The Latin maxim has it that law does not concern itself with small things. Well, lawyers certainly concern themselves with “small claims” at the moment, with the question of the applicable small claims limit for injury cases never far from debate as we await concrete proposals following the announcement, now nearly six months ago in the Autumn Statement, that the Government wants to raise it to £5,000. The matter is the subject of a House of Commons briefing paper, issued on 3 May 2016, which considers the current financial limits for claims in the small claims track and examines both previous and current proposals for increasing them.
The small track (provided for at Civil Procedure Rules Part 27) is intended to operate as a simple and informal way of resolving disputes. Although lawyers may be instructed, the court will not, in most instances, order legal costs to be paid by the losing party. With the successful party generally paying their own costs, it is believed that most claimants deal with their small claim without the help of a solicitor. In multi-track or fast track cases, however, the successful party would normally recover costs from the losing party, subject to the plethora of rules which determine how much can be recovered (and subject to broad areas of judicial discretion).
In April 2013, the financial limit for the small claims track for many types of claim was increased from £5,000 to £10,000. The Ministry of Justice said there would be no change then to the limit of £1,000 for personal injury and housing disrepair claims. It also restated its aim to increase the general small claims limit to £15,000 in the future after a full evaluation of this increase. [This is not the place to engage in a semantic debate about whether most people would classify a dispute of up to £10,000 – equivalent to about five months’ net pay, based on the current median UK annual earnings of £27,600 gross – as a “small” claim].
There had been consultation, from December 2012, on proposals to increase the small claims limit to £5,000 for road traffic accident personal injury claims. However, after full consideration of the consultation responses and a Transport Committee report, the Coalition Government was persuaded that, on balance, it would not be appropriate to increase the small claims limit at that stage, but it would consider the impact of other changes – principally, the Jackson suite of costs reforms and the extension of the Claims Portal – and keep this issue under consideration.
The current Government (not to mention insurers) is concerned about the number of whiplash claims and the impact on motor insurance premiums. As mentioned already, the Chancellor’s Autumn Statement of 25 November 2015 flagged proposals to increase the small claims track limit for personal injury claims to £5,000 and to remove the right to general damages for minor soft tissue injuries. The Association of British Insurers Director General, Huw Evans quickly welcomed the proposals and said: “This is a significant breakthrough in tackling the compensation culture and is good news for motorists. Insurers have long called for meaningful reform in reducing costs in the compensation system, including increasing the Small Claims Track Limit.”
Ministers have since confirmed that that there will be a consultation on the detail of these reforms, including safeguards, in due course, which will be accompanied by an impact assessment. The Government’s view, repeated by Justice Minister Lord Faulks QC addressing the Association of Personal Injury Lawyers’ conference on 5 May 2016, is that “Most minor injury cases are straightforward enough to be dealt with in the small claims track, without the need for legal representation – although claimants are not, and will not be, precluded from engaging legal representation should they wish to do so.” Possibly in anticipation of a Parliamentary debate on the issue, the Commons Library issued a briefing note on small claims on 3 May 2016.
Not surprisingly, APIL and the Law Society are among those who have raised concerns about the effect of the proposals and the prospect of injured claimants having to represent themselves when the defendant (in reality, its insurers) might be legally represented and when complex points might be involved.
An e-petition on the UK Government and Parliament Petitions website called for the small claims track limit for personal injury claims to remain at £1,000. It stated that the increase would “restrict access to justice for thousands of people” and would “put firms of solicitors out of business, leading to unemployment in the legal sector.” It has so far attracted over 24,000 signatures. The Government posted a robust response to these objections, which states that “it is both justifiable and proportionate to increase the limit to £5,000.” [The petition and the response can be viewed here].
The current small claims limit for injury claims of £1,000 was set nearly 25 years ago. Inflation alone would suggest the present value of that sum lies in the mid to upper £2,000s. The present procedure for changing it is by straightforward statutory instrument to amend the CPR. But regardless of what the procedure might be, the whole area is hugely controversial and it seems highly likely that the consultation process, any decision reached as a consequence and steps to implement that could all be challenged by way of judicial review.
Lord Faulks said last week that the Government aimed to make the changes set out above in 2017. If that is going to happen then the necessary consultation ought to begin in the next few months and we will, as ever, make sure that details appear on this blog at the earliest opportunity.
About the Authors
Alistair Kinley is BLM’s Director of Policy & Government Affairs.
Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.
He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).
Jef Mitchell is a consultant at BLM and former Chief Claims Officer at the Ministry of Defence where he regularly briefed Ministers on claims issues and risk management. He now helps to lead the firm’s Policy and Government Affairs work with Alistair Kinley preparing submissions and supporting evidence for consultations and reform proposals, in addition to liaising with government departments and regulators on key issues and consultations affecting the firm and its clients. Jef is also an accredited mediator.