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10% increase in general damages will not apply to all cases

On 26th July 2012 the Court of Appeal announced a 10% increase in general damages in all cases where judgment is given after 1st April 2013 (Simmons v. Castle [2012] EWCA Civ 1039 - see 'The Round-Up' August 2012 for details).

Within 3 months of that decision, however, the Court of Appeal has been forced to rethink how the increase should be implemented and the implementation has been revised.On 10th October 2012 the Court of Appeal, having heard submissions from ABI, APIL and PIBA, agreed with ABI's submissions that the increase should not apply to cases which fall within s.44(6) of LASPO (that is, cases where the success fee may still be recovered from the defendant - broadly, where the CFA was entered into before 1st April 2013) - Simmons v. Castle [2012] EWCA Civ 1288.

It is unclear what will happen when there is more than one CFA. At [33] the example is given of a PI claim where the claimant subsequently dies and so the executors enter into a fresh CFA after 1st April. A more frequently occurring example would be where a claimant enters into a CFA with a solicitor before 1st April and with Counsel after 1st April. In both cases, it seems, the claimant will have to pay the success fee relating to the later CFA out of his damages, yet will fall within the exception to the 10% increase.

The decision also gives rise to a conceptual difficulty. At present for any injury there is a 'proper' award, 'x'. For example, a minor whiplash injury might now be worth £1,500. After 1st April the proper award will be 'y' (being x + 10%), but not if you fall within the exception, where the award will be y -  9.09%. Thus, after 1st April there will no longer be a single ‘proper’ award for a given injury. The award for the above minor whiplash will be either £1,650 or, if the claimant falls within s.44(6), £1,500. Presumably the Judicial College Guidelines after March 2013 will state the new 'proper' award but with the caveat that the award will be 9.09% lower where the claimant entered into a CFA before 1st April. There will be a runoff period of at least 5 years where, before putting a value on certain injuries, the parties' advisors and the court will first have to ask how the claim is funded.

Richard Menzies / 1st Nov 2012


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