In the recent judgment of Simmons v Castle, the Court of Appeal has confirmed that in all cases where a judgment is given on or after 1 April 2013, the proper level of general damages to be awarded for personal injury, nuisance, defamation and all other tort claims that cause suffering, inconvenience or distress to individuals will be increased by 10%.
Lord Justice Jackson’s Review of Civil Litigation Costs: Final Report in December 2009 included recommendations that general damages for pain, suffering and loss of amenity should rise by 10% to redress the potential claimant-defendant imbalance where CFA success fees and ATE insurance premiums would no longer being recoverable from defendants in civil litigation. This was ostensibly designed by Lord Justice Jackson to leave claimants “no worse off than they are under the current regime”. Provisions regarding recoverability of CFA success fees and ATE premiums, along with other recommendations from the Final Report, are brought into law by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which comes into force on 1 April 2013 (see our previous Law-Now on the Act). However, the recommendation for a 10% increase in damages in tort claims is not set out in the Act (or elsewhere).
In Simmons v Castle, the Lord Chief Justice provided clarity on when and how the 10% increase would come into effect. While approving the quantum of a personal injury settlement in the instant case, he took the opportunity to state that, with effect from 1 April 2013, the proper level of general damages to be awarded in judgments for: (1) pain, suffering and loss of amenity in respect of personal injury; (2) nuisance; (3) defamation and breach of privacy; and (4) and all other torts which cause suffering, distress or inconvenience to individuals will be 10% higher than previously.
Now that the date that the increase on damages will come into effect has been confirmed, defendants have an additional incentive to settle meritorious claims in advance of 1 April 2013 to avoid additional liability. Claimants (on the other hand) may attempt to prolong or delay proceedings to leverage either a higher settlement amount or a higher amount in damages awarded at trial.
Further, claimants who enter into CFAs and ATE insurance before 1 April 2013, and whose cases are not settled or decided before this date, will also be able to claim 10% more in damages whilst also being able to recover their success fees and ATE premiums. During this interim period, defendants will risk the combined effect of CFA success fees, ATE insurance premiums and an increase in damages. The courts may, of course, take steps to avoid this potential additional recovery.
The 10% increase on tort damages may also have an unforeseen impact on Part 36 offers. It is uncertain whether the date on which a Part 36 offer has been made, and therefore whether the sum offered should attract an increase of 10% or not, will now have to be taken into account by a court when determining whether an offer was beaten.
Please click here for the full judgment.