Update on 'Jackson' general damages
This morning (10 October 2012) the Court of Appeal (CA) gave its revised judgment concerning implementation of the ten per cent increase to general damages for non-pecuniary loss. This increase stems from the Jackson reforms and is, in essence, by way of a quid pro quo for the loss of recoverable success fees - itself a key recommendation of Jackson.
The decision today brings further practical alignment as to how the loss of recoverable success fees will be replaced by the general damages increase. This should be welcomed. The outcome should minimise - but perhaps not totally eliminate - disputes over which of these enhancements should apply in any one case. It also clarifies, with sound justification, that the general damages increase should equally apply to tort and non-tort claims.
While today's decision narrows any arguments about one key aspect of the Jackson package of reforms, it is worth recalling that the fine detail of other measures - most notably Qualified One-way Cost Shifting and a new test of proportionality - has yet to be completed, despite all these measures being due to be implemented in less than six months.
In late July the CA had initially sought to effect to the general damages increase by providing, without further clarification, that it would apply in tort cases in which judgment was given after 1 April 2013.
The reform of success fees, however, is to be brought about by statute. Its relevant transitional arrangement - s44(6) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 - provides that the success fee will cease to be recoverable where the conditional fee agreement (CFA) was entered into after 1 April 2013.
The loss of recoverable success fees and the increase in general damages were intended to balance each other. Conceptually, they would be mutually exclusive: either a case would be one in which a success fee was paid (as now) or it would be one in which the general damages uplift would apply (for the future). There would be one or the other, but not both (or neither).
The CA's brief judgment in July, and the absence of detail on the issues above, left open the prospect of both the enhancements (success fees and general damages) applying in the same case. It also failed to deal with cases funded other than by way of a CFA. These "misalignments" prompted insurers to intervene to seek further clarification from the CA, which it has given today.
Today's revisited judgment from the CA now confirms that the general damages increase of ten percent will apply:
- to CFA cases concluded after 1 April 2013, but only in accordance with s44.6 of the 2012 Act (ie the CFA was entered into after this date)
- that it will also apply to non-CFA cases concluded after 1 April, and
- also to non-tort claims for general damages for non-pecuniary loss on the basis as set out above.
With regard to the last point, the CA particularly had in mind contractual or quasi-contractual claims such as holiday claims or housing claims. While including these certainly extends the remit of the increase, it is fair and reasonable. It can be justified on the basis that because these claims may be funded by CFAs at present, they will therefore be subject to the ending of recovery of success fees under s44 of the 2012 Act. That, as explained above, was always intended to be balanced with an increase in general damages.
Head of policy development
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