Property, Chancery & Commercial, Other Areas of Law
ABI takes on the Senior Judiciary over 10% double whammy

On 27 July Simon Readhead QC – always vigilant, always at his desk (even in the vacation) – posted on these pages news that the Court of Appeal had slipped a surprise judgment through at the start of the summer holiday season in which they announced a 10% increase in general damages awards across the board with effect from next April. 

This change was intended to dovetail with the coming into effect of changes made to the CFA costs regime under the controversial LASPO statute that passed into law this year, reflecting the reforms recommended in Lord Justice Jackson’s civil costs report.  The scheme from 1 April 2013 will stop ATE premiums and success fees being recoverable from defendants, and contingency fee schemes will be allowed, by which a successful personal injury claimant agrees to pay his lawyers out of his damages.  The 10% uplift in general damages to make up for this was considered to be something that the judiciary, rather than Parliament, should put in place, and the Court of Appeal’s three most senior judges did this in July in an otherwise mundane case, Simmons v Castle [2012] EWCA Civ 1039.

However, in the last week the insurance industry has announced its unhappiness with this decision of the judiciary and has launched a challenge.  In the decision in Simmons v Castle Lord Judge (LCJ), Lord Neuberger (MR) and Sir Anthony May (Vice-President of the CA) said that they did not consider it necessary to invite representation or hear submissions on the 10% issue (and it was not an issue in the case before them).  They said that Jackson LJ and the government had consulted fully.  However, the Association of British Insurers (ABI) has lodged a challenge with the court and asked to be heard on the subject. 

However, the ABI is not seeking to unravel the whole scheme of costs reform with a third bite at the cherry.   Its particular concern is that the LASPO changes to recovery of ATE premiums and CFA success fees come into force next April, but they will not apply in relation to existing cases in which the ATE and the CFA arrangements were entered into before 1 April 2013.  So for any number of months (or longer?) it is feared that insurers could face the double whammy of having to pay enhanced general damages awards in addition to ATE premiums and success fee uplifts. 

The ABI is reported to have instructed DAC Beachcroft partner Andrew Parker to represent them.  He was one of the team of seven assessors who assisted Jackson LJ in preparing his report, so the challenge will certainly be well informed.  A bit like Simon Readhead QC.






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