WHAT IS IT?
CPR 27.1 (2)
Old Limit: Value of the claim not more than £5,000.00 with personal injury not more than £1,000.00.
New Limit: Value of the claim not more than £10,000.00 with personal injury not more than £1,000.00.
The Small Claims Track has increased its financial limit, effective from 1 April 2013. Previously, claims which had a financial limit of not more than £5,000.00 would fall into this track however the limit has now increased to £10,000.00, thus encapsulating more claims.
The personal injury financial limit is apparently being increased to £5,000.00 (or even £15,000.00) but it is unclear when this will happen. The Government consultation on raising the limit to £5,000.00 for just whiplash claims, or alternatively all road traffic claims, ended on 8 March 2013 and an announcement is awaited, but the Government is now considering raising the small claims limit to £15,000 for everything including personal injury.
Also to note is the impact of Solomon -v- Cromwell Group Plc & Donna Oliver -v- Sandra Doughty [2011] EWCA Civ 1584, which has been written into the rules at 44.9 (2). Previously, if a case settled on a Part 36 basis pre-issue there were suppositions to be made as to whether standard basis costs would apply. With the new rules, if a claim settles by way of Part 36 but pre-issue there is a clarity that other cost regimes may now apply.
Part 27.14 (5) and (6) have now been omitted from the CPR. This has diluted the scope to obtain costs outside fixed costs for the small claims track.
MRN OUTLOOK
The small claims track usually sees claims by litigants in person bringing low value personal injury claims. Consequently, when dealing with costs the court imposes a fixed cost regime which provides nominal fees to cover expenses etc. By increasing the limit to £10,000.00 this will see a rise in more complex claims that a litigant in person would generally not have the skill to run. Litigants in person are more likely to seek advice from a Solicitor who may be reluctant to taken on such claims given the increased risks to costs. A litigant in person is now expected to negotiate directly with Defendant insurers without the expertise of a solicitor. This new regime will likely impact RTA claims in the main where personal injury claims can be quite low however costs for car hire can be high. This has a clearly negative impact on access to justice and there is currently a petition to oppose this change which can be found at http://www.activism.com/en_GB/petition/save-100-000-jobs-in-the-legal-industry/42852#signnow
In respect of the Solomon judgment and rule 44.9 (2), Solicitors will have to be mindful of the effect of Part 36 offers put forth pre-issue if there is a chance that the claim would fall into the small claims track. Defendants will have scope to argue that the standard basis does not apply and therefore seek to implement the fixed cost regime.
The effect of omitting Part 27.14 (5) and (6) from the CPR narrows the scope for the Claimant to obtain settlement outside the fixed costs of the small claims track.
Overall these rules are detrimental to Claimants’ costs in respect of pre-issue Part 36 offers, cases which are allocated to the small claims track but settle outside of the financial limit and unallocated cases which may fall within the small claims track limits on value.