In R (Association of British Insurers) v Lord Chancellor and Association of Personal Injury Lawyers) [2017] EWHC 106 (Admin), the Administrative Court (Baker J) refused permission to the Association of British Insurers ("ABI") to pursue judicial review of the Lord Chancellor's decision to complete her review of the discount rate applicable to personal injury damages and announce the result by 31 January 2017.

Key Points:  

  • A statement by a public body of its intention to publish a consultation response does not by itself give rise to a legitimate expectation that consultees will then have a further opportunity to provide input on the proposals

  • Similarly, the publication of a consultation response document prior to any decision does not in and of itself mean a further opportunity for consultees to provide input

  • The publication of a consultation response and / or the delay between a consultation and the issuing of a decision does not trigger a duty to re-consult on the part of the public body; there needs to be some "fundamental change in circumstance" that has arisen pending a final decision

  • Where an expedited hearing is sought together with interim relief, and expedition is granted, this will define the context in which interim relief is to be considered

  • The Lord Chancellor's power to prescribe a discount rate was a power to do just that, from time to time; it was not a power to prescribe transitional arrangements

Background

In personal injury cases, where a court awards damages for losses that will be incurred after the date of the award it must apply a "discount rate" pursuant to the Damages Act 1996 (the "Act"), save in exceptional circumstances. The Lord Chancellor has the power under the Act to set the discount rate from time-to-time. However, this rate had remained unaltered for more than a decade. In August 2012, following considerable lobbying, the Lord Chancellor took the decision to consult on changing the discount rate.

The first consultation paper, dated 1 August 2012, set a consultation period until 23 October 2012, and stated that there would be a response within three months of the expiry of the consultation period. This did not happen. Instead, a second consultation paper was published in February 2013. Despite again promising a response within three months of the consultation period ending, no response was published. The Lord Chancellor appointed an expert panel in 2014 for the purposes of giving advice about the investments claimants in personal injury cases should be assumed to make with their award, though no report has ever been made public.

The Association of Personal Injury Lawyers ("APIL") sent a pre-action protocol letter in October 2016 to the Lord Chancellor threatening judicial review, arguing that the Lord Chancellor's delay was unreasonable. The Lord Chancellor responded on 6 December 2016, and made a public announcement that same day, to the effect that the result of the review would be announced by 31 January 2017, notwithstanding that no response to the consultations had been published and consultees had not been given a formal opportunity to provide further input on the back of such a response (the "Decision").

The ABI sought permission for judicial review of the Decision on two grounds:

(1) the Lord Chancellor's decision would infringe the ABI's legitimate expectation that, in spite of not publishing a response to the consultation papers issued in 2012 and 2013, the ABI and other consultees should be afforded the opportunity to provide further input before the final decision ("Ground 1"); and

(2) were the Lord Chancellor to prescribe a new discount rate, it would be unlawful for her to do so unless she provided for some transitional arrangements (as regards causes of action already in existence, and cases which have already begun) in her Order ("Ground 2").

 

Decision

The High Court dismissed the application on both grounds.

On Ground 1, Baker J reinforced the public law principle that a duty to re-consult would not arise unless there is "a fundamental change in circumstance" which arises during the course of the delay in making a final decision. He found that, while it was arguable that the ABI and other consultees had a legitimate expectation that their views would be received and taken into account, and that a response would be published by the specified date in the consultation papers, it was not arguable that there was a legitimate expectation that no decision would be made without further consulting the ABI and other consultees. The delay was immaterial unless any fundamental change in circumstance came to light during the delay, and on these facts this was not the case. Baker J was further of the view that a consultation response need not be published as evidence that the Lord Chancellor had in fact taken full and proper account of the consultees' input. In any event, a consultation response in and of itself was not sufficient to necessitate further consultation.

On Ground 2, Baker J flagged upfront that this did not challenge any decision that had yet been made. He considered the ABI's argument to be "wrongly conceived" that the rule on retrospectivity would be engaged if the Lord Chancellor made any decision impacting litigation already going through the courts and any potential claimants with causes of action existing prior to the change. He interpreted the Act as affording the Lord Chancellor the power to prescribe a discount rate from time-to-time. As to whether that discount rate would apply to claimants with existing causes of action or ongoing cases before the change, Baker J viewed this issue as one not for the Lord Chancellor, but as a question of statutory interpretation. It was therefore not for her to make the sort of transitional provisions that the ABI contended.

In spite of dismissing the application and the question of interim relief not arising, Baker J nonetheless explained that had the hearing been successful, while he would have ordered an expedited hearing, interim relief would not have been appropriate (applying the American Cyanamid principles as adapted to public law situations in R (Medical Justice) v Secretary of State for the Home Department [2010] EWHC 1425 (Admin)). Baker J first acknowledged that granting an expedited hearing would define the context within which the interim relief would be granted. Second, he held that denying interim relief at this stage would be the more appropriate course, since it would be better to allow the Lord Chancellor to proceed with her decision and make any uncertainty as to the discount rate "narrowly defined and quantifiable".

Comment

This case primarily illustrates the principle that a duty to re-consult will usually only arise where something has fundamentally changed between the consultation period and the final decision being taken. A period of delay, even significant delay as in this case, does not imply that the public body is under an obligation to re-consult unless there has been such a fundamental change, or re-consultation is otherwise specifically required.

As a matter of practice, it is important for consultees to keep the progress of a consultation under review and all the while that a decision is pending, consider whether any fresh material has arisen that should be provided to the decision-maker, even where the formal consultation period has ended. This gives rise to the separate issue of whether the decision-maker must nevertheless take it into account, but it is better to provide material proactively, particularly where it is unclear whether there will be any further formal consultation.

In relation to the provision of interim relief in a judicial review case, ultimately, in practice it appears that the appropriate order will be whichever creates the least uncertainty. An expedited hearing will help define the parameters of any uncertainty, and allowing the public body to proceed with its decision will further narrow these parameters. In a case where, as Baker J described, it is not clear which side's detriment outweighs the other, denying an injunction might help to create the most certainty pending the outcome of the judicial review.

Current position

The Lord Chancellor announced her decision on 27 February 2017, to lower the discount rate from 2.5% to minus 0.75%:

https://www.gov.uk/government/news/new-discount-rate-for-personal-injury-claims-announced