Court of Appeal rethink over damages

“Successful claimants who entered into a conditional fee agreement before 1 April 2013 will not be given an extra 10% of damages, the Court of Appeal has ruled, amending its previous position.

In July, in the case of Simmons v Castle, the court announced that general damages in tort cases would be increased by 10% from 1 April 2013—implementing one of Lord Justice Jackson’s recommendations for civil costs. The increase is partly intended to make up for the fact claimants will no longer be able to recover their success fees from the losing side.

However, the Association of British Insurers (ABI) asked the court to re-open the case, objecting that many claimants would be able both to gain from the extra 10% and recover their success fees, and so would receive a “windfall”. It suggested that only claimants whose funding arrangements were agreed after 1 April 2013 should be given the extra 10%, as those claimants would not be able to recover their success fees.

At the re-hearing, led by the Lord Chief Justice, Lord Judge, the court held that the “primary purpose” of the 10% increase was as a quid pro quo for depriving successful claimants of the ability to recover success fees ([2012] EWCA Civ 1288).

It rejected the Association of Personal Injury Lawyers’ (APIL’s) arguments that keeping to the court’s initial position would be clearer and would avoid the risk of satellite litigation—that risk would “rarely arise”.

Ruling last week, the court followed the ABI’s suggestion, and also extended the increase in damages to contract cases as well as tort—an amendment that was suggested by the Personal Injuries Bar Association.

Don Clarke, President of the Forum of Insurance Lawyers, says the judgment is “a victory for common sense”.

“As Simmons has proven, the devil is in the detail and the government now needs to accelerate the pace so that claimants and compensators can have clear visibility as to the changes coming in April 2013.”

Karl Tonks, president of APIL, says the decision means “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”.