ABI secures compensation victory as CoA reverses earlier ruling

The Court of Appeal (CoA) has handed a victory to the Association of British Insurers (ABI) after it ruled that only conditional fee agreements (CFA) entered into after 1 April 2013 will benefit from a 10 per cent rise in damages.

Timothy Dutton QC
Timothy Dutton QC

The ruling, given by the Lord Chief Justice Lord Judge, newly appointed Master of the Rolls Lord Dyson, and vice president of the CoA Sir Maurice Kay, reverses the position of a CoA ruling given in Simmons v Castle.

The ABI instructed DAC Beachcroft partner Andrew Parker and Fountain Court’s Timothy Dutton QC to act after that ruling opened a loophole that meant that all CFA cases where judgment was given after 1 April 2013 would benefit from the uplift regardless of when the claim was filed.

In a highly unusual move the CoA agreed to reopen the case, requesting that the ABI contact the Association of Personal Injury Lawyers (Apil) and the Personal Injury Bar Association (Piba) to add them to the list of parties as defendants.

Apil directly instructed 9 Gough Square’s Grahame Aldous QC, while Piba drafted in 39 Essex Street’s Charles Cory-Wright QC to lead the defence.

Dutton argued for the ABI that allowing the 10 per cent uplift would create “a misalignment involving a windfall for successful claimants”. It was also argued that claimants with traditionally funded cases should not be entitled to the 10 per cent increase unless the letter of claim or service of proceedings was served after 1 April 2013.

Apil countered that Lord Justice Jackson’s litigation funding reforms, which were the trigger for the compensation hike, were intended to raise damages, which, he said, are “not high at the moment” and would counterbalance the effect of halting recoverability of the success fee.

Giving the lead judgment Lord Judge LCJ accepted the ABI’s position and overturned the first instance ruling, stating that only claimants who issued after April next year would benefit from the 10 per cent rise.

The ABI had claimed that if the original position was maintained it would cost the insurance market £300m in motor insurance premiums, a cost that would be passed on to the consumer. In court Apil criticised the figure but Lord Judge LCJ held that it was “not a good argument. The precise figures do not matter.”

He added: “It is obvious that, if the ABI’s proposal is accepted, the insurance industry and other groups representing defendants will be significantly better off than if the proposal is rejected, and it is equally obvious that this would be reflected in the level of future premiums.”

The ABI welcomed the ruling, with assistant director of motor and liability James Dalton saying: “We’ve won a battle against unnecessary costs but not the war. So the fight to bring about a speedier, more cost-efficient civil litigation system for the benefit of claimants and customers continues.”

Apil, meanwhile, slammed the decision. In a statement president Karl Tonks, who is also a Fentons partner, said: “Not content with all the extra money it will save from injured people as a result of the Laspo [Legal Aid, Sentencing and Punishment of Offenders] 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,” he went on. “And once again, the victim loses out.”

The Lawyer first revealed that the ABI was planning to have the case reopened last month after Lord Judge LCJ and former MR Lord Neuberger raised the compensation limit through a standard personal injury case (3 September 2012).