Neutral Citation Number: [2012] EWCA Civ Case No: A3/2011/1846

Transcription

1 Neutral Citation Number: [2012] EWCA Civ 1288 IN THE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM THE DERBY COUNTY COURT RECORDER BURNS (SITTING IN NORTHAMPTON) REF: 0DE03953 Case No: A3/2011/1846 Royal Courts of Justice Strand, London, WC2A 2LL Before: Date: 10/10/2012 THE LORD CHIEF JUSTICE OF ENGLAND AND WALES THE MASTER OF THE ROLLS and THE VICE-PRESIDENT OF THE COURT OF APPEAL (CIVIL DIVISION) Between: CHRISTOPHER SIMMONS - and - DEREK CASTLE Appellant Respondent ASSOCIATION OF BRITISH INSURERS First - and Interested - Party ASSOCIATION OF PERSONAL INJURY LAWYERS - and Second Interested Party PERSONAL INJURIES BAR ASSOCIATION Third Interested Party - - Mr Timothy Dutton QC and Mr Jamie Carpenter (instructed by DAC Beachcroft LLP) for the Association of British Insurers Mr Grahame Aldous QC for the Association of Personal Injury Lawyers Mr Charles Cory-Wright QC and Mr Martyn McLeish for the Personal Injuries Bar Association Hearing date: 25 September Approved Judgment

2 The Lord Chief Justice: The procedural background to this application 1. On 26 July 2012, we handed down a judgment in this case, announcing that, with effect from 1 April 2013, general damages in tort cases would be increased by 10% from current levels [2012] EWCA Civ As we explained in that judgment, the need for the court s approval of the settlement in this personal injury appeal presented us with the opportunity to give proper notice of this increase, which is intended to give effect to the reforms proposed by Sir Rupert Jackson in his Final Report on Civil Litigation Costs ( Final Report ) published in December Some three weeks later, on 16 August 2012, the Association of British Insurers ( ABI ) issued two applications, one in its own name and the other in the name (and with the authority) of the respondent defendant, Mr Castle, together with supporting evidence and written argument. The purpose of those applications (which really amount to a single application, and so we will treat them as such) was to invite the court to reconsider whether, to summarise the point shortly, the 10% increase should only apply to cases where the claimant s funding arrangements for his or her legal costs had been agreed after 1 April The application was listed before the Master of the Rolls on 22 August. 3. While he did not give formal permission to make the application, the Master of the Rolls ordered that it should be listed for a rolled up hearing i.e. that the question whether permission should be granted to make the application would be heard on the basis that, if permission was granted, the substantive application would be heard immediately thereafter. 4. That hearing took place on 25 September, when we considered written and oral submissions from Mr Dutton QC on behalf of ABI, and from Mr Aldous QC and Mr Cory-Wright QC, on behalf of two other interested parties, Association of Personal Injury Lawyers ( APIL ) and Personal Injuries Bar Association ( PIBA ) respectively. Just before the hearing, PIBA raised an additional point, namely whether the 10% increase announced in our judgment, which referred to certain types of general damages in tort cases, should be extended to cases in contract and to claims for general damages more widely. 5. This judgment, like our earlier judgment, is the judgment of the court. 6. Much of the background to our earlier decision is fully, and, it would appear, uncontroversially, explained at [2012] EWCA Civ 1039, paras 7 to 18, and it need not be rehearsed again. The part of the judgment which we are asked by ABI to reconsider is in para 19, whose conclusions are reflected in the last sentence of para 20. The point raised by PIBA relates to the categories of case covered in the first sentence of para 20. It is therefore sensible to set out what we said in those two paragraphs: 19. The only remaining question is precisely how the increase should be applied. We have concluded that it should apply to all cases where judgment is given after 1 April It seems to us that, while it can be said that this conclusion does not achieve perfect justice in every case, the

3 same thing can be said about any other answer to the question, particularly in the light of a number of the forthcoming changes being made to the costs regime pursuant to Sir Rupert's recommendations. Our conclusion has the great merits of (i) providing simplicity and clarity, which are both so important in litigation, and (ii) according with the recommendation of Sir Rupert, which is consistent with much of the rationale of the 10% increase in general damages. 20. Accordingly, we take this opportunity to declare that, with effect from 1 April 2013, the proper level of general damages for (i) pain, suffering and loss of amenity in respect of personal injury, (ii) nuisance, (iii) defamation and (iv) all other torts which cause suffering, inconvenience or distress to individuals, will be 10% higher than previously. It therefore follows that, if the action now under appeal had been the subject of a judgment after 1 April 2013, the proper award of general damages would be 10% higher than that agreed in this case, namely 22,000 rather than 20,000. The relevant statutory provisions relating to costs 7. In order to understand the two issues now raised before us, it is necessary briefly to explain the effect of certain statutory provisions relating to the costs of providing advocacy or litigation services. Those provisions are (i) the current costs regime which has applied in many cases since 1999, as a result of amendments to section 58 of, and the insertion of new subsequent sections into, the Courts and Legal Services Act 1990, and (ii) the changes to that regime which will come into force on 1 April 2013, as a result of the reforms contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 ( LASPO ). 8. In summary form, the current position in relation to the costs of such services is as follows. A claimant can enter into Conditional Fee Agreements ( CFA, also known as no win no fee arrangement), which involve his lawyers receiving nothing if the claim fails and an uplift in the lawyers normal fee, known as a success fee (which can currently be up to 100% of their normal fee), if the claim succeeds; if the claim succeeds, the whole of the success fee is recoverable, subject to assessment by a costs judge, from the defendant in addition to the claimant s lawyers normal fee; in addition, the claimant can take out so-called ATE (after the event) insurance against any liability he might have to pay the defendant s costs; if the claim succeeds, the defendant has to pay the ATE premium as part of the claimant s costs, but if the claim fails, the premium is effectively nil. 9. The changes made to that regime by LASPO are, again in summary form, as follows. By section 44(2), the level of success fees is to be limited by reference to a maximum which will be set by the Lord Chancellor; by section 44(4), success fees will no longer be recoverable from a defendant as part of a successful claimant s costs; however, by section 44(6): The amendment made by subsection (4) does not prevent a costs order including provision in relation to a success fee payable by a person ( P ) under a [CFA] entered into before [1 April 2013] if

4 (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]. Section 45 of LASPO extends the right to charge contingency fees (under what are referred to as damages-based agreements as they are referred to) from employment cases to many other types of litigation. Section 46 of LASPO limits the ability of successful claimants to recover an ATE premium to a very restricted number of cases. 10. The reforms effected by sections 44 to 46 of LASPO were enacted in order substantially (if not entirely) to reflect and follow the recommendations made by Sir Rupert in his Final Report, which also included the recommendation, which was intended to be implemented by our earlier judgment, that general damages in certain cases be increased by 10%. In particular, in recommendation 10 in the Final Report, he said that [t]he level of general damages for personal injuries, nuisance and all other civil wrongs to individuals should be increased by 10%. ABI s application: the arguments 11. ABI s argument is based on the proposition that the primary purpose of the 10% increase is to compensate successful claimants who fund their litigation through the means of a CFA (henceforward CFA claimants ) for the loss of the right to recover the success fee from the defendant, and it is therefore illogical and unfair on defendants if the increase can be enjoyed by successful CFA claimants who, because of section 44(6), can recover the success fee pursuant to judgments given after 1 April In effect (as the argument developed), ABI s primary case is that the 10% increase, which they accept will otherwise take effect in relation to all judgments given after 1 April 2013, should not apply in those cases where the claimant has entered into a CFA before that date. Otherwise, say ABI, there will be a misalignment involving a windfall for successful claimants who can rely on section 44(6) to recover the success fee. 12. I describe this as ABI s primary argument, because they also contend that claimants who are not CFA claimants, but who have funded their claims in the conventional way ( conventional claimants ), should not be entitled to the 10% increase unless the letter of claim or service of proceedings (whichever is the earlier) was served after 1 April (ABI also originally contended that any claimant who was entitled to require the defendant to pay the ATE premium should be disallowed from enjoying the 10% increase, but that argument has now been abandoned; it is therefore unnecessary to say any more about it, except that the decision to abandon the argument seems to us to be well judged). 13. The position adopted by APIL is that we should reject ABI s argument, and adhere to our original position. First, it is pointed out that Sir Rupert recommended the 10% increase partly because the level of damages is not high at the moment, so that [t]he abolition of recoverability would be an opportune moment for raising the level of such damages generally see para 5.6, Chapter 10 of the Final Report.

5 Secondly, it is said that our original position had the merit of clarity and simplicity, and that to accede to ABI s proposal would increase the risk of satellite litigation. Thirdly, it is said that there is an element of give and take in the proposals put forward by Sir Rupert and adopted in LASPO: for instance, the 10% increase in damages will produce, as Sir Rupert himself said in para 5.6 of Chapter 10 of the Final Report a windfall for conventional claimants. Fourthly, it is said that it is one thing for this court to introduce an increase in general damages from a future date (which is a small extension to what was done in Heil v Rankin [2000] EWCA Civ 1039, [2001] QB 272), but it is quite another to indulge in the quasi-legislating exercise of tailoring the increase only to certain types of claim. 14. PIBA adopt a neutral position, effectively seeing the force of the arguments advanced by both ABI and APIL. In relation to the contention that the 10% increase was not intended simply to compensate claimants for the loss of the recoverability of the success fee, PIBA point to the fact that, following the Final Report, the Ministry of Justice issued a Consultation Paper, in which it specifically asked whether the 10% increase should be limited to cases where the claimant had entered into a CFA (as well as to certain types of legally aided cases). Sir Rupert and the Senior Costs Judge, in a joint response, disagreed with that proposal, essentially for four reasons. First, there is a strong argument to the effect that general damages are already too low, so that an across the board increase was appropriate. Secondly, they emphasised the point, made in the Final Report, that, as a result of the reforms the majority of claimants will be better off. Thirdly, they said that it was wrong in principle to provide for different measures of damages for differently funded claimants. Fourthly, they said that limiting the increase to CFA-funded claimants would be a perverse incentive encouraging CFAs. 15. PIBA put forward a third possibility as an alternative to those favoured by ABI and by APIL, namely that the precise way in which the 10% increase should take effect should be effectively delegated to the Civil Procedure Rule Committee ( CPRC ), so that the issue can be fully considered by its members. The point raised by PIBA: the arguments 16. The point raised by PIBA is based on the fact that, in para 20 of our earlier judgment, we indicated that the 10% increase in damages should extend, but be impliedly limited to, damages in tortious claims for suffering, inconvenience or distress to individuals. On behalf of PIBA, Mr Cory-Wright suggested that (i) there is no good reason for limiting the increase to cases in tort, and that it should be extended to cases based on contract, and (ii) the heads of damage identified in para 20 of our earlier judgment may be too limited, and should be widened to non-pecuniary loss for suffering, inconvenience or distress to individuals. 17. For ABI, Mr Dutton realistically accepted the illogicality of limiting the 10% increase to tortious claims, and while he was understandably reluctant to commit his clients to the full extent of PIBA s proposals, with the benefit of the midday adjournment he did not, as we understood him, oppose what was proposed. Mr Aldous was also happy with PIBA s proposals. Procedural aspects

6 18. So far as procedural matters are concerned, there is no suggestion by APIL or PIBA that it is not open to ABI to make their application, at least through the respondent, Mr Castle. In our view, the court does have jurisdiction to entertain ABI s application (and, indeed, PIBA s proposal). It would be surprising if that were not so, as the effect of our earlier decision was, and was intended, to affect the outcome of a very large number of actions in the future, in which Mr Simmons and Mr Castle, the only parties to these proceedings at that time, had no interest, and were not represented. Accordingly, if, in reaching our decision, we failed to take relevant matters into account to the detriment of one group of future litigants, it would be wholly unjust if someone representing that group was unable to ask us to reconsider our decision. It seems to us clear that there is jurisdiction to entertain ABI s application, in the light of the very exceptional nature of the exercise we were carrying out, namely giving guidance as to future practice rather than laying down any general principle of law, in a case where the parties were not represented, and no prior notice had been given to potentially interested parties. 19. In this connection, it is appropriate to make three points. First, we are treating this application as made by ABI through Mr Castle. Secondly, the exceptional nature of this case means that this aspect of our decision cannot be taken as any sort of precedent signalling to disappointed litigants or others unhappy with a decision of this court that they may apply to a court to reconsider a decision. CPR remains the law. Thirdly, in the light of the present application and arguments, it is apparent that we should have invited representations from ABI, APIL and PIBA before giving our earlier judgment on 26 July Fortunately, however, our failure to do so has not resulted in any injustice, as ABI have made the present applications, long before anyone will have acted on it. The reason for the 10% increase in damages 20. In order to deal with both the point raised by ABI s application and the point raised by PIBA, it is relevant to consider precisely why, in the Final Report, Sir Rupert recommended that general damages be increased by 10%. We have already quoted Recommendation 10 which was that [t]he level of general damages for personal injuries, nuisance and all other civil wrongs to individuals should be increased by 10%. 21. One of the major proposals in the Final Report was that, as is now reflected in sections 44 and 46 of LASPO, a successful CFA claimant should no longer be able to recover the success fee from the defendant. Chapter 10 of the Final Report addressed the question whether any measures ought to be taken to assist [such] claimants to meet the success fees which they will have to pay out of damages or other sums received. In para 5.3 of that chapter, Sir Rupert concluded that [i]n order to assist personal injury claimants in meeting the success fees out of damages, [the] level of general damages for pain, suffering and the loss of amenity be increased by 10% across the board (and success fees be capped at 25% of damages, and the reward for making a successful claimant s offer under CPR Part 36 be enhanced ). 22. In para 5.6 of the same chapter, Sir Rupert said that he recommend[ed] that the level of general damages for nuisance, defamation and any other tort which causes suffering to individuals be increased by 10%. He went on to say that this would assist claimants who proceed on CFAs to meet the success fees. He added that the

7 increase may appear to be a windfall for claimants who are not on CFAs, but pointed out that the level of general damages in England and Wales is not high at the moment, so [t]he abolition of recoverability would be an opportune moment for raising the level of such damages generally. 23. Following the Judicial Executive Board s support for the proposals contained in the Final Report, the Ministry of Justice ( MoJ ) issued a consultation paper in November In para 97 of the paper, it was pointed out that adjustments to levels of general damages have hitherto been regarded as a judicial issue for the courts and the general question of whether damages are currently too low is properly a matter for the judiciary. In para 98, it was stated that [a]n increase in the level of damages expressly for the purpose of assisting claimants to meet their costs liabilities would represent a fundamental change in the nature of the general damages award. In para 99, it was pointed out that a general increase for all successful claimants might be seen as a windfall for claimants who are not on CFAs, but that it might be considered that the level of damages awarded should not depend on how the claim is funded. 24. The paper then sought views on whether there should be a 10% increase in damages at all, and, if so, whether it should be limited to CFA claimants. As explained in para 13 above, Sir Rupert (together with the Senior Costs Judge) responded, and supported the view which the MoJ ultimately adopted, namely in favour of an increase in nonpecuniary general damages, such as pain, suffering and loss of amenity in tort cases, for all claimants (to quote from the MoJ s announcement of March 2011). 25. In the tenth of his Implementation Programme lectures, given on 29 February 2012, Sir Rupert explained that his recommendation that general damages be increased by 10% represented one further benefit which, as a result of the force and volume of the submissions from the personal injuries lobby during the Costs review, he was persuaded to recommend be given to personal injury claimants as a quid pro quo for losing recoverability of success fees and ATE premiums. He reiterated the point that, according to the statistical evidence recorded in the Final Report, mainly because of the proposed increase in general damages, the majority of personal injury claimants would be better off as a result of his proposals. 26. It is also relevant to mention that in that lecture, as on other occasions, Sir Rupert emphasised that the recommendation to increase general damages by 10% was part of a balanced package of reforms. He also made the point that [n]o package of reforms could be perfect, and warned against unpick[ing] this part of the package. 27. In our view, it is clear from these observations that both Sir Rupert and the MoJ envisaged and intended the primary purpose of the 10% increase in damages would be to compensate successful claimants, as a class, for being deprived of the right which they had enjoyed since 2000 to recover success fees from defendants, in cases where a claimant was funding the legal costs of pursuing his or her claim by a CFA. The reason, or at least the principal reason, Sir Rupert made the point that the level of general damages was generally on the low side was to meet the argument that the 10% increase in damages could be said to represent something of a windfall for successful conventional claimants. Similarly, it appears clear that the MoJ regarded

8 the proposed 10% increase in damages as being a quid pro quo for depriving successful CFA claimants of the ability to recover success fees from the defendant. 28. It is also clear that Sir Rupert intended that his proposals should be accepted or rejected as a package, although he appreciated that it was inevitable in any set of proposals relating to the complex and controversial issues which he was addressing that there would be some significant anomalies. Clearly, his reference to the balanced nature of the proposals was to warn against the MoJ, Parliament or the courts being too easily tempted into altering one proposal, because it seemed unfair, as that might result in the proposals, as a whole, ceasing to be balanced. Having said that, it cannot conceivably have been Sir Rupert s expectation, or even his intention, that every single one of his recommendations be implemented without any variation. ABI s application: the main issue: CFA claimants 29. We have been presented with three possible substantive solutions to the question of the extent to which the 10% increase should apply in cases where judgment is given after 1 April The first is to confirm our original decision that it applies to all actions, as suggested by APIL; the second is to vary our original decision at least to some extent as suggested by ABI; the third is to override the mechanism for implementation set out in our original decision and remit the question of implementation to the CPRC, as mooted as a possibility by PIBA. 30. We have no hesitation in rejecting the third of these options, even if we could properly delegate our present function to the CPRC (which need not be decided). As explained in our earlier judgment, it is important that parties engaged in current or projected litigation know where they stand well in advance of 1 April 2013, so that they can make properly informed decisions about matters such as issuing proceedings, settling the litigation and making Part 36 offers. Further, it seems to us that the battle lines on the issues raised by ABI s application have been clearly drawn in the submissions of the three parties who appeared before us, and that, although the solution to the problem raised by these applications is a topic on which reasonable people could differ, the arguments have been fully deployed at this hearing and no further points are likely to emerge if the matter were to be the subject of further analysis. 31. Turning now to ABI s main argument, it has three steps. The first step is that the 10% increase in damages was intended as a quid pro quo for successful CFA claimants in return for depriving them of the right to recover the success fee as part of their costs. For the reasons discussed above, we accept that contention. The second step in ABI s argument is that it would therefore be wrong to permit CFA claimants who are entitled to recover the success fee to benefit from the 10% increase. On the face of it, at any rate, it is hard to challenge that contention: such claimants would have the penny and the bun. The third step is that this misalignment can easily be met by reversing the conclusion reached in para 19, and adding a qualification to our conclusion in para 20, of our earlier judgment, namely that it would not apply to claimants who had entered into a CFA before 1 April Again, such an amendment, which appears at least on its face to be simple and clear, would seem to dispose of the misalignment.

9 32. In our view, therefore, it would seem to follow that, unless there is a good reason to the contrary, we should accede to ABI s principal contention. On behalf of APIL, Mr Aldous has put forward a number of arguments as to why we should not do so, but we are unpersuaded by them (although it is only fair to record that it was similar arguments which caused us to reach the conclusion we arrived at in para 19 of our earlier judgment). 33. APIL s first point is that ABI s proposal would lead to satellite litigation. However, the only examples Mr Aldous came up with were (i) a case where a claimant had entered into a CFA before 1 April 2013, and, after that date, he had died, and his executors then entered into a fresh CFA, and (ii) where a claimant entered into a CFA before 1 April 2013, and then disinstructed his solicitors and reinstructed other solicitors on a CFA after 1 April The first situation will very rarely arise, and the answer in the second situation is obvious. 34. If anything, it seems to us that, as Mr Dutton contended, if we accept the amendment sought by ABI to our original judgment, it will be likely to lead to fewer procedural problems than if we reject the proposal. If the amendment is rejected, there could be cases where a Part 36 offer was sufficient at the time it was made but was insufficient after the 1 April; no such difficulties would arise if ABI s proposal was accepted. Similarly, if ABI s proposal is rejected, there could be cases where defendants try to accelerate the trial and claimants try and delay it. We do not think that these problems are considerable, but they tend to favour ABI s case. 35. Secondly, APIL contended that it was inappropriate for a court, when adjusting levels of damages, to do anything in addition to announcing the adjustment. In particular, it was argued, the court should not be introducing transitional provisions of the sort one finds in legislation. As a general proposition, there is much to be said for this view, but, as we explained in our original judgment at para 16, the circumstances in which we are announcing the 10% increase in damages are very unusual. In those circumstances, particularly as the transitional provision proposed by ABI is conceptually and practically simple, as well as correcting a potential injustice, we reject this point. 36. Thirdly, APIL relied on Sir Rupert s strongly expressed view that his proposals represented a coherent and connected parcel of proposals, none of which (and in particular the 10% increase in damages) should be unpicked. Particularly, given that both Sir Rupert and the MoJ (and indeed Parliament) considered that the courts should give effect to the 10% increase in damages, we do not think that there is anything in that point. If it is for the court to give effect to the increase, as the MoJ said in its November 2010 paper, the court should do so in the way which seems to comply best with justice as well as with Sir Rupert s recommendations as implemented in LASPO. We have already said that to accept ABI s proposal appears to us to be consonant with justice; we see nothing in the argument that, by accepting it, we would cause conflicts or inconsistencies with other recommendations. The very fact that this issue only concerns a transitional provision speaks for itself. 37. Fourthly, APIL contended that the 10% increase in damages was largely introduced because, as Sir Rupert said, general damages were too low, and accordingly the increase should not be seen as linked to the way in which claimants funded their costs in any event. As we have already explained, Sir Rupert made the point about damages

10 being too low simply to meet the windfall argument in relation to conventional claimants. Further, the inherent adequacy of current levels of general damages does not seem to have featured in the MoJ s thinking. As Mr Dutton said, this court is not carrying out the sort of exercise which it did in Heil v Rankin [2001] QB 272, which involved looking at a great deal of evidence in order to decide whether the levels of damages in certain areas were too low, and, if so, by how much they should be increased. We are implementing one of a number of interlocking recommendations in a report on litigation costs. 38. Fifthly, APIL criticised the figures which ABI produced, which suggested that, if we rejected ABI s contention, it would cost the insurance industry 300m or possibly more. This is not a good argument. The precise figures do not matter. It is obvious that, if ABI s proposal is accepted, the insurance industry and other groups representing defendants will be significantly better off than if the proposal is rejected, and it is equally obvious that this would be reflected in the level of future premiums. 39. Finally, there is the uncomfortable fact that, if ABI s proposal is accepted, there will be different levels of damages awarded at the same time, conceivably in the same proceedings to two claimants who have suffered the identical injuries. We accept that this would be more likely to happen if ABI s proposal is accepted than if it is rejected. However, it is not difficult to think of circumstances in which this could happen even if ABI s proposal was rejected. Further, if ABI s proposal was accepted, this sort of outcome would, we suspect, occur relatively rarely, and it would only be a temporary phenomenon. In all the circumstances, we regard the point as a fair, but not a particularly powerful, one. 40. Accordingly, we would accept ABI s proposal in relation to CFA claimants, subject to one point. The point is this. Rather than excluding from the 10% increase those claimants who enter into CFAs before 1 April 2013, we would prefer to exclude those claimants who fall within the ambit of section 44(6) of LASPO. First, this would mean that there will be a guaranteed identity between those successful claimants who are statutorily entitled to recover their success fees from defendants and those successful claimants who are disentitled from enjoying the 10% increase in general damages. Secondly, in so far as there is any risk of satellite litigation, as Mr Aldous suggests, it will be limited to one formulation, namely that set out in section 44(6). ABI s application: the secondary issue: other claimants 41. Although we would accept ABI s primary case, we would not accept their proposal in relation to conventional claimants or, indeed, self-represented litigants ( SRLs ). In principle, as reflected in our earlier judgment, general damages should be increased by 10% in all cases where judgment is given after 1 April 2013, subject to the exception, explained above, where the claimant entered into a CFA before 1 April That exception is based on the fact that CFA claimants are better off under such a CFA than they will be under a CFA (or a damages based agreement) entered into after that date. When it comes to conventional claimants and SRLs, they are likely to be in the same position or, possibly, better off, if they sent a letter of claim or served proceedings after 1 April 2013 than if they did so before that date. 42. Subject to one point, such claimants will be able to recover their costs (normally on the standard basis) if they win, and to pay the defendant s costs (normally on the

11 standard basis) if they lose, after 1 April 2013, as is the current position. However, with the forthcoming introduction of QOCS, qualified one way costs shifting, it may be that in many cases after 1 April 2013, a conventional claimant or SRL would not have to pay the defendant s costs, even where the claimant has lost. The point is not clear because the provisions relating to QOCS, including their commencement date, remain to be decided. 43. However, the essential point is that conventional claimants and SRLs will not be worse off after 1 April 2013, and therefore the logic which underpins ABI s argument in relation to CFA claimants is simply not present in relation to conventional claimants or SRLs. There is therefore no basis for acceding to ABI s case in relation to them. 44. It might be said that this demonstrates an inconsistency of outcome so far as the 10% increase is concerned, and therefore assists APIL s third argument in relation to CFA claimants (an extension of the point considered in para 38 above). There are three answers to that. First, this was an arguable windfall which Sir Rupert specifically dealt with. Secondly, the only way of dealing with it would be to deprive conventional claimants and SRLs of the 10% increase generally, which would plainly be inappropriate: there is a great difference between a temporary, transitional, provision which will result in different levels of damages depending on how the litigation is funded, and a permanent provision to that effect. Thirdly, two wrongs do not make a right. PIBA s point 45. As the extracts from the Final Report, set out in paras 19-21, above demonstrate, the types of damages to which the 10% increase is intended to apply are described in more than one way damages for personal injuries, nuisance and all other civil wrongs to individuals, damages claimed by personal injury claimants, general damages for pain, suffering and the loss of amenity, general damages for nuisance, defamation and any other tort which causes suffering to individuals and the level of general damages generally. The MoJ s March 2011 announcement referred to non-pecuniary general damages, such as pain, suffering and loss of amenity in tort cases, and, in his tenth Implementation lecture, Sir Rupert referred to the 10% increase as being given to personal injury claimants. 46. In our view, it would be inconsistent and unfair to limit the 10% increase to claims in tort, so that it did not apply, for instance, to claims in contract. As Mr Dutton said, there is much overlap between tort and contract cases, both in the sense of parallel claims under each head, each based on essentially the same facts (e.g. many professional negligence claims), and in the sense of similar claims (e.g. disappointing holiday claims in contract). Further, claims in tort and contract are and will be equally susceptible to being funded on a CFA basis (or, after 1 April 2013, under a damages based agreement). Indeed, while it is hard to think of many examples, we can see no good reason why the 10% increase should be limited so as to exclude any type of claim. 47. We do not regard this conclusion as running counter to what was said by Sir Rupert or by the MoJ. While some of their statements seemed to limit the increase to tort cases (as was reflected by what we said in para 20 of our earlier judgment), that is readily

12 explicable by the fact that the protagonists in the argument on this issue before Sir Rupert were personal injury lawyers and interest groups. In any event, as the whole issue of the 10% increase in damages has been left to the court, as pointed out in para 35 above, it is ultimately for us to decide how to give effect to it in a way which best accords with justice. 48. As to the types of damages which are covered by the 10% increase, we believe that the best guidance is to be found in Chapter 3 of McGregor on Damages (18 th edition), which is concerned with Non-Pecuniary Damages. The chapter goes on to discuss four types of damage in relation to both tort and contract cases, namely pain and suffering and loss of amenity., physical inconvenience and discomfort, social discredit, and mental distress. In our view, it is those types of general damages which are to be subject to the 10% increase. 49. We accept that there may be cases where either the cause of action, or, perhaps less unlikely, the nature of the damages, is such that it is not clear whether the 10% increase is to apply. Those cases will have to be dealt with on their merits if and when they arise. Conclusion 50. In these circumstances, we would, as it were, delete para 19 from our earlier judgment, and replace para 20 with the following paragraph: Accordingly, we take this opportunity to declare that, with effect from 1 April 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% higher than previously, unless the claimant falls within section 44(6) of LASPO. It therefore follows that, if the action now under appeal had been the subject of a judgment after 1 April 2013, then (unless the claimant had entered into a CFA before that date) the proper award of general damages would be 10% higher than that agreed in this case, namely 22,000 rather than 20,000.