In Simmons v Castle,1 the Court of Appeal has ruled on the 10% uplift in general damages proposed by Sir Rupert Jackson in his 2009 Final Report on Civil Litigation Costs. It gave its first judgment in July and then modified and clarified that ruling in a second judgment given in October. In its initial judgment, the court held that:

19. The only remaining question is precisely how the increase should be applied. We have concluded 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, particularly in the light of a number of the forthcoming changes being made to the costs regime pursuant to Sir Rupert’s recommendations. Our conclusion has the great merits of (i) providing a simplicity and clarity, which are both so important in litigation, and (ii) according with the recommendation of Sir Rupert, which is consistent with much of the rationale of the 10% increase in general damages.

20. Accordingly, we take this opportunity to declare that, with effect from 1 April 2013, the proper level of general damages for (i) pain, suffering and loss of amenity in respect of personal injury, (ii) nuisance, (iii) defamation and (iv) all other torts which cause suffering, inconvenience or distress to individuals, will be 10% higher than previously. It therefore follows that, if the action now under appeal had been the subject of a judgment after 1 April 2013, the proper award of general damages would be 10% higher than that agreed in this case, namely £22,000 rather than £20,000.

The Association of British Insurers (“ABI”) was concerned that as a consequence claimants who would not be having to fund any success fee themselves would secure a windfall benefit over and above that intended by Sir Rupert. It therefore made two applications, inviting the court to reconsider:

  • Whether the 10% increase should apply only to cases where the claimant’s funding arrangements for his or her legal costs had been agreed after 1 April 2013 (i.e. in cases where the claimant was no longer entitled to recover the 100% success fee from the defendant); and
  • Whether non-CFA or ‘conventional claimants’, should be entitled to the 10% uplift. ABI contended that such conventional claimant’s would receive a ‘windfall’ if the increase were to be awarded and that there would be a ‘misalignment.’

The application was heard on 25 September 2012, where submissions were made by two other interested parties, the Association of Personal Injury Lawyers (“APIL”) and the Personal Injuries Bar Association (“PIBA”). PIBA raised an additional point, namely whether the 10% increase announced in the original judgment, which

  1. on the face of it appeared to confine the increase in PSLA damages (paragraph 20(i)) to tort claims, and
  2. undoubtedly expressly confined the increase to other claims for suffering inconvenience or distress (paragraph 20(iv)) to tort claims,

should expressly be extended to cases in contract and to claims for general damages more widely.

On the renewed hearing, the court held that it was necessary when trying to give effect to Jackson’s report to consider the reasons why the recommendation for the increase in damages had been made. The court considered this at paragraphs 22 – 28 of its judgment and held that:

  • One of the main recommendations of the report was that a successful claimant suing with the benefit of a CFA should no longer be able to recover the success fee from the defendant. This was later reflected in sections 44 – 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (‘LASPO’).
  • The increase was therefore intended to assist claimants who could no longer recover the success fee from the defendant in meeting their costs bill, which would come out of their award for damages.
  • The report specifically considered that the level of general damages was not generally high, and although any 10% uplift may represent a windfall for ‘conventional claimants’, the report saw this as an opportunity for increasing awards for general damages generally.
  • It was clear that the Ministry of Justice had also seen the increase as a quid pro quo for successful claimants who were deprived of a success fee.2

The relevant statutory provisions relating to the recoverability of success fees, which underpin the decision in Simmons v Castle, are as follows:

  • The current costs regime, which has been in place since 1999, under the amended section 58 of the Courts and Legal Services Act 1990 and sections 44 – 46 of LASPO.
  • By Section 44(4) of LASPO, success fees will no longer be recoverable as an item of costs from a defendant save for when section 44(6) applies.
  • Section 44(6) provides an exception to the irrecoverability of success fees, where the claimant has entered into a CFA before 1 April 2013.
  1. The Court of Appeal accepted the ABI’s submissions that the 10% increase in all cases where judgment is given after 1 April 2013 should not apply to claimants who are entitled to recover a success fee. However, rather than excluding from the increase those claimants who entered into CFAs before April 1, 2013 the court decided to exclude those claimants who fell within the ambit of section 44(6) of LASPO (paragraphs 31 – 32, 40). It seems that there will be an almost 100% overlap between the two proposals. (In so doing it rejected APIL’s argument that the ABI’s proposals would produce satellite litigation and uncertainty, stating that that proposal would be likely to produce fewer inconsistencies and anomalies.)
  2. The Court declined to limit its decision to CFA claimants. It accepted that ‘conventional claimants’ would be in a better position and that this may produce some inconsistency. However, the court considered that the only way to ensure consistency would be to deprive both conventional claimants and selfrepresented claimants of the 10% increase generally, and that this would be ‘plainly inappropriate.’ Moreover the Court added that ‘two wrongs do not make a right’ and emphasised that the proposed regime was only an intermediate measure.
  3. The court held that it would be unfair and inconsistent to limit the 10% increase to claims brought in tort, and therefore acceded to PIBA’s application to apply it to contract claims and to other heads of general damage as well. It held that the increase should apply with effect from 1 April 2013 to all categories of civil claim for general damages unless, of course, the claimant falls within section 44(6) of LASPO. It identified these categories of claim (by reference to the latest edition of MacGregor on Damages) as (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. The court in summarising its decision, removed paragraph 19 from its first judgment and replaced paragraph 20 with the following:

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 expressly acknowledged that in view of the specific categories referred to immediately above there might be some categories of non-pecuniary general damage in relation to which it would be unclear whether the increase applied; these would have to be resolved on a case by case basis.

This decision, aside from being welcome from the point of view of insurers, means that litigators can now proceed with some certainty that CFA funded claimants who have entered into a CFA after 1 April 2013 will not receive the 10% uplift in general damages.

The Court of Appeal has not offered any guidance as to how the Court will assess which party is successful in beating a Part 36 offer where the claimant has beaten the offer due only to the 10% uplift. This has been left, it seems, for another day.