Simmons v Castle

Background:

One aspect of Sir Rupert Jackson’s proposed reforms on Civil Litigation Costs was recently put into effect by the Court of Appeal in the case of Simmons v Castle ([2012] All ER (D) 335 (Jul)). The Court held that general damages in tort cases were to be increased by 10% from current levels in judgments brought after 1 April 2013.

On 16 August 2012, an application was brought by the Association of British Insurers (“ABI”) on behalf of Mr. Castle asking for some aspects of the original July judgment to be reconsidered. The main focus of ABI’s application was to ask the Court to reconsider whether the 10% in general damages should only apply to cases where the Claimant’s funding arrangements for their legal costs had been agreed after 1 April 2013.

The Legal Costs Framework:

The Legal Aid, Sentencing & Punishment of Offenders Act 2012 (“LASPO”) contains certain provisions which, once they come into force on 1 April 2013, will bring in reforms to Conditional Fee Agreements (“CFAs”). The level of the success fee is to be limited to a maximum set by the Lord Chancellor and success fees will no longer be recoverable from the losing party as part of Claimant’s successful costs.

Importantly, however, s.44 (6) of LASPO provides that ATE premiums and success fees will continue to be recoverable where the policy or conditional fee agreement is entered into before 1 April 2013.

ABI’s Arguments:

ABI’s primary argument was that the 10% increase in general damages is designed to compensate successful Claimants who fund their litigation through a CFA for the loss of the right to recover the success fee from the Defendant. However, some Claimants would still be able to recover the success fee from the Defendant because they fall within s.44 (6) of LASPO, i.e. where the CFA was entered into before 1 April 2013. ABI argued that this was unfair and illogical and certain Claimants will be able to recover twice, in that they will benefit from the 10% increase in damages and will still be able to recover the success fee.

The issue for the Court to consider was whether a Claimant who has entered into a CFA before 1 April 2013 should be able to enjoy the 10% increase in general damages.

The Appeal Court’s Decision:

Whilst acknowledging that it was carrying out an exceptional task, in giving guidance on future legal practice rather than outlining a general principle of law, the Court accepted ABI’s principle arguments and revised their earlier judgment, declaring 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”.

 What does this mean for Claimants?

  • The 10 % increase applies to damages received for , “pain and suffering and loss of amenity”, “physical inconvenience and discomfort”, “social discredit”, and “mental distress”, whether claimed in tort or contract. Accordingly, it appears that damages in personal injury and clinical negligence claims will primarily attract this increase.
  • Where a Claimant has entered into a CFA before 1 April 2013 and judgment is heard after 1 April 2013, it will be entitled to recover the success fee from the losing party but will not receive a 10% increase in any general damages awarded.
  • Where a Claimant has entered into a CFA after 1 April 2013 (and judgment is heard after 1 April 2013), it will not be entitled to recover the success fee from the losing party but it will receive the benefit of a 10% increase in any general damages awarded.
  • The Court’s ruling ensures that a successful Claimant does not have the benefit of recovering the success fee and the benefit of increased damages.
  • The Court made it clear that the above decision was also applicable to cases in contract.

Going forward, it may be necessary to reconsider the agreed percentage uplift or success fee under a CFA. Where a successful Claimant no longer has the security of potentially recovering its success fee from the Defendant, consideration may need to be given as to whether the 10% increase in the level of general damages awarded will compensate for this.

For further information , please contact Georgina Squire or the Partner with whom you usually deal.