Background to the Increase
The 10% increase in
general damages is one of the key elements of the Jackson Reforms, which aim to
rectify disproportionate costs in civil litigation.
Those behind the
reforms felt that escalating costs had come to be at the forefront of
decision-making in civil litigation, to the detriment of fairness and access to
justice considerations. Consequently, the reforms concluded that the proper
course was to abolish recoverability of success fees and after the event (ATE)
insurance premiums.
Thus, the 10% increase
in general damages was introduced to assist Claimants in meeting additional
risks and costs arising from the introduction of such measures.
Implementation
Some of the key reforms
recommended by The Jackson Report, such as the abolition of conditional fee
agreement (CFA) success fees and ATE premium recovery, are encapsulated in the
Legal Aid, Sentencing and Punishment of Offenders (‘LASPO’) Act 2012 which came
into force at the beginning of April 2013.
However, the 10%
increase in general damages did not appear on the face of this Bill. The
government held firm that this matter was for the judiciary.
Simmons v Castle
Consequently, the 10%
increase in general damages was confirmed by the Court of Appeal in Simmons v
Castle [2012] EWCA Civ 1039. The original judgment in this case was given in
July of last year – this stated that general damages will increase by 10 per
cent where judgment is given after 1 April 2013 – whether or not a CFA is in
place and irrespective of when the agreement was signed.
That original decision
was widely criticised, both for the manner in which it came about, without
giving affected parties the opportunity to make submissions, and the
uncertainty that it created:
Litigants were left not
knowing how the courts would treat Part 36 offers that would potentially only
be beaten by virtue of the 10% increase. Others argued that the decision would
be unfair in that Claimants who had entered into CFAs pre April 2013 would
still be able to recover success fees AND would now also have the windfall of
the 10% increase.
Consequently, following
an application of the Association of British Insurers (ABI), the Court heard
arguments from the ABI, Association of Personal Injury Lawyers (APIL) and the
Bar and subsequently handed down a revised decision of the Simmons judgment in
October 2012
Revision of Simmons
In this revision the
Court stated as follows:
“20. Accordingly, we
take this opportunity to declare that, with effect from 1 April 2013, the
proper level of general damages in all civil claims for (i) pain and suffering,
(ii) loss of amenity, (iii) physical inconvenience and discomfort, (iv) social
discredit, (v) mental distress, or (vi) loss of society of relatives, will be
10% higher than previously, unless the claimant falls within section 44(6) of
LASPO. It therefore follows that, if the action now under appeal had been the
subject of a judgment after 1 April 2013, then (unless the claimant had entered
into a CFA before that date) the proper award of general damages would be 10%
higher than that agreed in this case, namely £22,000 rather than £20,000”.
In effect this revision
means that the Court broadly accepted the ABI’s submissions and held that the
10% increase in cases where judgment is given after 1 April 2013, should not
apply to claimants who fall within the ambit of section 44(6) of LASPO.
Therefore, claimants who have already entered into a CFA or CCFA before 1 April
2013 and will be able to recover a success fee from the defendants, will not be
eligible for the 10% increase in general damages.
original article: http://www.zenithchambers.co.uk/site/the_jackson_corner/articles/10_percent_increase_in_general_damages.html
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