Christopher Simmons (Appellant) Derek Castle (Respondent) Association of British Insurers (First Interested Party) Association of Personal Injury Lawyers (Second Interested Party) Personal Injuries Bar Association (Third Interested Party)
| Jurisdiction | England & Wales |
| Judge | The Lord Chief Justice of England and Wales,The Master of the Rolls |
| Judgment Date | 10 October 2012 |
| Neutral Citation | [2012] EWCA Civ 1288 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2011/1846 |
| Date | 10 October 2012 |
[2012] EWCA Civ 1288
The Lord Chief Justice of England and Wales
The Master of the Rolls
and
The Vice-President of the Court of Appeal (Civil Division)
Case No: A3/2011/1846
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE DERBY COUNTY COURT
RECORDER BURNS (SITTING IN NORTHAMPTON)
REF: 0DE03953
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Timothy Dutton QC and Mr Jamie Carpenter (instructed by DAC Beachcroft LLP) for the Association of British Insurers
Mr Grahame Aldous QC for the Association of Personal Injury Lawyers
Mr Charles Cory-Wright QC and Mr Martyn McLeish for the Personal Injuries Bar Association
Hearing date: 25 September 2012
Approved Judgment
The Lord Chief Justice
The procedural background to this application
On 26 July 2012, we handed down a judgment in this case, announcing that, with effect from 1 April 2013, general damages in tort cases would be increased by 10% from current levels – [2012] EWCA Civ 1039. As we explained in that judgment, the need for the court's approval of the settlement in this personal injury appeal presented us with the opportunity to give proper notice of this increase, which is intended to give effect to the reforms proposed by Sir Rupert Jackson in his Final Report on Civil Litigation Costs ("Final Report") published in December 2009.
Some three weeks later, on 16 August 2012, the Association of British Insurers ("ABI") issued two applications, one in its own name and the other in the name (and with the authority) of the respondent defendant, Mr Castle, together with supporting evidence and written argument. The purpose of those applications (which really amount to a single application, and so we will treat them as such) was to invite the court to reconsider whether, to summarise the point shortly, the 10% increase should only apply to cases where the claimant's funding arrangements for his or her legal costs had been agreed after 1 April 2013. The application was listed before the Master of the Rolls on 22 August.
While he did not give formal permission to make the application, the Master of the Rolls ordered that it should be listed for a "rolled up hearing" – i.e. that the question whether permission should be granted to make the application would be heard on the basis that, if permission was granted, the substantive application would be heard immediately thereafter.
That hearing took place on 25 September, when we considered written and oral submissions from Mr Dutton QC on behalf of ABI, and from Mr Aldous QC and Mr Cory-Wright QC, on behalf of two other interested parties, Association of Personal Injury Lawyers ("APIL") and Personal Injuries Bar Association ("PIBA") respectively. Just before the hearing, PIBA raised an additional point, namely whether the 10% increase announced in our judgment, which referred to certain types of general damages in tort cases, should be extended to cases in contract and to claims for general damages more widely.
This judgment, like our earlier judgment, is the judgment of the court.
Much of the background to our earlier decision is fully, and, it would appear, uncontroversially, explained at [2012] EWCA Civ 1039, paras 7 to 18, and it need not be rehearsed again. The part of the judgment which we are asked by ABI to reconsider is in para 19, whose conclusions are reflected in the last sentence of para 20. The point raised by PIBA relates to the categories of case covered in the first sentence of para 20. It is therefore sensible to set out what we said in those two paragraphs:
"19. The only remaining question is precisely how the increase should be applied. We have concluded that it should apply to all cases where judgment is given after 1 April 2013. It seems to us that, while it can be said that this conclusion does not achieve perfect justice in every case, the same thing can be said about any other answer to the question, particularly in the light of a number of the forthcoming changes being made to the costs regime pursuant to Sir Rupert's recommendations. Our conclusion has the great merits of (i) providing simplicity and clarity, which are both so important in litigation, and (ii) according with the recommendation of Sir Rupert, which is consistent with much of the rationale of the 10% increase in general damages.
20. Accordingly, we take this opportunity to declare 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".
The relevant statutory provisions relating to costs
In order to understand the two issues now raised before us, it is necessary briefly to explain the effect of certain statutory provisions relating to the costs of providing "advocacy or litigation services". Those provisions are (i) the current costs regime which has applied in many cases since 1999, as a result of amendments to section 58 of, and the insertion of new subsequent sections into, the Courts and Legal Services Act 1990, and (ii) the changes to that regime which will come into force on 1 April 2013, as a result of the reforms contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (" LASPO").
In summary form, the current position in relation to the costs of such services is as follows. A claimant can enter into Conditional Fee Agreements ("CFA", also known as "no win no fee" arrangement), which involve his lawyers receiving nothing if the claim fails and an uplift in the lawyers' normal fee, known as a "success fee" (which can currently be up to 100% of their normal fee), if the claim succeeds; if the claim succeeds, the whole of the success fee is recoverable, subject to assessment by a costs judge, from the defendant in addition to the claimant's lawyers' normal fee; in addition, the claimant can take out so-called ATE (after the event) insurance against any liability he might have to pay the defendant's costs; if the claim succeeds, the defendant has to pay the ATE premium as part of the claimant's costs, but if the claim fails, the premium is effectively nil.
The changes made to that regime by LASPO are, again in summary form, as follows. By section 44(2), the level of success fees is to be limited by reference to a maximum which will be set by the Lord Chancellor; by section 44(4), success fees will no longer be recoverable from a defendant as part of a successful claimant's costs; however, by section 44(6):
"The amendment made by subsection (4) does not prevent a costs order including provision in relation to a success fee payable by a person ("P") under a [CFA] entered into before [1 April 2013] if –
(a) the agreement was entered into specifically for the purpose of the provision to P of advocacy or litigation services in connection with the matter that is the subject of the proceedings in which the costs order is made, or
(b) advocacy or litigation services were provided to P under the agreement in connection with that matter before [1 April 2013]."
Section 45 of LASPO extends the right to charge contingency fees (under what are referred to as "damages-based agreements" as they are referred to) from employment cases to many other types of litigation. Section 46 of LASPO limits the ability of successful claimants to recover an ATE premium to a very restricted number of cases.
The reforms effected by sections 44 to 46 of LASPO were enacted in order substantially (if not entirely) to reflect and follow the recommendations made by Sir Rupert in his Final Report, which also included the recommendation, which was intended to be implemented by our earlier judgment, that general damages in certain cases be increased by 10%. In particular, in recommendation 10 in the Final Report, he said that "[t]he level of general damages for personal injuries, nuisance and all other civil wrongs to individuals should be increased by 10%".
ABI's application: the arguments
ABI's argument is based on the proposition that the primary purpose of the 10% increase is to compensate successful claimants who fund their litigation through the means of a CFA (henceforward "CFA claimants") for the loss of the right to recover the success fee from the defendant, and it is therefore illogical and unfair on defendants if the increase can be enjoyed by successful CFA claimants who, because of section 44(6), can recover the success fee pursuant to judgments given after 1 April 2013. In effect (as the argument developed), ABI's primary case is that the 10% increase, which they accept will otherwise take effect in relation to all judgments given after 1 April 2013, should not apply in those cases where the claimant has entered into a CFA before that date. Otherwise, say ABI, there will be a "misalignment" involving a "windfall" for successful claimants who can rely on section 44(6) to recover the success fee.
I describe this as ABI's "primary argument", because they also contend that claimants who are not CFA claimants, but who have funded their claims in the conventional way ("conventional claimants"), should not be entitled to the 10% increase unless the letter of claim or service of proceedings (whichever is the earlier) was...
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