Small claims court law reforms

In his 2015 spending review, Chancellor George Osborne has vowed to reform the law relating to Personal Injury practice by raising the Small Claims limit to £5000.00 from its current level of £1000.00. In the small claims court cases are generally pursued by the parties acting in person, not least as a result of the restrictions on the court to award their costs to the winning party.  Although the small claims court limit has been set at £10,000.00 since the 1st April 2013, claims involving Personal Injury with a value over £1000.00 have been excluded and in 2013 it was acknowledged by the Government that there was no justification to increase the  limit in respect of Personal Injury claims.

The chancellor’s justification for his announcement is that this will provide significant savings to the insurance industry who generally underwrite such claims and he estimates a saving of £40.00 to £50.00 per household each year that he expects the insurers to pass on to consumers. This of course remains to be seen as following earlier reforms there is no clear evidence that insurers have passed on premium savings.

There is a real risk that this change if implemented will lead to a significant imbalance in power between the parties in a Personal Injury claim and quite possibly lead to legitimate claims not being pursued or being in appropriately presented. If the limit for Personal Injury claims is raised to £5000.00 then a vast proportion of Personal Injury claims will be subject to a system of very low fixed costs which will make it either impossible for the client to instruct a solicitor to pursue their claim, or use a proportion of their damages, intended to compensate them for their pain and suffering, to fund their legal costs.

Commenting on the proposed reforms Mark Hambling, director of Rogers & Norton and a senior litigator accredited by the Association of Personal Injury Lawyers commented as follows. “The biggest fear is that innocent victims of accidents will be forced to fight claims themselves when faced with an insurer who has a limitless legal budget. As a consequence their is a real risk that many legitimate Personal Injury claim may fail, be settled at an undervalue or not pursued at all, as a result of the innocent victim not having the benefit of legal advice, given the inability of recovering the costs of seeking that advice.”

Although many personal injury claims will fall outside of the £5000.00 ceiling, that does not mean that those claims below the limit are any less meritorious and therefore the victim, who will often need there compensation to cover medical expenses and loss of earning, should not be deprived of their compensation or forced to use a proportion to fund their legal costs, which in the absence of this change would be recoverable.

It is therefore important that the voice of innocent victims is heard when the government consults on these changes in 2016 and Rogers & Norton intend to insure the voice of the innocent personal Injury victim is presented.

Mark Hambling is a director in Rogers & Norton’s Personal Injury team and an Accredited Senior Litigator with the Association of Personal Injury Lawyers.  He can be contacted on 01603 675637 or by email at mbh@rogers-norton.co.uk.