The Ministry of Justice has recently confirmed on behalf of the government that there will be no increase on the limit of the small claims courts.
There has been speculation in the industry for some time now that the small claims limit would be raised to £5,000. If this new limit had been implemented then thousands of low value claims, such as the majority of claims for whiplash in road traffic accidents, would have been treated as small claims by the Courts.
If the increase had taken effect, claimants would have been prevented from recovering legal costs from their opponent, and those people with genuine personal injury cases would have been prevented from finding a lawyer to take on their claim. These claimants would have had to represent themselves in Court against insurance companies, or else drop the case completely.
The decision by the Ministry of Justice appears to have been prompted by concerns that were raised during the initial consultations. The Ministry of Justice has also followed the recommendations made by the Transport Select Committee of the House of Commons, which suggested that an increase in the small claims court would have a detrimental effect on those with genuine injuries.
The Ministry of Justice also concluded that the previous reforms in this sector needed more time to take effect, although they were unable to rule out the possibility of a change to the limit in the future.
Express Solicitors have welcomed the decision by the Ministry of Justice, as they campaigned against the increase to the small claims limit. We believed that there would be more opportunity for fraud, as solicitors would effectively be removed from the claims process, and replaced by ‘claims management company-type operations’.
Rather than implementing an increase on the small claims limit straight away, I believe, along with many others, that a “pause” was needed to examine the effects before more changes are made.