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Civil Justice Reform

INCREASE IN GENERAL DAMAGES

General damages have been increased by 10 per cent, which is a specific measure designed to assist claimants who will have to pay success fees from 1 April 2013.

In July 2012, in the case of Simmons v Castle, the Court of Appeal confirmed the proposed increase would apply whether or not a conditional fee agreement (CFA) is in place and irrespective of when it was signed. The decision prompted concern about uncertainty of its effect and was challenged (including by the Association of British Insurers).

The Court of Appeal revised its decision in September 2012, which confirmed that the increase is dependent on the date the funding agreement is entered into. Whilst there may be uncertainty about the application of the increase, the Court recognised such circumstances would "occur relatively rarely, and it would only be a temporary phenomenon".

Critical points:

  • Where the claimant has entered into a CFA before 1 April 2013 - he will be entitled to recover a success fee from the losing party, but will not be able to receive a 10 per cent uplift on general damages.
  • Where the claimant has entered into a CFA on or after 1 April 2013 - he will not be entitled to recover a success fee from the losing party, but will be entitled to receive a 10 per cent uplift on general damages.
  • It also appears that the increase would apply to claims funded privately and by before the event (BTE) insurance.

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