Jackson LJ recommended a 10% increase in general damages to compensate claimants for having to pay success fees when his reforms come into force in April 2013. HMG agreed and said the Court would make the change necessary. So the Court of Appeal highjacked an infant settlement in order to declare that the 10% increase will apply as from that date. The Association of British Insurer spotted an obvious flaw, which was that the Court of Appeal did not say that it will apply only to those CFAs entered into after April 2013 where the success fee is irrecoverable from the Defendant. In other words, for those old CFAs unaffected by the reforms, but where damages were agreed or assessed after April 2013, the insurer would have to pay both a 10% increase in generals and the success fee. Insurers were not prepared to put up with that windfall, therefore they applied to re-open the Court of Appeal's 'judgment', which they successfully have done and the Court of Appeal has issued a new judgment which makes it clear that the 10% uplift only applies where the Claimant has to meet the success fee. The new judgment is here.
One of the most startling aspects of this whole thing is that we make such big changes through the interesting legislative medium of some senior judges ram-raiding a private law action in order to make a declaration as to the common law. Would any other system legislate in this way? The Court of Appeal has been the traditional guardian of general damages, but where wholesale reform is taking place, which includes legislation debated and passed in Parliament, why should one strand be left to be enacted in this bizarre way? Perhaps given the horlicks the Court made of its legislative foray it will leave such drafting to Parliamentary Counsel in future.