Under proposals to reform civil litigation funding, claimants who enter into no win, no fee agreements will not be able to recover their success fee from the defendant and to compensate them, the level of general damages will be increased. In Simmons v Castle, the Court of Appeal held that the increase will not apply to claimants who could recover the success fee under section 44(6) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
Basic facts
In July 2012, the Court of Appeal handed down a judgment in which it announced that, from 1 April 2013, general damages in all cases involving civil wrongs (called torts) would be increased by 10 per cent where judgment was given after 1 April 2013.
This was to give effect to reforms in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), based on proposals made in a 2009 report by Sir Rupert Jackson. He recommended (among other things) that a successful claimant suing with the benefit of a conditional fee agreement or CFA (probably better known as a “no win, no fee” agreement) should no longer be able to recover the success fee from the defendant.
He also recommended a ten per cent increase in the level of general damages, partly because they were not high and partly because it would help claimants to meet the cost of the success fees they were going to have to pay out of damages they were awarded.
Three weeks later, the Association of British Insurers made an application, asking the court to reconsider the judgment and to rule that the increase should not apply to those cases where the claimant entered into a CFA before 1 April 2013. Otherwise, it argued, they could rely on section 44(6) LASPO to recover the success fee as well as benefit from the increase in damages.
Relevant law
Section 44(6) of LASPO states that costs orders (including a success fee payable by a person (P) under a CFA entered into before 1 April 2013) can be made 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].”
Court of Appeal decision
The Court said that as the primary purpose of the ten per cent increase in damages was to compensate successful claimants for being deprived of the right to recover success fees from defendants as part of their costs, it would therefore be wrong to allow them to benefit from the ten per cent increase as they would then have “the penny and the bun”.
It therefore declared that “with effect from April 1, 2013 the proper level of general damages in all civil claims for (i) pain and suffering; (ii) loss of amenity; (iii) physical inconvenience and discomfort; (iv) social discredit; (v) mental distress; or (vi) loss of society of relatives, will be 10 per cent higher than previously, unless the claimant falls within s.44(6) of the 2012 Act.
“It therefore follows that, if the action now under appeal had been the subject of a judgment after April 1, 2013, then (unless the claimant had entered into a CFA before that date) the proper award of general damages would be 10 per cent higher than that agreed in this case, namely £22,000 rather than £20,000”.