Wednesday, 10 October 2012

The Penny and the Bun - Simmons -v-Castle Round 2

The Court of Appeal has today (10 October) given a second judgment in Simmons-v-Castle.  It has qualified the introduction of an across the board 10% increase in general damages with effect from 1 April 2013. The uplift will not apply to claimants who had entered CFA's before that date. However, it has rejected the suggestion that the uplift should only ever apply to claimants who are liable to pay their lawyers' success fees.

The Court had previously, without hearing submissions, hijacked a settled quantum appeal to announce a 10% increase in general damages for (i) pain, suffering and loss of amenity arising from personal injury, (ii) nuisance, (iii) defamation and (iv) other torts causing suffering, inconvenience or distress to individuals. The 10% increase was to come into force from 1 April 2013.

The judgment was given because of an understanding or covenant between the judiciary and the government regarding the reforms to civil litigation costs (following the Jackson reforms). The uplift in damages was an important part of the reforms, designed to compensate claimants for having to pay their lawyers' success fees, rather than recovering those fees from the losing party.

The 10% uplift is expressly not about compensating claimants for their injuries. The justification is not to give claimants more appropriate levels of damages for their pain, suffering and loss of amenity, but to give them money to pay their lawyers.

On the application of the Association of British Insurers, the Court agreed to re-open the appeal and to hear submissions. Concerns had been expressed about the fact that the uplift would benefit all claimants, even those who would still be able to claim all their costs, including success fees, from losing parties after 1 April 2013 (because they had entered into CFAs before that date). 

In my view the use of compensation for injury as a means of balancing a reform to costs was wrong in principle and was bound to give rise to injustice. If you adjust the general damages for all claimants then there will be gainers and losers. Some claimants will not have to pay success fees, some (very few) will pay fees which coincidentally match the 10% increase, others will pay fees which exceed the increase. The unattractive alternative is to award different levels of general damages to different claimants according to their liability to pay success fees.

It would have been better to leave general damages out of the costs changes altogether.

Now the Court of Appeal has addressed the submissions of various interest groups within the civil litigation system. It accepted ABI's primary submission that the 10% uplift ought not to apply to claimants who had already entered into a CFA before 1.4.13. It has determined that the conclusion of its original judgment ought to have been:

"Accordingly, we take this opportunity to declare that, 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. It therefore follows that, if the action now under appeal had been the subject of a judgment after 1 April 2013, then (unless the claimant had entered into a CFA before that date) the proper award of general damages would be 10% higher than that agreed in this case, namely £22,000 rather than £20,000".

The Court said that to hold othewise would be to give claimants "the penny and the bun".

However, after 1.4.13 many claimants will have the penny (the uplift) and they will have the bun (not having to pay success fees). The Court recognised that this would happen to claimants not funding claims by CFA or who were self represented and accepted it as a price worth paying for the simplicity and overll justice of the reform. However, in my opinion the 10% uplift will be a windfall in most cases because the market will drive out success fees. And if the market does not support claimants paying lawyers out of damages, then the great majority of claimants will have the penny and the bun.

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