The Court of Appeal has confirmed that general damages will increase by 10% where judgment is given after 1 April 2013: Simmons v Castle [2012] EWCA Civ 1039. The increase will apply to damages for: pain, suffering and loss of amenity in respect of personal injury; nuisance; defamation; and all other torts which cause suffering, inconvenience or distress to individuals.
This implements a recommendation from Lord Justice Jackson’s final report, aimed at assisting claimants to meet the additional costs and risks arising from his recommendation to abolish recoverability of conditional fee agreement (CFA) success fees and after-the-event (ATE) insurance premiums (being implemented under the Legal Aid, Sentencing and Punishment of Offenders Act 2012). From April 2013 parties will still be able to enter into CFAs and take out ATE insurance to fund their litigation, but will have to bear the additional costs of doing so, with an obvious impact on the level of damages claimants will receive (though in personal injury cases the success fee will be subject to a cap of 25% of damages, excluding for future care and loss). The increase in general damages, together with the move to qualified one-way costs shifting for personal injury claims (see post) and the enhanced sanctions for claimants’ Part 36 offers (see post) is intended to counter-balance this impact.
Notably, the cut-off date for the abolition of recoverability for CFA success fees and ATE premiums depends on whether the arrangements are entered into, whereas the 10% increase in general damages depends on when judgment is given. In light of the impending change, it might be expected that some claimants with relevant tort claims will seek to drag their heels to avoid proceeding to judgment before next April.
Note: The Association of British Insurers (ABI) has applied to the Court of Appeal requesting it to reconsider its decision that the 10% increase should apply to all cases where judgment is given after 1 April 2013. The ABI argues that, instead, the increase should apply: (a) if the claimant has entered into a CFA or taken out an ATE insurance policy after 1 April 2013; and (b) in all other cases where the letter of claim or proceedings were served after 1 April 2013. The application is to be heard by the Court of Appeal on 25 September – see [2012] EWCA Civ 1189.