10% increase in general damages

What changed?

From 1 April 2013, there was a 10% increase in general damages for non-pecuniary loss (ie pain and suffering, loss of amenity, physical inconvenience and discomfort, social discredit or mental distress). This applies regardless of whether a claim is brought in contract or tort.

The increase is most obviously relevant to claims for personal injury, nuisance and defamation; it rarely applies to commercial claimants.

How was the change implemented?

The change was implemented by Court of Appeal guidance in the case of Simmons v Castle [2012] EWCA Civ 1288 (amending the initial guidance given in the same case: [2012] EWCA Civ 1039).

Why was the change introduced?

The increase implemented a recommendation of Lord Justice Jackson which was aimed at assisting claimants to meet the additional costs and risks arising from his recommendation to abolish recoverability of conditional fee agreement (CFA) success fees and after-the-event (ATE) insurance premiums (see “Conditional fee agreements (CFAs) / after the event (ATE) insurance”).

From 1 April 2013 parties are still able to enter into CFAs and take out ATE insurance to fund their litigation, but have to bear the additional costs of doing so, with an obvious impact on the level of damages claimants will receive (though in personal injury cases the success fee is subject to a cap of 25% of damages, excluding future pecuniary loss). The increase in general damages was one of a number of measures intended to counter-balance this impact.

In which cases does the increase apply?

Initially the Court of Appeal announced that the increase would apply to all cases where judgment was given after 1 April 2013: Simmons v Castle [2012] EWCA Civ 1039. This however led to an uproar by defendants, and a challenge by the Association of British Insurers on the basis that it would mean a "double whammy" for defendants where CFAs were entered into before 1 April 2013 (so the costs are still recoverable from the defendant) but judgment was given after that date so the 10% increase in general damages would also bite.

That challenge was successful, and so the Court of Appeal amended its previous guidance on the point. As a result the increase applies where judgment has been given after 1 April 2013, except where the claimant entered into a CFA before 1 April 2013 and therefore the success fee continues to be recoverable from the defendant: Simmons v Castle [2012] EWCA Civ 1288. This avoids the possibility of defendants (and their insurers) having to pay a claimant’s success fee while at the same time being liable for the 10% increase in general damages which was intended to compensate CFA claimants for the loss of recoverable success fees.

The 10% increase applies to all other cases where judgment has been given after 1 April 2013, regardless of when the proceedings were started and whether the claimant has entered into a CFA.

Note: Content up to date as at 16 January 2017

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