CASE TRACKING FOR LAWYERS

Case Track Limits 

Background

The Civil Procedure Rules (CPR), implemented following Lord Woolf’s report, Access to Justice, provide a single set of rules that apply to claims both in the High Court and the county courts. Their purpose is to ensure that cases are dealt with in a way that upholds the principles of ‘equality, proportionality and expedition.’1 They provide for a system of case management tracks that have different rules to ensure that cases are dealt with in a manner appropriate to their value and complexity. . All defended civil claims are allocated to one of three tracks: the multi-track, the fast track or the small claims track. The courts’ powers in relation to the allocation of claims to tracks can be found in Part 26 of the CPR. There are several factors that the court can take into account when allocating a claim to a certain track, for example, the views of the parties and the nature and complexity of the claim. However, the most straightforward way for the courts to distinguish between cases is on the basis of monetary value, so each different track has a financial limit, which determines what the normal track for a claim will be.

3. Currently cases allocated to the small claims track are those with a monetary value of less than £5000. There are two exceptions to this general rule. The first is personal injury claims where a limit of £1000 applies (this amount relates to the damages awarded for pain, suffering and loss of amenity (PSLA) only and excludes any other damages claimed). The second exception is housing disrepair where the limit of £1000 applies for the cost of the disrepair and £1000 for any other damages arising from the disrepair. Claims that are allocated to the fast track are those with a value that exceeds the limit of the small claims track, but is less than £15,000. The multi-track is the normal track for any claim that does not fall within the scope of the small claims or fast track (i.e. predominantly with a value exceeding £15,000). 4. The purpose of the small claims procedure has always been to provide an informal environment in which disputes can be resolved in a simple, straightforward way that is accessible and proportionate to their low value. This means that the normal procedural rules and the strict rules of evidence do not apply (for example witnesses do not have to give evidence on oath). The presence of expert witnesses is subject to the agreement of the court and hearings are conducted in an informal manner, often with parties sitting around a table.

5. The cost rules relating to recoverable costs for the small claims differ greatly from those of the fast track and multi-track. In the latter two tracks the successful party is generally able to recover their costs, including the cost of legal representation, from the unsuccessful party. In the small claims track the costs that can be recovered from the other side are strictly limited. The usual rule is that the court may only award fixed costs attributable to issuing a claim, any courts fees, reasonable travelling expenses for a witness or party and limited costs for loss of earnings for a party or a witness (up to £50 per day per person). In addition fees of any permitted experts (currently limited at £200 per expert) can be claimed and an amount up to £260 can be claimed for legal advice and assistance in claims including an injunction or specific performance. No costs can be claimed for legal representation or for the services of a lay representative. 6. This part of the consultation paper considers all the case track limits.

The Financial Limit of the Small Claims Track 7. The small claims procedure was first introduced in 1973, and evolved out of a judge’s statutory power to refer a case to arbitration. The limit was originally set at £75 but this has increased over time. In 1991 it was set at £1000. In 1995 Lord Woolf published his Interim Report and the following year the limit was raised to £3000. 8. It was at this time that the system of differential limits was introduced. Some groups, including lawyers who specialised in personal injury claims, argued forcibly that the complexity of these claims meant they could not be dealt with within the small claims procedure. In particular, attention was drawn to the difficulty claimants have in assessing the value of their claims and the worry that they may substantially underestimate the value of their claim. The then Lord Chancellor felt that claims with a value below £1000 were being dealt with fairly but decided that the limit should not be raised further for this type of claim. Similar arguments were raised in relation to housing disrepair cases. This initially led to specialist cost provisions (to reflect the fact that these cases involve bringing an injunction) but later to the different limits of £1000 for the disrepair and £1000 for any other damages claimed. 9. In April 1999 the track limits for small claims were examined again. Research had indicated that the rise to £3000 was generally considered to have been successful and the decision was taken to raise that limit again to £5000. At the same time the limits for personal injury and housing disrepair claims were reviewed. The limit for personal injury claims remained at £1000, but it was decided that it should apply to general damages only (i.e. the money awarded for PSLA) rather than the value of the entire claim.

. In May 2004 the Better Regulation Task Force (BRTF) published the report, Better Routes to Redress. As part of their report they examined the small claims procedure. They concluded that the costs rules mean that claimants in person have the ability to bring claims against represented defendants, as they know they will not have to pay their costs if a claim is unsuccessful. The BRTF considered that there was an argument for raising the current limit for the small claims track for personal injury claims. They recommended that the Department for Constitutional Affairs (DCA) should carry out research into what the small claims limit for personal injury claims should be ‘but justify any limit lower than £5000.’2 11. The BRTF stated that research carried out on the rise to the limit from £3000 to £50003 demonstrated two positive and significant points. The first was that the rise did not result in a dramatic increase in the number of cases being litigated in the small claims track, as was feared before the limit went up. The second was that both litigants and the judiciary expressed approval in the small claims process. The BRTF cited this approval as supporting the idea that raising the track limit for personal injury claims would improve ‘access to justice for many as it will be less expensive, less adversarial and less stressful.’4 12. The Civil Justice Council (CJC) considered the matter of raising the track limit for personal injury claims in the report Improved Access to Justice – Funding Options and Proportionate Costs (published in August 2005). The CJC stated it was necessary to focus on achieving proportionality of costs within every track and cited as a positive example the fixed costs for fast track road traffic accidents (RTAs). They recommended developing fixed costs for a wider range of cases. 13. The CJC did not agree with the BRTF that the track limit for personal injury claims should be raised. They expressed concerns that raising the limit would mean that claims would be dealt with either by claimants in person who may find the complexities of personal injury law difficult to grasp, or by unregulated claims management companies. On the latter point the Compensation Act 2006 provides for the regulation of these companies.

The Constitutional Affairs Select Committee (CASC) considered the small claims limit in The courts: small claims (published in December 2005). This report stated that the central issue was whether legal representation was necessary for those personal injury claims with a value at the higher end of the scale. There was a wide range of evidence put forward from the organisations whose views were sought. CASC was concerned that many of the injuries originally intended to fall within the small claims bracket (minor injuries with no long-term effects) no longer do so, due to inflation in damages. It was on this basis that the Committee recommended that the limit be raised to £2500. The report also recommended that in order to ensure consistency of approach, it would be sensible if the limit for housing disrepair cases was raised by the same amount. It added that when considering the housing disrepair limit, however, it would be essential to ensure that vulnerable tenants were not unduly disadvantaged by any change.

Small Claims Limit for Personal Injury Claims 15. In its response to the BRTF report the Government recognised that there are concerns that the processes and costs in lower value cases are often the most disproportionate. Raising the limit for the small claims track would be a way of resolving this problem. However, the Government also recognised concerns about the potential lack of legal representation for claimants if the small claims limit for personal injury claims was raised to £5000. The Government therefore undertook to consider other options for dealing with these claims in a more timely, proportionate and cost-effective way. These options have been considered and proposals for improving the system are set out in the second part of this paper. First we consider whether the small claims limit for personal injury cases should be raised. 16. Following the various recommendations on this subject, the Government has received a considerable number of submissions and correspondence from stakeholders, the majority of which have strongly opposed any increase in the limit. Various organisations have also published their proposals. The arguments for and against raising the limit are summarised below.

Arguments in favour of an increase in the limit • Insurers are concerned that the fast track system is not working well for personal injury claims with a value at the lower end of the scale. They cite the disproportionately high costs that have been recorded as proof of this. It has been contended that rather than the fast track, the proper forum for hearing low value personal injury claims is the small claims track, which is viewed as a more efficient system. If the limit on the small claims track was raised it would lead to a more predictable process. • An increase in the limit would lead to a decrease in the amount of money paid out by insurers (as they would not be burdened with paying the claimant’s legal costs) which in turn may lead to a decrease in insurance premiums. Raising the limit is a simple way of solving the issue of disproportionately high costs as it would mean that the majority of personal injury claims would be taken out of the fast track. • Since 1991 there have been developments in the type of lower value injuries, which are the focus of many personal injury claims, For example, there has been a large increase in claims for injuries such as whiplash. These injuries are considered simple and straightforward for a claimant in person to understand. It is argued that these injuries should fall within the remit of the small claims track but do not do so because the limit was set so long ago.

There is a blanket assumption put forward by claimant lawyers that personal injury cases are more complicated than other types of claims. Insurers believe that this is an assumption that needs testing. • Although claimants may find it difficult to bring a claim without legal representation, it has been pointed out that there is already support and assistance available to them. For example, there are leaflets published by Her Majesty’s Courts Service, specifically designed for the claimant in person, which contain information about the small claims track. These contain advice on the eligibility of cases for the small claims track and preparation for a hearing. It has been suggested that if the limit was raised, an increase in this type of literature could be very helpful to claimants. • CASC stated that raising the limit to £2500 would be a reasonable compromise between no change at all and a dramatic increase to £5000. They stated that an increase to £2500 would bring the minor claims that Lord Woolf had in mind back into the scope of the small claims jurisdiction (this issue is examined later in the paper).

An increasing number of claimants now have the benefit of Before The Event insurance (BTE) which is often purchased as an addition to a motor or household insurance policy. These policies can give assistance in a variety of ways such as offering legal advice or help with paying disbursements. If a claimant already has BTE as part of an insurance package then they may be able to bring a claim without engaging a solicitor. • Unrepresented parties are not necessarily disadvantaged when against a party with legal representation as often the majority of work in establishing a claim is carried out before the hearing takes place. In addition, to level the playing field greater use could be made of opportunities for unrepresented parties to obtain advice prior to hearings through the voluntary sector. CASC considered that any disadvantage to claimants in raising the limit could be ameliorated by better provision of advice and support before the parties attended court. • District judges have the responsibility of equalising the uneven playing field in claims not involving personal injury where one party is unrepresented. This is often achieved by adopting a more interventionist approach. They should be able to carry out the same function in relation to personal injury claims. • The impact of inflation should be taken into account and that raising the limit to £2500, or £5000 would make allowances for inflation proofing.

Arguments against raising the limit • Claimant representatives indicate that personal injury claims are complex and often require independent legal guidance and expert evidence, the cost of which would be prohibitive if the limit were raised. The substantive law involved in a personal injury claim can be complicated and a claimant in person may not be aware of regulations or statutory duties that could apply to their claim. In addition issues such as identifying the right defendant and establishing a breach of duty of care can be difficult for an unrepresented claimant to understand. It can also be hard to collate the necessary evidence, medical and otherwise, to prove a claim. Potential claimants could be put off by the work involved and would not bring a claim • In a vast majority of claims the defendants to personal injury claims are insured and the insurance companies can afford to be legally represented or will use expert claims handlers, even in lower value claims. If the limit was raised the claimant would often not be able to afford legal representation and would have no prior knowledge of establishing a claim. This could lead to inequality of arms.

There is the added concern that potential claimants could have strong claims but be unable to afford legal representation or conduct their own claims either because they are poorly educated or because they do not have English as their first language. These people are often the most vulnerable in society. There is a real danger that they will be deprived of access to justice. • Although these claims are referred to as low value, a sum of £1000 or £2000 is a significant sum of money to the overwhelming majority of the population. • It is estimated that as many as 80 per cent of claims brought on behalf of trade union members have a value of less than £5000. The trade unions are concerned that raising the limit would mean that their members would no longer be legally represented but would be claiming against insurance companies who would be represented. The current situation allows the trade unions to offset claims for less than £1000 (where costs for legal representation cannot be claimed) against the majority of cases with a value between £1000 and £5000. If the limit were raised then they would be unable to afford to provide legal representation for all personal injury claims brought within the small claims track.