Friday, 3 August 2012

Implications of the 10% Increase in General Damages

In Simmons-v-Castle the Court of Appeal announced that with effect from 1 April 2013 the proper level of general damages for pain, suffering and loss of amenity in respect of personal injury will be 10% higher than previously.

We had a previous one-off (graded) increase in general damages for PSLA following Heil-v-Rankin, so disquiet about the implications of this decision - see The Law Society Gazette comments for example -  may be an over-reaction.

The 10% increase is intended to "compensate" claimants for the loss of success fees which lawyers will be able to take out of the clients' damages. Three points about that: first, it would be insufficient to achieve that purpose; second this is a clear distortion of the restitution principle which governs tortious damages; third the market will surely drive out success fees in any event - as a solicitor said to me recently "The market does not go backwards. Clients will not accept paying lawyers out of damages when they do not have to do so at present."

One can see how a court might address the 10% increase. A Judge could look at pre April 2013 decisions on quantum, come to a view of the appropriate level of damages and increase it by 10%. However, 99% cases (not an official figure) never reach court. There is always a possible range of general damages for PSLA and it would be a brave litigator who advises a client that they can be sure within a 10% margin what award of general damages for PSLA the court will make. In other words, the 10% increase will surely get "lost in the wash" in negotiations. Most claims for damages for PSLA are for less than £10,000. Would a claimant's solicitor be certain that a claimant will recover £8,800 rather than £8000, or £2,200 rather than £2,000? I suggest not.

I recently compared the JSB Guidelines for damages for PSLA from 2002 and 2010. On average the guideline figures had increased by about 28% over those 8 years. For mesothelioma the rise was about 38%. For the most serious injuries the rises were closer to 20%. Thus, general damages increase over time in any event. The most likely mechanism by which the decision will have an impact is when the next edition of the JSB Guidelines comes out. The increases in guideline figures ought to be for more than 10% when compared with the current edition, reflecting both the usual increase plus the decision in Simmons-v-Castle.

Should claimants' representatives seek to put off settlement until after 1 April 2013? Defendant representatives might seek to avoid that by making offers which expire before that date. In any event, the increase of 10% is, as I have already suggested, marginal. The courts will be alert to deliberate attempts to delay proceedings. Claimants want their cases resolved and may not think that the reward of waiting after 1 April 2013 is worth it (if they notice any reward at all).

As for Part 36 Offers, the Court will surely look at whether it would have been better for the Claimant to have accepted the offer at the time when the law was what it was. If a Claimant beats an offer purely because of the 10% increase, then I suggest that the Court would be entitled to consider whether the offer would have been beaten without the 10% increase and to make an award of costs accordingly. Otherwise the defendant would be penalised in costs having made an offer which ought to have been accepted at the time when the offer was made. This will be an issue which will vex the court in very few cases, I suggest, but may nevertheless give rise to an appellate decision or two.