Update regarding law reform commission of Hong Kong on periodical payments

Date published

08/05/2018

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On 25 April 2018, the Law Reform Commission of Hong Kong (LRC)’s Sub-committee released a consultation paper to invite public views on whether the court should be given, by way of legislation, the power to make periodical payment orders (PPOs) in respect of damages for future pecuniary loss in personal injury cases. The consultation period will last until 24 August 2018.

Summary of consultation paper

The LRC have explained the purpose of the consultation paper is as follows:

To identify the problems of the current law and practices in assessing damages, in particular, future pecuniary losses in personal injury cases, and whether reform is needed to allow periodical payments for future pecuniary loss to be awarded, and if so, to make recommendations for reform as appropriate.

The Sub-committee has studied the experiences from other jurisdictions, such as UK, Ireland, US, Singapore and other European countries to provide guidance on the consideration as to the desirability and viability of introducing relevant legislation for Hong Kong.

The Sub-committee wishes to highlight different aspects of concern and to gauge the sentiment of the public and stakeholders on the issues involved by inviting comments on several open-ended questions.

In the consultation paper, the Sub-committee invites the opinion of the public as to whether there is a need for a mechanism to set the discount rate at appropriate periods inclusive of who or which authority should be empowered to set the discount rate. Public views on whether the Chief Justice or any other person or body should be empowered to fix this discount rate and to conduct periodic revision of such rate are also sought.

The major question to be consulted is whether, as a matter of principle and notwithstanding the need for further exploration as to various aspects of operational feasibility, the court should be given, by way of legislation, the power to make periodical payment orders in respect of damages for future pecuniary loss in personal injury cases.

Subject to the above question, the Sub-committee invites submissions on some key issues, summarised as follows:

  1. What mechanism should be adopted for the formulation and promulgation of the discount rate?
  2. What factors and limitations, if any, should be imposed on the court’s power to award and review PPOs?
  3. What are the circumstances for reviewing PPOs and related contingencies, and whether the current regime of awarding damages should co-exist with a PPO regime?
  4. Whether the court should take into account the security, funding options and suitability of a paying party before making a PPO?

Detailed questions for consultation

The full details of the questions which the LRC have invited submissions on are as follows:

  1. Whether, as a matter of principle and notwithstanding the need for further exploration as to various aspects of operational feasibility, the court should be given, by way of legislation, the power to make periodical payment orders in respect of damages for future pecuniary loss in personal injury cases.
  2. (i) Whether an authority should be empowered to fix and to conduct periodical revision of the presumed net rate(s) of return on investment (the Discount Rate(s)) to be applied in the assessment of damages in all personal injury cases, in particular, in the selection of multiplier(s) for assessing future pecuniary loss for different periods of future loss and expenses to be incurred. 
    (ii) Whether the Chief Justice or any other person or body should be such empowered authority. 
    (iii) The identification of the stakeholders whom such empowered authority should consult in fixing the Discount Rate(s), the frequency of review and the mode of promulgation of the Discount Rate(s) so fixed.
  3. (i) Whether the power of the court to award periodical payment should be irrespective of the consent of the parties to the proceedings. 
    (ii) Whether the power to award periodical payment should be generally vested in the court to be exercised in circumstances as it deems just and fair or whether such power should be limited to cover a specific class of personal injury cases, and, if so, how the class of cases is to be defined. 
    (iii) Whether a periodical payment order made by the court may cover all or only some heads of future pecuniary loss, in whole or in part, irrespective of the consent of the parties to the proceedings; and in the latter case, whether a periodical payment may cover all other heads of damages to such extent as the parties may agree.
  4. (i) Whether the original periodical payment order should be open to review by the court upon the application of either party to the proceedings. 
    (ii) If yes, what should be the circumstances for reviewing periodical payment orders, including but not limited to the following: 
        (a) changes in the need for and level of future care as a result of significant medical deterioration or improvement, which is foreseen at the time of the original order, with specific criteria pertinent to the nature of deterioration or improvement, as well as the duration during which a review can be applied for, being stipulated in that order; 
        (b) exceptional life-changing circumstances, and if so, what are these circumstances; and 
        (c) restriction on the number of applications for review and limit on extension of time for review that may be allowed. 
    (iii) Whether, upon the cessation of periodical payment occasioned by premature death of a recipient of periodical payment, the dependants of such recipient should be afforded one last opportunity to pursue a claim against the paying party for loss of dependency, or being the amount which the deceased recipient would have contributed to his dependant from the periodical payment he received but for his premature death and in respect of which the dependant has not received any compensation or damages from the paying party or any person who was or may be liable to him. 
    (iv) Whether the current mechanism for provisional damages should be preserved and whether periodical payment orders should be applicable to cover provisional damages although their co-existence is technically possible.
  5. (i) Whether the court should take into account the security of the periodical payments before making the order. 
    (ii) The funding options that should be available to ensure adequate security for periodical payments. These options may include, but are not limited to: 
        (a) self-funding provided by, as the case may be, insurers, the government, or statutory bodies of substantial means; 
        (b) self-funding backed by guarantees from government or a statutory scheme of protection; and 
        (c) procurement of annuities or similar investment products to provide a secured stream of income. 
    (iii) Whether, apart from government departments, there are other organisations and institutions, whether created by statute or otherwise, which are considered to be financially secure as paying parties for court ordered periodical payments.