Civil Litigation – Increase in the Small Claims Limit as of 1 April 2013

Amendments made to the civil procedure rules on 1 April 2013 have seen new provisions come into effect.

One of the major changes is that the small claims track limit has increased from £5,000 to £10,000 for all claims issued on or after 1 April 2013 (except in housing cases, and in personal injury cases in respect of the injury itself, where the limit will remain at £1,000).

The small claims track is designed to be quicker, cheaper and less formal than for larger disputes and therefore when dealing with costs the court imposes fixed costs, which provide only nominal fees to cover expenses etc. The upshot being that most parties to a small claim will conduct their claim themselves, as Litigants in Person, rather than being represented by a solicitor or barrister.

To most people £10,000 is a substantial amount of money and it is expected that increasing the limit will result in more complex, and sometimes acrimonious, claims being dealt with by litigants in person, some of whom will lack the necessary skill to run such cases and/or negotiate directly with the defendant.

In some cases, even if the value of the case is more than £10,000 the court can now allocate the case to the small claims track without the consent of the parties being required and the costs regime applicable to the small claims track will apply unless the parties agree otherwise.

The court can also allocate a claim from the small claims track to a different track and if this happens the usual rule about costs in the small claims track cease to apply. In such cases if the claimant loses the claim they may have to pay the defendant’s costs; therefore what a claimant expected to be a cheaper and less formal claim could end up involving more complex procedure issues and the risk of paying substantial costs if the claim is lost.

Legal advice will be badly needed where there are complex procedural issues to contend with; however the increase in the small claims limit will mean that the costs of obtaining this advice will not generally be recoverable from the other side.

Litigants in person may struggle to comply with court rules in higher value and more complex cases, which will now fall within the small claims limit, and district judges are likely to be robust in not tolerating failures to comply with those rules or allowing relief from sanctions when they occur.

Although the changes were recommended by LJ Jackson as “designed to control costs and promote access to justice” the opposite could happen if claimants with sound claims are put off from pursuing them, knowing that the costs of legal advice are unlikely to be recovered.

by Janet Lane from the Kings Lynn office