10 October 2012Print This Post

Court of Appeal accepts insurers’ argument to limit impact of 10% damages increase

Judge: increase makes up for end of recoverabilty

The Court of Appeal has amended its ruling on the 10% increase in general damages after accepting that claimants funded by conditional fee agreements (CFAs) whose cases begin before 1 April 2013 but conclude afterwards should not benefit from it.

However, the court refused to extend this to conventional claimants, while maintaining that the uplift will apply to all claims, rather than just personal injury cases.

In its original ruling in Simmons v Castle, the court said the 10% increase would apply to all cases where judgment is given after 1 April – meaning that a CFA-funded claimant whose case starts before 1 April would also recover their success fee. This ‘double bubble’ led to a challenge by the Association of British Insurers (ABI).

Ruling today, the Lord Chief Justice Lord Judge said it was clear that both Sir Rupert Jackson and the Ministry of Justice intended the 10% increase to compensate successful claimants, as a class, for being deprived of recovering the success fee under section 44(6) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

Rejecting the arguments of the Association of Personal Injury Lawyers (APIL) that it should not amend its ruling, he said the change “will be likely to lead to fewer procedural problems than if we reject the proposal”.

He explained: “If the amendment is rejected, there could be cases where a part 36 offer was sufficient at the time it was made but was insufficient after the 1 April; no such difficulties would arise if ABI’s proposal was accepted. Similarly, if ABI’s proposal is rejected, there could be cases where defendants try to accelerate the trial and claimants try and delay it. We do not think that these problems are considerable, but they tend to favour ABI’s case.”

Lord Judge added that it was not a function of the court in this case to consider more generally whether damages are in any case too low, as APIL suggested.

The court said only CFA-funded claimants would be affected; it rejected the ABI’s contention that all “conventional” claimants and self-represented litigants (SRLs) should also not receive the 10% if the case begins before 1 April.

Lord Judge said: “The essential point is that conventional claimants and SRLs will not be worse off after 1 April 2013, and therefore the logic which underpins ABI’s argument in relation to CFA claimants is simply not present in relation to conventional claimants or SRLs. There is therefore no basis for acceding to ABI’s case in relation to them.”

He also said “it would be inconsistent and unfair to limit the 10% increase to claims in tort, so that it did not apply, for instance, to claims in contract”.

APIL president Karl Tonks said the original ruling provided a “simple, clear and fair” solution. “But now someone who starts funding his claim in, for example, March next year but whose case concludes in, for example, November, won’t be entitled to the increase, while at the same time someone who starts on 1 April but whose case concludes in November will receive a different sum in damages for his pain and suffering.

“It could easily mean that two claimants leaving court on the same day, with the same injuries, will receive different damages just because of the date on which they signed their funding agreement.

“Not content with all the extra money it will save from injured people as a result of the LASPO Act, the insurance industry has, once again, put the needs of its shareholders before those of people who are injured through no fault of their own. And once again, the victim loses out.”

The court accepted the “uncomfortable fact” that there will be different levels of damages awarded at the same time, conceivably in the same proceedings to two claimants who have suffered the identical injuries. “However, it is not difficult to think of circumstances in which this could happen even if ABI’s proposal was rejected. Further, if ABI’s proposal was accepted, this sort of outcome would, we suspect, occur relatively rarely, and it would only be a temporary phenomenon. In all the circumstances, we regard the point as a fair, but not a particularly powerful, one.”

 

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