Uplift ruling is a lesson for litigants

Litigants with CFAs should heed the Court of Appeal's declaration on how the increase in general damages will be applied post April 2013, says Greg Cox

One of Sir Rupert Jackson’s main recommendations in his report on the reform of civil litigation costs, which will come into effect in April 2013, was, of course, to increase the level of general damages in certain categories of cases by '¨10 per cent.

Last week, the Court of Appeal handed down its second judgment in the case of Simmons v Castle [2012] EWCA Civ 1288, where the appeal judges sought to implement this recommendation.

The primary purpose of the 10 per cent increase was (and this proposition was challenged but accepted by the Court of Appeal) to offset, at least in theory, the effect of claimants losing the right to recover success fees and/or after-the-event '¨insurance premiums.

In July, a very strong Court of Appeal (the Lord Chief Justice, the Master of the Rolls, and the Vice President of the Civil Division) took the opportunity, while approving settlement in Mr Simmons case, to announce the increase in general damages.

Imperfect justice

The court specifically set out: "We have not been addressed by counsel on the issue of increasing the level of general damages. It does not seem to us to be appropriate, let alone necessary, for us to be so addressed.”, before concluding that “it should apply to '¨all cases where judgment is given after '¨1 April 2013. It seems to us that, while it '¨can be said that this conclusion does not achieve perfect justice in every case, the same thing can be said about any other answer to the question."

So far, so good you may think. Except that the ABI and the defendant personal injury lobby were unhappy and sought to challenge, or at least invite the court to reconsider, the point.

The ABI's primary complaint was that some claimants would get a windfall because of the way the transitional provisions in LASPO work. Essentially, claimants (or for that matter defendants) who entered into CFAs before April 2013 can still recover the success fee even if their cases are not resolved until after the changes. The ABI cried that it was unfair that claimants who will get their success fee will also benefit from the 10 per cent increase in general damages. As the court put it, those claimants would have the penny and the bun. Except that this was, at least on the ABI's figures, it would be a £300m bun.

The Association of Personal Injury Lawyers and the Personal Injury Bar Association both intervened, PIBA adopting a relatively neutral stance save for advocating the 10 per cent increase beyond just tort cases (this position was accepted). APIL deployed a range of arguments to which I cannot do justice in this article. They warned of satellite litigation and pointed to the already low level of general damages, and the uncomfortable position of having different levels of damages for claimants with different funding.

The Court of Appeal recognised the force in ABI's arguments and amended its earlier judgment declaring: "With effect from 1 April 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% higher than previously, unless the claimant falls within section 44(6) of LASPO." Section 44 (6) LASPO reference is to those who can recover their success fee post-April because they entered into a pre-April CFA.

Correct approach

In my opinion, the court was right to correct the "misalignment". But of more concern is that this was one of the simplest parts of the Jackson reforms to implement and the difficulties encountered here do not bode well for implementation in some of the more difficult areas.

In this regard, the Ministry of Justice '¨has made further announcements about '¨how it will take the recommendations forward. The latest update is most notable for the fact that the MoJ have disregarded '¨a key recommendation of the eminent '¨group considering damages based agreements that there is no need for a cap '¨in commercial cases. The MoJ say there '¨will be a 50 per cent cap.

It is perhaps best to conclude with this sentiment from the Court of Appeal: “it is important that parties engaged in current or projected litigation can know where they stand well in advance of April 2013 so that they can make properly informed decisions about matters such as issuing proceedings, settling or making Part 36 offers.”

Unfortunately we appear to be a long way from that position at the moment and that risks injustice.