New Small Claims Limit Comes into Force
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New Small Claims Limit for EL/PL Claims
Last year, the government confirmed that it would raise the small claims track limit for employer’s liability and public liability personal injury claims in England and Wales, from £1,000 to £1,500 in April 2022.
Initially, the new small claims limit was to be set at £2,000; however, Lord Wolfson confirmed this would be reduced to £1,500 following opposition from unions, insurers and claimant representatives, who argued that the issues in these types of claims were often more complex than those seen in road traffic accident claims.
This increase in the small claims limit was initially set to come into force in April last year; however, due to the issues that were expected to be faced by claimant representatives in RTA cases due to the whiplash reforms, they decided to defer the implementation until April 2022.
The new small claims limit will have an impact on both victims of these types of accidents, as well as Claimant Solicitors within the personal injury sector.
Claimant Solicitors will now be unable to recover their legal costs in EL/PL claims which are valued below £1,500. This may mean that more and more Solicitors will be unwilling to take on these types of claims for compensation, limiting access to justice for victims of these types of accidents.
Small Claims Limit in RTA Whiplash Claims
Following the Civil Liability Act 2018, the government implemented a number of changes to how compensation could be claimed by victims of whiplash injuries caused by road traffic accidents. One of the main reforms implemented was the new small claims limit for these types of cases.
These changes were implemented in an attempt to reduce the number of fraudulent whiplash claims; thus, reducing insurance premiums for all road users. According to the MOJ, they have been introduced to “reduce insurance costs for ordinary motorists by tackling the continuing high number and cost of whiplash claims.”
The small claims track was increased from £1,000 to £5,000. The new small claims limit for RTA whiplash claims came into force on 31st May 2021 with the whiplash reforms, which imposed a number of changes to RTA whiplash claims.
Some of the changes to whiplash claims that came into force last year include the following:
- The introduction of a fixed tariff for general damages for claimant’s pain, suffering and loss of amenity following a whiplash injury caused by a road traffic accident.
- A complete ban on claims being settled without medical evidence in the form of an assessment and medical report.
- The introduction of a new claims portal which could be accessed by unrepresented claimants.
Vulnerable road users, such as horse riders, cyclists, motorcyclists and pedestrians have been excluded from the reforms.
Following these reforms, Claimant solicitors can no longer recover their legal costs and fees from the Defendant if they are successful in these types of cases. The outcome of this is that more and more Claimant solicitors are refusing to take on these types of cases as they are no longer profitable.
Some firms that are continuing to represent claimants in RTA whiplash claims have introduced Contingency Fee Agreements of up to 35% to ensure they are still making some degree of profit in representing whiplash Claimants.
Impacts of the New Small Claims Limits on Solicitors
The new small claims limit for EL/PL cases is just another blow to Solicitors following the issues caused by the whiplash reforms. Solicitors may see a reduction in profits and a drop in their caseloads due to these new reforms.
Solicitors need to ensure they are diversifying their practice, and remain on top of their costs internally to ensure they are maximising their profit as much as possible (on a reasonable basis) on all types of cases.
Recovering Costs for Small Claims
Civil Procedure Rule 27 and Practice Direction 27A outline the key guiding principles for Small Claims matters in England and Wales. Matters are CPR 26.6 ‘small claims’ if the claim value is less than £10,000 (CPR 26.6(1)(a)(i))/CPR 26.6(3), the value of any personal injury is not more than £5,000/£1,000 (depending on whether it is an RTA claim or not, CPR 26.6(1)(aa)/(bb)/(cc)) or otherwise the matter is a housing dis-repair case with the cost of any repairs/and other damages being less than £1,000 (CPR CPR 26.6(1)(b)(i)/(ii)).
Notably any claim for a remedy for harassment or unlawful eviction further cannot be allocated to the Small Claims Track regardless of claim value (CPR 27.1).
CPR 27.1(1)(a)/(b) limits the legal costs recoverable on the Small Claims Track with reference to the categories of recoverable costs set out in CPR 27.14 and otherwise with reference to the CPR 45 fixed costs regime.
CPR 27.14(2) limits recoverable costs to CPR 45 fixed costs (CPR 27.14(2)(a)), the costs of specific performance/an injunction (CPR 27.14(2)(b); PD27A), Court fees, should the Claimant need to pay a fee (CPR 27.14(2)(c)).
It also allows for reasonable party/witness expenses in attending the hearing, including loss of earnings (CPR 27.14(2)(d)(e)), expert fees (CPR 27.14(2)(f); PD27A), any costs ordered to be paid for unreasonable behaviour (CPR 27.14(2)(g)) and stage I/stage II fast track fixed costs where a claim has been progressed within the same regime, but stage costs remain unpaid (CPR 27.14(2)(h)).
CPR 27.14(4) further clarifies that the costs of lay representation is also capped by virtue of these same rules.
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