Use of Discount Tables in Personal Injury Litigation

In personal injury litigation, discount tables are used to determine the lump sum value of a future loss of earnings.

There are two discounts tables generally used:Formula

  • Weekly Multiplier – the present value of $1 per week for n number of years discounted at a discount rate (i).
  • Deferred Multiplier – the present value of $1 received in n years discounted at discount rate (i).

So how do we use the multipliers.

Example 1 – Use of Weekly Multiplier

The plaintiff is deemed to suffer a loss of earning capacity of $500 per week for 20 years. The loss is calculated as follows:

$500 x 666.4 (5% weekly multiplier for 20 years) = $333,200.

Example 2 – Use of Deferred Multiplier

The plaintiff will suffer a loss of $100,000 in 10 years time. The loss is calculated as follows:

$100,000 x 0.614 (5% deferred multiplier for 10 years) = $61,400.

Example 3 – Combined Weekly and Deferred

The plaintiff will suffer a loss of $500 per week from age 45 in 10 years time to age 65.

$500 x 0.614 (5% deferred multiplier for 10 years) x 666.4 (5% weekly multiplier for 20 years) = $205,585

We have a free Discount Multiple calculator at https://dolmanbateman.com.au/online-tools/discount-tables/.

Discount Rates by Legislation

The discount rates used are dependent upon the relevant legislation. The current discount rates for NSW and Victoria are:

Legislation Section Discount Rate
NSW – Motor Vehicle Accidents Compensation Act 1999 s.127 5%
NSW Civil Liability Act 2002 s.14 5%
NSW Workers Compensation Act 1987 s.151J 5%
VIC Transport Accident Act 1986 s.173 6%
VIC Wrongs Act 1958 s.28I 5%
VIC Accident Compensation Act 1985 s.134AB 6%