Changes Afoot for Small Claims?

Small ClaimsWill the proposed increase of the small claims limit spell trouble for the ‘man in the street’?

The current Justice Secretary, Mr Kenneth Clarke, has not had a particularly good month. In May he was at the centre of a media storm after he made some controversial remarks about criminal sentencing on Radio 5 live. The controversy attracted the attention of the media as an attack on our justice system. Unfortunately the reality is that it may have distracted attention from a more important change to our ‘justice’ system. The government is considering raising the £5,000 small claims limit to £15,000 from April 2012. The idea is to let more people use the ‘simple’ small claims procedure, but I fear this is another example of cutting costs at the expense of individuals being able to get a fair hearing.

When I started in litigation, the small-claims limit was £3,000. It rose to £5,000 in 1999 and has not increased since then. It is debatable whether it is now time for it to rise, but like university fees’ trebling overnight, it seems to be another case of too much too fast. So why is this increase important?

Those of you who have studied on the Diploma course will be aware that the small claims procedure is supposed to be more user-friendly, allowing parties to represent themselves. The use of lawyers is discouraged by the fact that win or lose you have to pay your own legal fees. I have always agreed with this principle in straightforward cases where the parties can put forward their claims without the fear of a huge legal bill. The difficulty I have is that even with a limit of £5,000 many people are not comfortable with the ‘simple’ procedure. If this limit is raised to £15,000 how many of these cases are likely to be straightforward?

When I have been instructed by clients to assist them with a small claim, they are usually happy to prepare most of the paperwork themselves and would seek my advice to check everything over. I wonder if they would be as happy in a complex claim where a ‘small’ amount of up to £15,000 is at risk. On a cost-to-benefit analysis a client may need proper legal advice, but it may not be economic for a lawyer to be involved. What is fair about someone winning his or her case but losing part of what the person was owed in legal costs?

What happens in the case when a client decides to embrace the DIY principles of small-claims procedure and tackles a complex case on their own? Worse than losing the money the person might have spent on legal advice, there may be a serious risk that the whole case may be lost. Consider one aspect of taking a case to trial – directions. If you have studied on the Diploma course you will have an appreciation of the importance of following directions. Directions are commands from the Court. They tell the parties what to do and when. In small claims one of the most important standard directions relates to disclosure of evidence. It is usual that each party provide copies of all documents they intend to rely on and bring the originals to Court. They should disclose signed witness statements at least 14 days before the date of a final hearing. If expert evidence is required, the Court has to give permission. If any of these requirements is not followed, it is grounds for the case to be thrown out. Should a legitimate case be thrown out on a technicality? I wonder if most members of the public would understand this. Where there is so much money at stake I think people should not only get a fair trial but also feel that their case has been properly heard.

I am a supporter of the current small claims procedure, and I have always encouraged people to have a go when they have a decent claim. Personally I do not want to represent people where I might leave them a legal bill as big as or bigger than the amount they are claiming. With the financial stakes so much higher, I suspect that many people will have no choice but to sacrifice some of their damages rather than risk losing it all, but personally this situation gives me no pleasure. As a graduate of the Diploma course, you at least have a better chance than most to bring or defend a case. Next month we will outline some top tips to consider when bringing a claim.