10% Increase in General Damages by Joanna Hastie and Helen Rutherford

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 

RTA PI Claims Portal

The system supports the RTA PI Claims reforms process for low value personal injury claims (£1,000 - £10,000) agreed by Claimant and Defendant stakeholders with the Ministry of Justice (MoJ) by providing a secure medium for the electronic transfer between Claimant Representatives and Defendant Insurer/Compensators of the information necessary to process claims by individuals for personal injury following a road traffic accident.

The system has been designed in partnership with Claimant and Defendant stakeholders to take account of the internal working practices of both, whilst remaining fully compliant with the agreed reform protocols. It manages the communications throughout the stages defined by the protocols, validates the data defined as mandatory is fully completed, monitors the agreed times and provides reminders to avoid these periods being exceeded.

Q: Why were the PI reforms introduced in April 2010?

A: The reforms were introduced to streamline the current compensation system by speeding up the process of establishing liability and finalising payment of low cost RTA injury claims. Claimant lawyers now submit agreed information and insurers/compensators responding within specific time periods.

Q: Do the reforms apply to all PI claims?

A: The new process does apply to low cost personal injury claims from accidents that occurred on and after 30 April 2010 in England and Wales valued between £1,000 - £10,000 in damages – the majority of all motor personal injury claims affecting in the region of 500,000 claimants.

Q: Will the majority of motor claims go through the process?

A: It is anticipated the majority of motor claims will fall into the category covered by the new process. It is too early to judge how many of these will fall out of the process due to liability disputes. The technology system has the capacity and scalability to deal with the anticipated volume of claims covered by the new process.

Q: How long did it take to resolve low value RTA claims and how much did it cost?

A: Previously, it took several months to establish liability if the insurer/compensator has to request further information. Additional work by either side increases both legal and insurer/compensator handling costs. Streamlining the flow of agreed information on both liability and quantum between parties reduces the operational costs experienced and will enable the insurer/compensator to agree settlement more quickly.

Q: How does the new process differ from the previous RTA PI claims procedure?

A: The new process requires the use of standardised information passed between claimant lawyers and insurers through a secure electronic Portal, within specific time frames, which enables key decisions to be communicated more quickly and reduces duplication.

Q: How is the new process structured?

A: There are two definitive key stages involved in the new process with an optional third stage in the event of disagreement on quantum:

Stage One: The claimant’s solicitor completes the claim notification form and sends it to the insurer, who may admit or deny liability within 15 working days. There is a £400 fixed fee.

Stage Two: Where liability is admitted, the claimant solicitor completes and sends a Settlement Pack to the insurer/compensator. The insurer/ compensator has 15 working days to accept or a further 20 working days to negotiate via counter offers. There is an £800 fixed fee attached to this stage.

Medical evidence is gathered between stages 1 & 2 – there is no set time as medical reports must reflect the claimant’s injuries and recovery.

Stage Three: Comes into effect only when the relevant parties cannot agree a settlement figure, the claim then proceeds to a quantum hearing. Fixed costs of £250 for a paper hearing or £500 for an oral hearing will be met and there is no time limit involved.

Credit Hire Basics

Many road traffic accidents result in claims for credit hire, and many personal injury solicitors end up dealing with them. However, this is a complex area of law, with some quite unique rules, and there are many pitfalls for those new to the work. This article is aimed at those who are dealing with a credit hire case for the first time, or who have not been involved since before the major recent decisions.

Most credit hire law comes from two cases: Clark v. Ardington [2002] EWCA Civ 510 and Lagden v. O’Connor [2003] UKHL 64, to which frequent reference will be made.

Validity of agreements

The first and most important point decided in Clark was that a credit hire agreement could be valid, enforceable and exempt from the Consumer Credit Act. If a credit hire agreement complies with the Consumer Credit (Exempt Agreements) Order 1989, then it is likely to be valid. This will be the case if:

1. It requires the debt to be paid in not more than four instalments in less than twelve months from the date of the agreement.

Most challenges to the validity of credit hire agreements are generally unsuccessful, provided the agreements comply with the requirements laid down in Clark.

Duration of hire

The law on this point was set out at paragraphs 115 to 121 of Clark. For the hire period to be reduced, the court should consider whether there was a failure to mitigate on the part of the Claimant, which could be said to be an independent cause of the loss of use of the Claimant’s own vehicle for that period. In particular, if the Claimant acted reasonably in placing his vehicle with a reputable garage, and that garage delayed carrying out the repairs, then the Defendant remains liable for the full period -- but can seek a contribution from the garage.

When the vehicle is repairable, delays generally come in three types: delay in starting repairs, delay in carrying out repairs, and delay in returning the hire vehicle when repairs are complete. A delay in starting repairs may or may not be the fault of the Claimant (or his insurance company). But if the Claimant’s insurer delayed instructing an engineer to inspect the vehicle, or delayed authorising repairs, that period is unlikely to be awarded. On the other hand, if the Defendant’s insurance company was dealing with repairs, the period is likely to be recoverable.

Delay in the course of repairs is very likely to be recoverable, subject perhaps to a contribution from the garage. Most garages are reputable and most people simply leave the garage to get on with it, although some difficulty can arise if the Claimant did not chivvy or chase the garage. In most cases, delays in this period are recoverable.

Delay following completion of repairs is difficult to justify beyond (in some cases) a few days. Most of the time there is no reason a Claimant could not pick up his vehicle straight away, and any delay is likely to be his own fault – or sometimes an administrative error by the hire company. On the other hand, a Claimant who was unable to pick up his vehicle straight away for a specific, good reason – such as being away on business in the hire vehicle – is likely to succeed.

When the Claimant’s vehicle is written off, other complexities arise. If the Claimant did not have comprehensive insurance, then he would have to buy another vehicle himself – possibly with money provided by the Defendant’s insurer. In these circumstances a sort of impecuniosity is relevant, although not in the same way as referred to in Lagden (discussed below).

If the Claimant could afford to buy a new vehicle straight away, then a hire period longer than a few weeks is unlikely to be justified. With an inexpensive vehicle, most claimants would be able to afford a loan to buy a replacement. If the vehicle is more expensive, then this becomes less feasible – but someone who owns a more expensive vehicle is likely to have more money available to buy a new one.

If the Defendant’s insurer delayed payment of the pre-accident value, this can sometimes justify longer claims. However, the courts are generally sympathetic to the argument that the Claimant should have bought a replacement himself, especially if the delays are lengthy.

Hire rate and impecuniosity

In Clark, the Court of Appeal set out that the Claimant must adduce evidence of the rate charged by a car hire company. The burden of proof then passes to the Defendant to show that the Claimant could reasonably have used a different, cheaper hire company. The burden is normally discharged by way of a report on ‘spot hire’ rates: evidence (whether lay or expert) of a survey of the rates charged by local hire firms for an equivalent vehicle. Because these firms do not provide credit hire, they are generally cheaper.

Once the Defendant has discharged this burden, the Claimant must then show that he had no choice but to use credit hire (‘Need’). If so, he can still recover the full credit hire rate. This is the effect of Lagden. Normally, the Claimant had no other choice if he was impecunious: that is, he could not afford to pay spot hire charges up front.

There was no single test laid down for impecuniosity in Lagden. Lord Nicholls suggested (at paragraph 9) that it was a question of priorities: if the Claimant could not pay hire charges without making sacrifices he could not reasonably be expected to make. Lord Hope said (paragraph 36) that an impecunious Claimant could not pay the spot hire charges without exposing himself or his family to a loss or burden which is unreasonable. He also said (paragraph 42) that the dividing line was likely to fall between those who did and did not have a credit or debit card. With respect to the latter, the courts normally consider whether the Claimant had sufficient funds available through his credit or debit card as well.

Impecuniosity nearly always comes down to a question of fact for the trial judge. Each case is decided on its own merits.

Liability at Common Law

Negligence places a burden upon the claimant to prove:

1. The D owes him a duty of care.
2. The D is in breach of that duty.
3. The breach has caused consequential losses reasonably foreseeable.

Establishing liability for road traffic accidents:

Road users have a duty of care to avoid causing injury to others who maybe injured by their actions. The standard of care is that of the ordinary skilful driver. Drivers owe a duty to take reasonable care to ensure the safety of their passengers.

Funding: Many firms offer a free initial half-hour interview, where they will form a view as to the viability o a PI claim:

• Conditional fee Agreement: Under s58 of the Courts and Legal Services Act 1990, a solicitor and client can agree that the client will pay his own solicitor costs under certain agreed circumstances (usually upon winning).
• After the event insurance: Insured against having to pay the other sides costs and disbursements as well as own. Usually taken out once legal action is required and before proceedings have commenced,

The clients proof of evidence not to be confused with the clients witness statement. The function of the proof is to obtain the fullest possible detail from the client. Usually taken at the end of the interview.

Limitations

• Has the 3 years limitation period expired? If so the solicitor should consider issuing protective proceedings immediately.
• Or request for the limitation period be disapplied.
• When was the client aware of his injury and cause of action.

Steps to be taken to kick start RTA claim:

1. Get the CFA signed
2. Gather evidence (medical records)
3. Issuing letter of claim.
4. Contact witnesses.
5. Deal with any mitigating losses.
6. Consider money laundering.
7. Do an MID search or DVLA search.
8. Obtain a police accident report, from the Criminal Justice Support team.
9. Instruct a doctor
10. Proof of Evidence

Pre-action protocol -Letter of claim: Nominate a medical expert to be agreed by both parties and draft a schedule of loss.