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Discounts

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There are three types of discounts that are applied to losses that arise through personal injury and death:

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Present value discount

Discount for vicissitudes or contingencies

Business specific discounts

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Present value discounts are applied to future cash flows.  The discount rate applied (which under common law is 3%, see Todorovic v Waller and Gill v Ethicon Sàrl (No 5) [2019] FCA 1905), is intended to take account of inflation, changes in wage rates or prices, and tax on income derived from investing the sum awarded.


Discount for vicissitudes or contingencies are intended to take account of death, sickness, accident, unemployment and industrial disputes (see Bresatz v Przibilla [1962] HCA 54).

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Business specific discounts are intended to take account of risks inherent to the cash flows generated by the specific business (Haviv Holdings Pty Limited v Howards Storage World Pty Ltd  [2009] FCA 242):

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 "present value of a series of risky future cash flows by discounting those cash flows at a discount rate that reflects both the time value of money and risk" [65-66] Jagot J

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This website provides general information and is not intended and should not be taken to be legal advice. No legal responsibility or liability is accepted, of any type (including negligence), by the author.

Liability limited by a scheme approved under Professional Standards Legislation.

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