However, the Court confirmed that in all other cases, the increase will be applied to all cases decided after 1 April 2013, regardless of when they were commenced.
The ABI argued that the previous decision in Simmons to increase general damages for all claimants post April 2013 was illogical. The primary purpose of the 10 per cent increase is to compensate successful claimants who, from April 2013, will have to pay for the success fee from their damages (up to a maximum of 25 per cent).
The ABI highlighted the "misalignment" of the Court’s earlier decision as it would lead to a windfall to successful claimants funding litigation on a current style CFA. As a secondary point – all be it one with less resonance – the ABI suggested that all non-CFA (or "conventional") claimants should also not receive such a windfall unless the claim was instigated after 1 April 2013.
The Court also took the opportunity to clarify which categories of general damages awards will benefit from the 10 per cent increase, namely those awarded for pain and suffering, loss of amenity, physical inconvenience and discomfort, social discredit and mental distress - whether claimed in tort or in contract. The core claims covered will be personal injury, clinical negligence, professional negligence, nuisance, defamation and housing disrepair claims. All other types of cases will be dealt with on a case by case basis.
We can, however, envisage some situations were there may be uncertainty. What will the outcome be for those cases where there is a change in solicitor from one who has a retainer for recovery of his costs under a CFA which falls into s. 44(6), to one where the post April 2013 position applies – how will the 10 per cent uplift in general damages and payment of success fee apply? Will we see claimant solicitors recommending a change in their clients’ funding arrangements before April 2013?
We suspect that these situations will be few and far between and, as suggested by the Court, will be dealt with on an individual basis. Indeed, the Court recognised such circumstances would "occur relatively rarely, and it would only be a temporary phenomenon".
The Court of Appeal has achieved in this revision of its earlier decision "simplicity and clarity". It took the ABI to highlight the flaws in Simmons v Castle. The result: less satellite litigation for lawyers.
As James Dalton, the ABI’s Assistant Director of Motor and Liability, said:
“We have won the battle against unnecessary costs but not the war ... We are also pleased that the Court now acknowledges that it should have sought submissions from the ABI and other interested parties before announcing the increase”.
In July, the Court of Appeal confirmed that general damages will increase by 10 per cent where judgment is given after 1 April 2013 – whether or not a CFA is in place and irrespective of when the agreement was signed (Simmons v Castle (26.07.12)).
Whilst the decision was expected as part of the Jackson reforms of civil litigation funding, it prompted concern about uncertainty of its effect. The Court recognised that its decision would not "deliver justice in every case" with the result that the Association of British Insurers (ABI) confirmed it would challenge the ruling.
At a hearing on 25 September, the Court of Appeal heard submissions from the ABI, the Personal Injuries Bar Association (PIBA) and the Association of Personal Injury Lawyers (APIL), with other interested parties (including Kennedys), writing in support of the challenge through the ABI.
There was no objection to the increase in principle provided that it was aligned with the Jackson reforms. However, the ABI and PIBA submitted that the blanket increase in general damages was not what was intended by Lord Justice Jackson and created a discrepancy between self-funded claimants, CFA and after the event (ATE) funded claimants and parties where Part 36 offers were made in an attempt to settle the matter.
The ABI and PIBA sought clarity from the Court about the position and so prevent satellite litigation. APIL agreed that clarity was required but considered that this could be achieved by maintaining the decision as previously stated.