The Court of Appeal has ruled that a 10% uplift on general damages will not apply to cases begun before 1 April on a conditional fee agreement (CFA).
In a ruling made today, the most senior judges in England and Wales overturned an earlier judgment that would have applied the uplift to all cases settled after 1 April.
The court also ruled that it will apply to all types of claims, rather than just personal injury cases.
The Association of British Insurers had intervened in the case to ask the court to reconsider its original decision, which it claimed would cost the industry around £300m in extra costs.
Lord chief justice Lord Judge stated that the uplift had originally been proposed by Sir Rupert Jackson as part of a ‘balanced package of reforms’ and had warned against unpicking this package.
The judgment said: ‘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.’
It added that accepting the ABI’s argument would be likely to lead to fewer procedural problems, particularly if a Part 36 offer was sufficient at the time it was made but insufficient after 1 April.
The court did reject the ABI’s contention that all ‘conventional’ claimants and self-represented litigants should also not receive the 10% if the case begins before 1 April. This was because they are not likely to be any worse off as a result of changes to the CFA after 1 April, so the logic underpinning the ABI’s argument was not present.
James Dalton, the ABI’s assistant director of motor and liability, said: ‘The insurance industry had taken this action to reduce unnecessary costs being passed onto honest motorists.
‘Today’s decision by the Court of Appeal means that insurers will not be forced to pass on about £300m in increased costs to the premium paying public, which represents around £13 per motor insurance policy. We have won a battle against unnecessary costs but not the war.’
The Association of Personal Injury Lawyers, which had contested the ABI appeal, said the ruling would ‘introduce unfairness where before there was an even playing field’.
APIL president Karl Tonks said: ‘It could easily mean that two claimants leaving court on the same day, with the same injuries, will receive different damages just because of the date on which they signed their funding agreement.’