Damages uplift ‘will cost defendants £300m’
Insurers told the High Court today that defendants stand to lose more than £300m if claimants are given the ‘windfall’ of a risk-free rise in damages.
The Association of British Insurers (ABI) was arguing its case for an amendment to rules that will enforce a 10% uplift on general damages for all personal injury cases from 1 April 2013. The Court of Appeal used the case of Simmons v Castle in July to impose the uplift, but lord chief justice Lord Judge, the master of the rolls Lord Neuberger and the vice president of the CoA Sir Anthony May later agreed to hear arguments for an amendment.
The ABI said it accepted the uplift – a key element of Lord Justice Jackson’s review of civil litigation costs – in principle, but argued it should not apply to claimants already benefiting from conditional fee agreements.
Timothy Dutton QC, representing the ABI, said up to one million cases could be left in the pipeline by the end of March, costing organisations such as the NHS millions of pounds.
‘One would be in the position if these stand unchanged that there will be a very significant impact on these cases, where claimants will recover costs, success fees and after-the-event insurance as well as receive an extra 10% in damages.’
Describing the potential for a ‘misalignment’ in costs for defendants, Dutton also suggested the existing ruling could lead to ‘behavioural issues’ among some claimant solicitors.
When asked by Neuberger if this meant PI solicitors would advise clients to delay settlement until after 1 April, he agreed. Lord Judge had told a packed courtroom at the start of proceedings that the original judgment was ‘open to reconsideration’.
The Association of Personal Injury Lawyers told the panel of judges that damages were already too low, and that the uplift was intended to address this problem, rather than offset the changes to CFAs.
A decision is expected within days.