Small Claims: Not so Small Anymore

Written by Max Robinson

Max Robinson takes a look at how recent changes to the Civil Procedure Rules may impact how small businesses and individuals choose to deal with small claims.

There have recently been significant changes to the world of litigation with the Civil Procedure (Amendment) Rules 2013 implemented on 1 April 2013.

These changes affect the way solicitors have to manage litigation cases with the bulk of the new rules concerning management of costs. Much of the spotlight has focused on the Court’s power and responsibility to manage the steps taken to meet the overriding objective of dealing with cases justly and at proportionate cost. However, there are other rules that have not received so much media attention but will have a significant effect on how parties, especially those with smaller value disputes, will approach bringing legal claims.

The recent changes include the small claims track limit being increased from claims valued up to £5,000 to claims valued up to £10,000 (except in personal injury cases). This may not sound like a significant change but it will have an impact on smaller businesses and individuals where the loss or potential loss of up to £10,000 can be very damaging.

So why does this make a difference? Well, there are certain rules in regard to cases that fall into the small claims track. These cases are heard in the Defendant’s local county court and the “no costs” principle applies meaning that the successful party, be it the claimant or the defendant, is unable to recover their legal costs from the other side (except for very limited fixed costs) upon the conclusion of the matter. This is supposed to encourage the parties to settle disputes at an early stage and, if the matter cannot be settled, then it is assumed that as the claim is worth a “small” sum in litigation terms it will not be as complex in legal terms. Of course, this is true in many simple debt cases but just because a claim is not worth a substantial sum it does not necessarily mean that it is any less complex than a claim worth several million pounds.

The knock on effect of these rules will be that if a small business or private individual has a claim worth £9,750 then they might not consider it commercially viable to instruct solicitors (as they will not be able to recover their costs even if successful) and so will be left with the option of either litigating the matter themselves (which is obviously time consuming and challenging for those without legal expertise) or simply not pursuing the matter altogether. These rules have obviously been brought into force in order to ease the case load and make the county courts more efficient but with the rules potentially attracting more litigants in person it may well do the opposite. However, the proof will be in the pudding and we must wait to see what the long-term effects will be.

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Max Robinson

Gordon Dadds