Revised Court of Appeal judgment on PSLA increase is very welcome

George Bernard Shaw - “Progress is impossible without change; and those who cannot change their minds, cannot change anything.”

I was delighted to read the revised judgment in Simmons v Castle and see that their lordships had the courage to change their minds and adopt a more common sense approach to the 10% uplift in damages for pain, suffering and loss of amenity (PSLA). The ABI’s application was successful in respect of claims funded by a conditional fee arrangement (CFA).

The Court of Appeal specifically linked the 10% increase to the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012. The new wording is clear that the additional 10% will be awarded “unless the claimant falls within section 44(6) of LASPO”, which allows a claimant with a pre-existing CFA to still recover a success fee. This prevents double recovery and a retrospective application to hundreds of thousands of claims.

Speculation suggests this has avoided unnecessary additional costs of around £300m - a burden that would have inevitably been passed on to the premium-paying public, taxpayers and community charge payers.

Damages could ratchet up by 20%
While the ABI’s intervention along with the Court of Appeal’s willingness to revisit its own decision should be applauded, the judgment must be placed in context. Only last month, the Judicial College issued the 11th Edition of the PSLA Guidelines and in certain key areas this delivered PSLA inflation of 9%. The cumulative effect, when linked to Simmons v Castle, will see damages ratchet up by some 20% in many cases. This is against a backdrop of the government saying that it wishes to act to reduce premiums.

While Simmons v Castle delivers clarity in a key component of the Jackson reforms, the Forum of Insurance Lawyers (FOIL) remains concerned that much of the final detail is still outstanding from the Ministry of Justice (MoJ). We were encouraged, however, to see draft orders and regulations released last week for urgent review and feedback. These are regulations which will support various sections within Part 2 of the LASPO Act and include drafting around CFAs, damages-based agreements and offers to settle. This is important detail and FOIL will be considering the drafts and responding with further commentary.

Devil is in fixed costs detail
Our primary focus remains the level of fixed costs. We welcome repeated assertions from the government that the £1,200 road traffic accident (RTA) portal fee will be reduced. However, we need more details on what the fixed costs will be both inside and outside the portal. MoJ officials have confirmed that ‘Jackson Table B’ from Lord Justice Jackson’s final report will be the architecture adopted by the MoJ to present fixed costs for April 2013, but compensators need to know at what level costs are to be fixed so that pricing can be considered, as well as future reserves. We also await further detail of protocols and supporting rules so that those who run claims departments can consider IT, technical and operational requirements in an ever-decreasing timespan.

FOIL’s understanding is that the Rules Committee will meet on 7 December for the last time in 2012. Any outstanding detail to implement the Jackson reforms for April 2013 need to be signed off in that session. That is now less than two months away and time to work the detail is short. FOIL continues to work with MoJ officials on discussing the final intricacies of drafting, but we remain concerned that time is running out.

The Jackson reforms represent generational change for compensators and claimants alike. The efficacy of these reforms will drive the claims experience for injured people and will also reflect in the premium we all pay to provide that compensation. There will also be a direct impact on issues such as fraud, frequency and how quickly genuinely injured people can secure rehabilitation and compensation. These are fundamental to the claims service that supports injured victims and those who pay for that. FOIL urges the MoJ to focus renewed energy and determination on securing the details before that December deadline and deliver Jackson’s interlocking package for the benefit of all.

Don Clarke is president of the Forum of Insurance Lawyers