On 1 April 2013, the reforms to civil costs contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 will come into force. Part 2 of the act provides for the implementation of recommendations 7, 9, 14 and 94 of the final report on civil litigation costs by Sir Rupert Jackson. One of the key elements of the reform is the increase in general damages of 10%. Thus, given the impending date for the implementation of the act, the Court of Appeal took the opportunity in Simmons v Castle [2012] EWCA Civ 1039 to announce the increase in general damages rule and to consider the future impact of the rule.

The appeal before the court concerned the award of damages which had been made by Mr Recorder Burns in Derby County Court in favour of the claimant, who suffered personal injuries as a result of being knocked off his motorcycle by a car driven by the defendant, who admitted negligence. The recorder assessed general damages at £20,000 and special damages of £2,730.37 plus interest. However, the recorder declined to make awards (i) of provisional damages, (ii) for handicap on the labour market, or (iii) to compensate the claimant for the risk of future pecuniary loss caused by the risk of medical deterioration.

The claimant successfully obtained permission to appeal after which the defendant made a part 36 offer, which the claimant decided to accept. The terms of settlement provided for the total amount of damages but also went on to state that, if the claimant developed ‘fulminant septicaemia resulting in long-term disabling illness or death, which causes… significant ongoing recoverable loss of earnings’, he ‘should be entitled to apply for further damages…’. Because the terms of settlement involved the appeal being allowed, the settlement required the consent of the Court of Appeal. Normally, such consent is given in writing by a single lord justice, without the need for a hearing. However, the lord chief justice (LCJ) took the opportunity for the Court of Appeal to announce an increase in general damages in most tort actions with effect from 1 April 2013.

After approving terms of the settlement, the LCJ turned his attention to the future approach to the measure of general damages in tort actions and noted the previous endorsements of Jackson’s recommendations by the executive and judiciary. It was now the duty of the Court of Appeal to give effect to the 10% rule. His lordship proceeded to reinforce the important role played by the Court of Appeal in providing valuable guidance in respect of damages in personal injury claims.

This was clear from the words of Lord Diplock in Wright v British Railways Board [1983] 2 AC 773, when he stated that the Court of Appeal ‘with its caseload of appeals in personal injury actions’ is ‘generally speaking, the tribunal best qualified to set guidelines for judges trying such actions, particularly as respects non-economic loss’. In the later case of Heil v Rankin [2000] EWCA Civ 84, [2001] QB 272, Lord Woolf referred to Lord Diplock’s statement in Wright and observed that ‘it is clear that Lord Diplock also intended the Court of Appeal to have the responsibility for keeping guidelines up to date’.

Lord Woolf MR in Heil went on to explain that such an exercise should be carried out by reference to the ‘existing legal principles as to the assessment of damages’, which, in the case of general damages, involves ‘the difficult and artificial task of converting into monetary damages the physical injury, deprivation and pain and to give judgment for what it considers to be a reasonable sum’. Lord Woolf MR also made clear that it was the responsibility of the Court of Appeal to set damages and to keep the tariffs up to date. In the opinion of the LCJ, it was clear that the Court of Appeal did not merely possess the power but was under a positive duty to monitor, and where appropriate to alter, the guideline rates for general damages in personal injury actions.

In commenting upon the 10% rule, the LCJ noted that the present case was slightly different to that of Heil in the following manner:

  • The rule would not take effect immediately. However, there were now many cases proceeding towards a hearing, which include claims for general damages. Some of those claims may not proceed to judgment until after 1 April 2013. Therefore, it was appropriate for the Court of Appeal to state the position formally now, well ahead of the date when it will take effect. This had the advantage that proper warning is give to parties in, or contemplating, litigation – which was not the case in Heil.
  • The increase in general damages also extended to tort claims other than personal injury actions. There were no good reasons why the observations and reasoning in Heil, and in the cases cited by Lord Woolf MR in his judgment in that case, did not apply equally to general damages in all tort cases.
  • The increase arises from a different set of facts from those in Heil. It was attributable to the forthcoming change in the civil costs regime initiated by Jackson’s reforms.
  • This was an unusual basis on which to rest a judgment or to adjust guidelines. However, the recommendation to adjust the level of damages arose from a report prepared by a judge, which was initiated by the judiciary (as it was Lord Clarke, who, as master of the rolls, initiated Jackson’s report) and which contains policy recommendations, which is itself unusual (and, we would add, can only be justified in relation to a topic as closely concerned with the administration of, and access to, justice, as legal costs).
  • Unlike in Heil, the court had not been addressed by counsel on the issue of increasing the level of general damages. Despite this, the LCJ stated that it was not appropriate, let alone necessary, for the court to be so addressed. Jackson had consulted widely before publishing his Interim Report and before publishing his Final Report, and the Ministry of Justice subsequently consulted on Jackson’s main proposals, and they have also subsequently been debated in (and out of) parliament. It seemed clear to the court that ‘there would simply be no point in incurring expense and time in going over ground which has already been well trodden in order to debate a point which will only involve future judgments and is part of a coherent package, the rest of which has already been brought into law’.

This case is significant as it serves as a reminder of the forthcoming changes to general damages. Clearly, all claims which are likely to continue to be litigated on or beyond 1 April 2013 will be subject to the 10% rule. Those acting on behalf of defendant insurance companies would be wise to advise their clients of the potential impact of the change, and to consider revisiting any reserves which have been set for matters which are likely to continue to be litigated beyond 1 April 2013.

Masood Ahmed, Birmingham City University