Round 2 in the battle over the proposal to increase general damages

15 Oct 2012

In the face of an Application by the ABI (Association of British Insurers), yesterday the Court of Appeal delivered an amended judgment in the case of Simmons v Castle 2012 which will be of some comfort to the Defendant insurance market.

In their prior judgment handed down on 26 July 2012, the Court of Appeal announced that General Damages in tort cases would be increased by 10% from current levels with effect from 1 April 2013. The purpose 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 (CFA) from the Defendant.

However, the ABI argued that this would give Claimants who entered into Conditional Fee Agreements prior to 1 April 2013 a double benefit in receiving a 10% increase on damages, and recovering the success fee. The Lord Chief Justice agreed with this contention: such Claimants would have “the penny and the bun”.

Consequently the Judgment has been amended so that the additional 10% General Damages will be awarded from 1 April 2013 unless the Claimant has entered into a CFA prior to 1 April 2013 which entitles them to recover a success fee.

The ABI had also argued that the 10% increase on damages should not apply to any Claimant who was entitled to require the Defendant to pay an ATE premium. This argument was abandoned, with their Lordships indicating that the decision to abandon the argument was “well judged”: The position remains that a Claimant with an existing ATE policy when the new regime comes into force will still be able to recover the premium, and enjoy the 10% increase in General Damages.