Damages uplift ruling sparks call for clarity

Lawyers have called for extra guidance after claiming a judicial announcement on damages raises more questions than answers.

The Court of Appeal last week handed down a judgment that will lead to a 10% increase in general damages in most civil cases from 1 April next year. But both claimant and defendant solicitors say the judgment could unbalance the system.

Kerry Underwood, chairman of national firm Underwoods, said large numbers of claimants will effectively receive a ‘bonus’ as cases come to court after 1 April that are already subject to recoverable success fees. ‘Thus they will get the 10% increase but will not have to pay any success fee out of it,’ Underwood said.

He added that there were also issues in relation to part 36 offers to settle.

‘Supposing a claimant now offers £10,000 and a defendant £9,500 and in April 2013 the court awards £9,200, uprated by 10% to £10,120. Has the claimant beaten its own offer, thus qualifying for indemnity costs, or has the claimant failed to beat the defendant’s offer, thus incurring liability for all of the defendant’s costs, from 21 days after the claimant’s offer?’

Don Clarke, president of the Forum of Insurance Lawyers, said members were concerned that the judgment was announced in isolation.

‘This reform is part of an interlocking package and closely aligned to the withdrawal of the recoverability of success fees and after the event premiums.

‘It would be illogical not to do everything possible to ensure that, as much as is reasonably practicable, the 10% increase and the withdrawal [of recoverability] are synchronised.’

A spokesman for the judiciary said it was clear from the wording of the judgment that ‘no approach was going to be perfect’. He said judges will be trained in the runup to next April so they are aware of any case being dragged out to a point where damages are increased.