the grand total from 1 May 2000 to 13 December 2008 will be 52.30 plus 1.20 equals 53.50%.

These tables should assist all those concerned with interest since 1985. The rates provide the base for a calculation from 1965 (Table 3). Although the tables’ primary application is to interest in personal injury cases, they are applicable to any other case in which the special account is used in calculating interest.

Rodney Nelson-Jones is a partner at Field Fisher Waterhouse.

Interest claculation tables

Download the tables below