Rodney Nelson-Jones on calculating interest for personal injury claims


In personal injury cases, the standard rate of interest on general damages for pain and suffering and loss of amenities was fixed at 2% per annum by the House of Lords in Birkett v Hayes [1982] 1 WLR 816; [1982] 2 All ER 70. The Court of Appeal confirmed this as appropriate in Lawrence v Chief Constable of Staffordshire [2000] The Times, 25 July.



Court of Appeal: confirmed standard rate of interest on general damages in Lawrence
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% per annum on 1 February 2002. Interest since June 1987 has been paid daily on a 1/365th basis, even in a leap year.



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 House of Lords has confirmed that Department for Work and Pensions (DWP) 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 are conveniently set out in the White Book at note 7.0.15 (see table, attached spreadsheet at bottom of page). Table 1 (also attached) records the total of these rates from January 1984. In the left column is shown the month from the first day of which interest is assumed to run. The right column shows the percentage interest accumulated from the first day of each month to 1 October 2004.



Continued use may be made of this table by adding to the figures therein 1/365th of the special account rate from 1 October 2004 onwards. Precision may easily be attained through table 2, which records the accumulated total of days at the end of each of the next six months.


Suppose that interest runs from 1 March 1998 to 13 December 2004. The total to the end of September 2004 is 44.9%. If the rate remains at 6% per annum, the grand total from 1 March 1998 to 13 December 2004 will be 44.9 + 1.2 = 46.1%.


These tables should assist all those concerned with interest since 1984 to make calculations fluently. The listed rates provide the base for a calculation from 1965. Although the tables' primary application is to interest on special damages in personal injury cases, they are equally applicable to any other case in which the special account is used in calculating interest.



Rodney Nelson-Jones is a partner at City law firm Field Fisher Waterhouse


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