Part 36 Uplift & General Damages Uplift

WHAT ARE THE CHANGES?

PART 36: The changes apply where the Claimant obtains Judgment against the Defendant that is at least as advantageous to the Claimant as the proposals contained in the Claimant’s Part 36 offer (Rule 36.14 (1)(b)). In this situation, under Rule 36.14 (3)(d) the Court will, unless it considers it unjust to do so, order that the Claimant is entitled to an additional amount, which shall not exceed £75,000, calculated by applying the prescribed percentage set out below to an amount which is—

(i) where the claim is or includes a money claim, the sum awarded to the Claimant by the Court; or

(ii) where the claim is only for a non-monetary claim, the sum awarded to the

Claimant by the Court in respect of costs—

DAMAGES: One of the key elements of the Jackson reforms is the 10% increase in general damages. The Court of Appeal has clarified that Claimants with existing Conditional Fee Agreements will not be eligible to benefit from both the recovery of their success fees and After The Event insurance available under current legislation, as well as the 10% increase in damage payouts set to take effect in 2013. The Appeal Judgment in Simmons v Castle confirmed that:

• Where a Claimant has entered into a Conditional Fee Agreement before 1 April 2013 they will be entitled to recover a success fee from the losing party, but will not be entitled to receive the 10% uplift on general damages.
• Where a Claimant has entered into a Conditional Fee Agreement on or after 1 April 2013 they will not be entitled to recover a success fee from the losing party, but will be entitled to receive the 10% uplift on general damages.

MRN OUTLOOK

A point of note to consider is that Part 36 offers are generally global of both general damages and special damages. However, the changes state that it is only general damages, not special damages, that will receive the 10% uplift. It follows therefore, that in each case the Court will need to disassemble any Part 36 offer, made by either the Claimant or the Defendant, to see exactly how much of the offer related to general damages. Only then will the Court be able to accurately assess who has beaten what.

It follows then that, from 1st April 2013, despite the above detailed changes, a Claimant Solicitor is still going to be far worse off than under the old success fee regime, particularly in cases that once attracted high success fees such as uncertain clinical negligence claims.

Further, it is unclear whether the Part 36 uplift will apply only to Part 36 offers made on or after 1 April 2013, or to all Part 36 offers provided that Judgment is given on or after 1 April 2013

It is also worth noting that the bias of Part 36 remains against Claimants: a Claimant only gets the 10% enhancement if Judgment is given at a hearing. So, in effect, a Defendant can accept a Claimant’s Part 36 offer years out of time with no penalty but a Claimant who accepts a Defendant’s Part 36 offer out of time pays both sides’ costs from the expiry of the date for acceptance of the offer..

Finally, it is unclear what weight will be given to Part 36 offers made before the 10% general damages uplift. Say a Claimant offers £20,000.00 and a Defendant offers £19,500.00. In May 2013 the Court awards £19,000.00, uprated by 10% to £20,900.00. Has the Claimant beaten its own offer by £900 or has the Defendant beaten its own offer by £500? Does the Claimant get indemnity costs or does the Defendant get their costs from 21 days after the date of their offer? We expect satellite litigation on this issue.

CHRISTOPHER KNIBB & HELEN FULLER