Controversy continues over proposal to increase General Damages

04 Sep 2012

In his wide ranging review of litigation costs Lord Justice Jackson proposed a package of measures to include a 10 per cent increase in General Damages.  It was felt that the reason for this was to compensate claimants for the fact that they would no longer be able to recover success fees payable under the terms of their Conditional Fee Agreement.  However, this proposal was not included in the Legal Aid Sentencing and Punishment of Offenders Act (LASPO) 2012 as it was felt that the Court of Appeal would be best placed to set such guidelines for judges.

Against this background the Court of Appeal in the case of Simmons v Castle 2012 confirmed that a 10 per cent increase in General Damages would be applied in most cases where judgment is given after 1 April 2013.

It seems however, that the matter will not rest there.  The ABI (Association of British Insurers) has now launched a legal action to challenge the ruling.  The ABI are concerned that there could be months or years where defendants are facing a double whammy of costs thanks to the damages increase and the fact that successful claims launched prior to April 2013 on a CFA will still result in recoverable success fees and insurance premiums.

This issue pitches the defendant insurance market squarely against the claimant legal sector and it is not likely to be the last such skirmish in view of the raft of changes to litigation funding that lie ahead.  In the circumstances this is likely to be a case which is watched closely to see how the interests of these two groups are balanced by the courts.

Kelvin Farmaner is a Partner with Trethowans LLP and heads the Insurance Litigation Team.  He is also head of the Forum of Insurance Lawyers national Costs Sector Focus Team.