LRC calls for Reform: Periodical Payment Orders for Future Pecuniary Loss

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Authored by: Alfred Tam and Gere Sit

The Law Reform Commission (LRC) of Hong Kong published a report on “Periodical Payments for Future Pecuniary Loss in Personal Injury Cases” on 19 January 2023, recommending that the Court be given, by way of legislation, the power to make periodical payment orders (“PPOs”) in relation to future pecuniary loss in personal injury cases as soon as practicable.

Future pecuniary loss, as defined in the proposed legislation, means the damages which the Court may award on account of the future needs of an injured person in terms of medical treatment, nursing and domestic care, aids and equipment, accommodation, transportation, socializing and other expenses incidental to such future needs．

Current Law

Currently, the Court awards pecuniary damages in personal injury cases in the form of a lump sum. The conventional approach to quantify future losses by using the multiplier/multiplicand model established by case law has been criticised as imprecise and unscientific.

Proposed Reform

The main recommendations made by the LRC are:-

1. Power to the Court to make Periodical Payment Order: The Court should be given, by way of legislation, the power to make PPOs in respect of damages for future pecuniary loss. Such power:

(a) should be limited to catastrophic cases;

(b) should be determined and exercised by the Court, irrespective of the consent of the parties to the proceedings to protect the accident victims requiring long-term care and attention throughout their lives and prevent them from being exploited by family members;

(c) may also cover damages for future loss of earnings if the parties to the proceedings consent.

2. Discount Rate: The Financial Secretary shall be the person empowered to formulate and promulgate the presumed net rate(s) of return on investment (otherwise known as the Discount Rate). The Discount Rate should be subject to periodic review once every 6 years, with the consultation of an expert panel.

3. Review of PPOs: The PPOs should be open to review by the Court under the following limited circumstances:

(a) changes in the need for and level of future care as a result of significant medical deterioration or improvement; and

(b) the review should be restricted to only 1 application.

4. Security of Payment: The Court should have a discretion to make a PPO after taking into account the security of the periodical payments to ensure the continuity of payments and satisfying itself that a PPO will secure the full scope of the claimant’s award.

It remains to be seen how and to what extent the Court will make a PPO. However, it is anticipated that there will be significant impact in personal injury claims involving serious injury claims e.g. paraplegia and tetraplegia. We will closely monitor further developments on the proposed legislation and keep our clients posted of updates.

Key Contacts

Alfred Tam

Partner | Insurance

Email or call +852 2825 9490

Gere Sit

Partner | Insurance

Email or call +852 2825 9632