Justice Committee Concerned About the Implications of Raising Small Claims Limit

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18 June, 2018

The House of Commons Justice Committee have examined the Small Claims limit for personal injury and have rejected the proposals to increase the small claims limit for personal injury claims from £1,000 to £2,000 and to £5,000 for road traffic accidents.

The Justice Committee have published the anticipated report which considers:

  • the impact of raising the small claims limit for personal injury (PI) from £1,000 to £2,000, and to £5,000 for RTA-related PI claims,
  • the reforms that have already been made to the claims process for personal injury;
  • the Government and industry response to insurance fraud;
  • the potential impact of raising the small claims limit on different types of personal injury claim;
  • the impact of doing so on the judiciary and the courts;
  • the Ministry of Justice's proposals for implementing the small claims reforms, and
  • the impact of increasing the small claims limit on different organisations that assist claimants.

The report concludes that the small claims track should not be increased to £2000 for PI claims and to £5000 for RTA claims. The Committee commented that they are "deeply unimpressed by the inability of the Ministry of Justice to quantify the impact of raising to £2,000 the small claims limit for employer liability and public liability claims". The report points to the potential complexity of such claims and the role of litigation in maintaining safe and healthy workplaces.

However, the overwhelming concern of the committee relates to the basic requirement of "unimpeded access to the courts". As claimants are unable to recover legal costs in the small claims track then they are unlikely to have legal representation. As a result, increasing the small claims limit for PI creates significant access to justice concerns. Whilst the Committee acknowledges the MoJ's attempts to develop an online system for supporting unrepresented claimants, it has deemed that the project does not guarantee access to justice and has condemned the "wait and see" approach to increasing the small claims track limit.

Instead, the Justice Committee recommends that the £1,000 small claims limit for PI should be increased to reflect inflation, suggesting an increase to around £1,500 might be appropriate in April 2019. However, the Committee also recommends delaying the national roll out of the new online portal platform and any changes to the small claims limit for PI claims until at least April 2020, with EL and PL claims excluded.

Forbes comment

Whilst critical of the proposals relating to the small claims track, on the wider issues of CMCs, holiday claims and the steps taken by the Government and the insurance industry to tackle insurance fraud the Justice Committee was certainly more positive. The Committee has suggested that the government should await its post-legislative review of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 before introducing further changes to the PI claims process. It remains to be seen how the government will respond; they are not required to follow the recommendations set out in the report but without a doubt the report will have an impact on the proposals going forward. We await a response from the government and whether they will be able to convince the sceptics that access to justice will not be affected. To read the report in full, click on this link.

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