Featured case: Civil procedure

Simmons v Castle. First interested party: Association of British Insurers; second interested party: Association of Personal Injury Lawyers; third interested party: Personal Injuries Bar Association. [2012] EWCA Civ 1288. Lord Judge LCJ; Lord Neuberger (MR); Maurice Kay LJ. 10 October 2012

The court amended the guidance in Simmons v Castle [2012] EWCA Civ 1039 by stating that, with effect from April 1 2013, general damages in all civil claims for specified heads of loss would increase by 10 per cent unless the claimant fell within the Legal Aid, Sentencing and Punishment of Offenders Act 2012 s.44(6).

Judgment accordingly

The court was asked to reconsider aspects of a decision to increase general damages in tort cases by 10 per cent.

The court had decided that the level of damages for pain, suffering and loss of amenity in respect of personal injury and all other torts would rise by 10 per cent. This was to apply to all cases in which judgment was given after April 1 2013 and was intended to give effect to a package of reforms recommended by Sir Rupert Jackson in his ‘Final Report on Civil Litigation Costs’ (the report).

The Association of British Insurers (ABI) submitted that the increase in damages should only apply to cases where the claimant’s funding arrangements had been agreed after April 1 2013, otherwise claimants who had entered into conditional fee agreements (CFAs) before that date would receive both the increased damages and the success fee.

Judgment accordingly

It was necessary to consider why the recommendation for the increase in damages had been made. One of the proposals of the report was that, as was reflected in the legal aid act s.44 and s.46, a successful claimant suing with the benefit of a CFA should no longer be able to recover the success fee from the defendant.

The rise was recommended to help such claimants meet success fees they would have to pay out of damages. The report went on to say that while the rise might appear to be a windfall for claimants not on CFAs, the level of general damages was not high, so it would be an opportune moment to raise the level of damages generally.

It was clear that the Ministry of Justice also regarded the proposed increase as a quid pro quo for depriving successful CFA claimants of the ability to recover success fees from defendants, and that Jackson intended his proposals to be accepted or rejected as a package.

The ABI had argued that it was wrong to permit CFA claimants who were entitled to recover their success fee by virtue of s.44(6) to benefit from the increase in damages. It was hard to challenge that contention. The ABI further argued that the “misalignment” could easily be met by adding a qualification to the earlier decision, namely that it would not apply to claimants who had entered into a CFA before April 1 2013. Such an amendment appeared to be simple and to dispose of the misalignment.

However, rather than excluding from the increase those claimants who entered into CFAs before April 1 2013 the court decided to exclude claimants who fell within the ambit of s.44(6). That meant there would be a guaranteed identity between successful claimants who were statutorily entitled to recover their success fees and those who were disentitled from enjoying the 10 per cent increase in general damages. In addition, if there was any risk of satellite litigation it would be limited to the formulation set out in s.44(6).

It would be inconsistent and unfair to limit the increase to claims in tort. The court therefore declared: “With effect from April 1 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 per cent higher than previously, unless the claimant falls within s.44(6) of the 2012 Act.

“It therefore follows that, if the action now under appeal had been the subject of a judgment after April 1 2013, the proper award of general damages would be 10 per cent higher than that agreed in this case.”

For the first interested party ABI

  • Timothy Dutton QC, Fountain Court
  • Jamie Carpenter, Hailsham Chambers’
  • Andrew Parker, partner, DAC Beachcroft partner

For the second interested party Apil

  • Grahame Aldous QC, 9 Gough Square

For the third interested party Piba

  • Charles Cory-Wright QC, 39 Essex Street
  • Martyn McLeish, Cloisters’

Commentary

Don Clarke

This was an important judgment and the Forum of Insurance Lawyers was delighted to see their lordships have the courage to change their minds and adopt a common-sense approach to the

10 per cent uplift in pain, suffering and loss of amenity (PSLA).

The ABI’s application was successful in respect of claims funded by a conditional fee arrangement (CFA.

The court linked the increase to the legal aid law. The new wording is clear that the uplift will be awarded “unless the claimant falls within section 44(6) of [the act]” – that being the section that allows a claimant with an existing CFA to recover a success fee. This prevents double recovery and retrospective application.

That could avoid additional costs of around £300m – a burden that would have been passed on to the premium-paying public and taxpayers.

While the ABI’s intervention, allied to the willingness of the Court of Appeal to revisit its decision, should be applauded, the judgment must be placed in context. Last month the Judicial College issued the ‘11th edition of the PSLA Guidelines’ and, in certain areas, this delivered PSLA inflation of 9 per cent. The cumulative effect, when linked to Simmons, will be a ratcheting effect of damages by some 20 per cent in many cases.

This is all against a backdrop of a government that says it wishes to act to reduce premiums.

Don Clarke is president of the Forum of Insurance Lawyers