The Court of Appeal recently declared that general damages
in most tort actions are to increase from 1 April, 2013. That’s good news,
isn’t it?
I wish it was, but a closer look reveals that it isn’t
necessarily so. The Court of Appeal’s judgment came in the case of Simmons v
Castle. The endorsement of a settlement between the appellant motorcyclist and
respondent car driver saw the Court of Appeal hold that it had an ongoing
responsibility and the power to monitor and set the guideline rates for general
damages in tort claims, including personal injury actions. Any such rates would
be neither rules of law nor practice rules, but judges at first instance should
consider themselves bound by them.
Hence, their Lordships ruled in favour of an increase in
damages – but only by 10 per cent. The judgment sent insurers calculating by how much they will need to increase consumers’ premiums. They, along
with the rest of us, had assumed that any increase in general damages would
come through the implementation of the Legal Aid, Sentencing and Punishment of
Offenders Act (LASPO), also in April next year. But at the same time as
insurers lament the guidelines of Simmons v Castle, so do personal injury
lawyers who work at the coalface. The fact is that 10 per cent is nowhere near
a large enough increase in rates for damages that have remained static and too
low for far too long
This is not just the view of a claimant solicitor. Over
10 years ago, in 1999, the Law Commission Report No. 257 concluded that in
cases where general damages exceeded £3,000 they should increase between 50%
and 100% (with an appropriate tapering rise for cases where general damages
were between £2,001 and £3,000). The Commission found that damages were not
generally commensurate with claimants’ losses but also that “the ongoing
non-pecuniary effects of many injuries are far greater than anticipated by
victims at the time that they receive their compensation.” The Commission’s
conclusions were reached after extensive research and an opinion poll on public
attitudes to levels of compensation.
This issue was considered by the Court of Appeal in the
2000 case of Heil v Rankin. Regrettably, the recommendations of the Law
Commission were not generally accepted. The Court held that in cases where the
general damages exceeded £10,000 they should thereafter increase by 33%.
However, there would be no increase for cases where general damages were under
£10,000.
Little has happened since the Heil judgment. The
recommendations of the Law Commission have not been implemented. Meanwhile, the
cost of litigation has continued to rise. LASPO continues to wend its way
through the legislative process, but there is no sign of provision for
well-thought out increase in levels of damages envisaged by the Law Commission
– as ought to be the case.
Now, along comes a recommended increase of 10 per cent,
originally recommended by Lord Justice Jackson, implemented before April next
thanks to Simmons v Castle. In some ways, we should be grateful as some were
doubtful such a decision would come at all, but the truth is that as a society
we are still woefully under-compensating injured people. We are still a long
way from a collective endorsement of carefully considered recommendations which
were made by experts, after due diligence and research, as long ago as 1999.
The 'Simmons' adjustment does not even counterbalance the LASPO none
recoverability provisions. As such, it is a step in the right direction, but
that’s all it is.
Hi John, hope you are well.
ReplyDeleteI think your blog is very interesting but critically overlooks two important points
Firstly the correct level of GDs has always been highly subjective. Compensation for PSLA cannot be precisely calculated in the way that loss of earnings or damage to a car can. In that sense the tariff will always be “wrong” in some opinions. Who’s to say that £2k for a whiplash is right or wrong – too high or too low? – it’s entirely a matter of opinion. However the key to justice is consistency. Anyone suffering the same effects of the same injury will receive the same compensation.
Therefore changing the tariff, be that up or down, is grossly unfair on claimants that have already been compensated. A person suffering an injury before the change will receive 10% less than a claimant suffering exactly the same injury after the change.
However the increase, which we recognise is a key part of the long over due reforms to costs in this area, has to have an effective date and the CoA felt taht whatever date is chosen will be imperfect.
Unfortunately, and this is the second point I feel you have overlooked, the Court went on to indicate that the increase in GDs applies to judgments issued after 1st April 2013.
Given that all other parts of the interlocking reforms are tied to the accident date, it will not be lost upon you that this anomaly creates a window of massive opportunity for claimants and their representatives. Someone already injured or injured before 1st April 2013 is now unlikely to receive judgment before 1st April 2013 and therefore is already more or less certain to receive the 10% increase provided they delay settlement until after 1st April 2013. However unless the accident date is after 1st April 2013 the claimant can still recover the success fee and the ATE premium from the defendant thereby getting all the benefit of the increase in GDs and none of the balancing offset in risk to costs. That cannot be right and is not, I submit, what the CoA intended.
Regards
Laurence Besemer FCII
CEO - FOIL
Hi Lawrence
DeleteGood to hear from you, and thanks for engaging with the blog.
I agree quantum of GDs always will have a degree of subjectivity. However, both the Law Commission, and the Court of appeal were both seeking to maintain the correct subjective backdrop. The Law Commission concluded that the benchmark had failed to keep pace and had lead to a reducing backdrop to evaluation of damages on a case by case basis.
The Court of Appeal, was of course more specifically responding to the LASPO changes particularly with regard to recoverability. I do not doubt we could argue about whether 10% is adequate as a balancing measure. There is statistical evidence of its inadequacy for instance in the most serious injury cases. I take your point about delaying judgement, but would argue this modest advantage is more than justified against the backdrop of the inadequacy of damages levels, and the continued failure to address the issue of the insufficiency of awards, especially in high level quantum cases.
Regards and thanks once more for contributing to the debate Lawrence.
John