Damages winners to receive bigger payouts

People who launch successful claims for damages in the civil courts are to get higher damages from next year, the most senior judges in the country announced today.

Levels of damages for those injured in incidents such as road crashes, mishaps at work and other mishaps would rise by 10% from April 1 next year, the Lord Chief Justice, Lord Judge, said in a decision handed down at the Court of Appeal today.

The increase in the general level of damages would also apply to the victims of nuisance, successful claimants in defamation cases, and in other cases involving "suffering, inconvenience or distress", said Lord Judge, who was sitting with the Master of the Rolls, Lord Neuberger, and Lord Justice Maurice Kay, Vice-President of the Court of Appeal, Civil Division.

The increase in damages comes with reforms to the funding regime for civil claims introduced in the Legal Aid, Sentencing, and Punishment of Offenders Act 2012.

The Act abolishes the current no-win-no-fee Conditional Fee Agreement (CFA) system under which a claimant's lawyers can recover a "success fee" - which can amount to 100% of their normal fee - on top of their usual charges from a losing defendant, meaning the defendant faces a costs bill which may come close to double what might otherwise be expected.

Instead, under the incoming regime, claimants will have to pay the success fee, which will be capped at 25%, from the damages they receive - which is one reason why the general level of damages is being raised.

The reforms also end the system under which claimants operating on a CFA could take out so-called After the Event (ATE) insurance, to protect them from having to pay a defendant's costs in the event that they lost, and claim the premium from the losing defendant if they won.

The reforms to the funding regime for civil claims in the Legal Aid, Sentencing, and Punishment of Offenders Act follow the recommendations of a massive report on report on costs in civil litigation produced by Sir Rupert Jackson, who sits in the Court of Appeal as Lord Justice Jackson, which was published in 2009.

Sir Rupert recommended a 10% increase in general damages in civil cases to compensate for the effect of stopping successful claimants making losing defendants pay success fees and insurance premiums.

Lord Judge said the new legislation had been introduced by the Government and enacted by Parliament "on the basis that the reforms are a coherent package, and that the judiciary will give effect to the 10% increase in damages".

It was accepted that the Court of Appeal was the tribunal best-qualified to set guidelines on damages, and ensure that guidance was kept up to date, he said.

It was appropriate for the court to state the position formally now, well ahead of the date when it would take effect - which had the advantage that parties involved in, or thinking about suing were given proper warning of the change.

Lord Judge said the reforms recommended by Sir Rupert were "unconditionally endorsed and supported as such by the judiciary publicly, and it was plainly on the basis that the 10% increase would be formally adopted by the judiciary that the 2012 Act was introduced and enacted".

He added: "With the exception of the 10% increase in general damages, the great bulk of those policy recommendations have been adopted in full by the legislature in an Act sponsored by the executive, on the clear understanding that the judges would implement the 10% increase.

"It would therefore be little short of a breach of faith for the judiciary not to give effect to the 10% increase in damages recommended by Sir Rupert."

The Court of Appeal, he added, had concluded that the 10% increase "should apply to all cases where judgment is given after April 1 2013".

A spokesman for the Judicial Office said the increase would affect most civil cases, adding that the Court of Appeal monitored the levels of damages awarded to ensure "consistency of approach".

A Ministry of Justice spokesperson said: "We welcome this judgment which sets out clearly how the 10% increase in damages will apply from April 2013.

"This is an important part of a package of measures to reform civil litigation costs.

"Under the Government's changes to no win no fee deals, valid claims will be resolved at more proportionate cost, while unnecessary or avoidable claims will be prevented from being pursued. These reforms will also come into effect in April next year.

"The Legal Aid, Sentencing and Punishment of Offenders Act will ensure that claimants will have an interest in the costs being incurred on their behalf and reduce costs for defendants."

PA