Kerry Underwood

PERSONAL INJURY SMALL CLAIMS LIMIT: CONSULTATION IN DETAIL

with 20 comments


On 17 November 2016 the Ministry of Justice published its consultation paper – Reforming the Soft Tissue Injury (‘Whiplash’) Claims Process – a disingenuous title as it proposes a five-fold increase in the small claims limit for personal injury cases of all kinds, not just whiplash and not just road traffic.

So if a spanner falls on your head at work this consultation covers that accident, which has nothing whatsoever to do with whiplash or motor insurance premiums.

It also covers credit hire claims and the possibility of a tariff system for injuries.

The consultation is open until 6 January 2017,  that is 50 days, including Christmas and the New Year period.

Including the impact assessment, which for once is lengthy and important, it runs to nearly 200 pages.

I have given the link above and the paper can be accessed there and responded to there.

In view of the length and complexity of the consultation paper I am doing separate blogs in relation to each proposal and in this first one I deal with the small claims limit proposal.

Small Claims Limit

 

The consultation paper proposes increasing the small claims limit for all personal injury cases from £1,000.00 to “at least £5,000.00.” (Paragraph 66, 82 – my bold).

The Executive Summary refers to £5,000.00 but Part 4 – Raising the Small Claims Track Limit for Personal Injury Claims – (pages 24 – 30 of the report) refers to “at least £5,000.00” (paragraph 66, 82), “whether the increase should be to £5,000.00 or higher.” (Paragraph 87, 94) and paragraph 97 reads:-

“97. The level for the small claims limit for PI claims relates only to the PSLA element of the claim and not to the total value of the claim. Consistent with this, it is intended that the increase should apply only to the PSLA element of the claim. In considering the level of the increase, and to build in an element of future proofing, the government has considered whether the limit should be raised further, for example to £7,500 or even to £10,000, given that the limit for all other claims is £10,000. However, the government has decided that an increase to £5,000 is a proportionate response to the issues identified at this stage, and the accompanying impact assessment uses this figure. We would, however, welcome views from stakeholders on whether the small claims limit should be increased beyond £5,000, and, if so, to what level.”

Question 14 of the consultation, which follows paragraph 97 reads:-

“Question 14: The small claims track limit for personal injury claims has not been raised for 25 years. The limit will therefore be raised to include claims with a pain, suffering and loss of amenity element worth up to £5,000. We would, however, welcome views from stakeholders on whether, why and to what level the small claims limit for personal injury claims should be increased to beyond £5,000?”

 

The Government says that it is “not minded” to limit the small claims rise to RTA claims only (paragraph 93), although question 13 states:-

“Question 13: Should the small claims track limit be raised for all personal injury or limited to road traffic accident cases only?”

 

The Ministry of Justice state, correctly, that neither the issue of raising the personal injury small claims limit, nor the types of personal injury claim that such increase will apply to, require primary legislation, that is they can be dealt with by way of a statutory instrument amending the Civil Procedure Rules.

Paragraph 86 reads:-

“Increasing the small claims limit for PI claims does not require primary legislation and can be achieved through changes to the Civil Procedure Rules. Supporting changes will also be required to allow for the recoverability of the fixed cost of a MedCo accredited medical report by the claimant and to ensure that all claims are supported by such a medical report.”

This will involve a major change in the culture of the Small Claims Court where generally expert evidence is not allowed.

Overall the consultation paper is very confused and confusing as to whether litigants in an increased small claims limit will require assistance.
The general tone of the paper is that they do not and yet paragraph 103 reads:-

“The government is considering the issue of the potential for claims management companies (CMC) and paid McKenzie Friends21 to re-enter the PI market in response to these reforms in general, and the increase in the small claims limit in particular. These types of organisation can offer services to claimants whilst operating with lower overheads than many PI lawyers. During the last consultation on this issue, a CMC trade association wrote to the government to argue that this would happen if the small claims limit were increased. We are interested in respondents’ views in relation to whether or not this would be helpful in providing support to otherwise unrepresented litigants.”

Questions 15 and 16, grouped together in the consultation paper, read:-

“Question 15: Please provide your views on any suggested improvements that could be made to provide further help to litigants in person using the Small Claims Track.

 

Question 16: Do you think any specific measures should be put in place in relation to claims management companies and paid McKenzie Friends operating in the PI sector?

Please explain your reasons why.”

 

Thus the Government is specifically considering replacing lawyers in personal injury small claims with paid McKenzie Friends and with claims management companies.

How on earth that will reduce, rather than significantly increase, fraudulent claims is beyond me and the issue is not even raised in the consultation paper.

A reminder that the consultation closes on 6 January 2017 at 5.30pm.

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Written by kerryunderwood

November 18, 2016 at 8:11 am

Posted in Uncategorized

20 Responses

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  1. It’s all about insurance companies getting out of paying solicitors costs, claimants solicitors costs that is and then driving down the costs that they paid defendant solicitors so that every qualified solicitor is paid a pittance.

    English law is difficult to grasp sometimes even for lawyers, how they expect litigants in person to deal with cases over and above £5k is beyond me. Ridiculous

    David

    November 18, 2016 at 8:49 am

    • David
      Out of interest do you think the limit should go up and if so, what to? It has not gone up since 1991.
      Kerry

      kerryunderwood

      November 18, 2016 at 9:52 am

      • It went up in 2000 from 500 plus specials to £1000.

        I think there should be a rise but on RPi it would be £2000 – £2500. Thereafter lord chancellor to review every 5 years, just as they do with the discount rate.

        There is probably a reasonable argument that soft tissue neck injuries at lower level or over compensated.

        No justification for EL/PL/OL to be within SCT. These can be complex particularly now Enterprise Act is routinely mooted
        by TP.

        The language on the consultation is a disgrace predatory, payout, fraud! If they believe that, they’ve seen nothing yet given the CMC’s and Mackensie friends who will inhabit this space!

        James Reilly

        November 19, 2016 at 1:05 pm

      • James

        It did not! Please see The County Court (Amendment No 2) Rules 1991, Statutory Instrument 1991 No 1126 (L 10) Rule 5.

        Kerry

        kerryunderwood

        November 20, 2016 at 4:13 pm

  2. applicable inflation would suggest the ‘new’ SCL should be circa £2k but the consultation question requires a closed response ie should t be more than £5k Y/N?

    PAUL MCKITTRICK

    November 18, 2016 at 11:04 am

  3. Hi, We can be successful with SCL rise by using the mechanism suggested by Kerry – I was on your course in May – very good BTW. However, it will not work if damages are capped. My felling is that the Government may well struggle to set such a cap. In response to David, I would suggest a rise of SCL to say £2,000.00 – £2,500.00 and then link it with inflation / price index for periodic review. It should then hopefully put this nonsense to bed once and for all after the past 5 years. No one appears to have mentioned how the reforms will make our roads more dangerous – no consequences for the at fault party. Perhaps this is something which should be pressed further. My gut feeling is that there will be some rollback to the reforms and we will still be employed in years to come – albeit at a reduced rate of pay.

    Lee Lacey

    November 18, 2016 at 11:05 am

    • Lee

      Thank you very much for this comment, and I agree with all of it.

      Clearly there is a strong case for some rise in the small claims limit which has not gone up since 1991. Inflation would make that sum just over £2,000.00 now and I agree that in future the small claims limit should be index linked, with a rise say every two years in April, so that everyone knows where they are.

      I also agree with your comments about making the roads more dangerous – it is well known that tough laws improve safety, which is why German cars are so safe. And their beer!

      This is all dealt with on my courses and in my forthcoming book, Kerry on… Personal Injury Small Claims, Portals and Fixed Costs which will be out shortly available here.
      On a separate matter I am trekking the Sahara in March 2017 to raise money for the Lord’s Taverners’ charity for disadvantaged children and the EY Foundation to assist youngsters in getting into work and education through other routes.

      You may care to visit the My Donate page and make a small donation here. 

      Kerry

      kerryunderwood

      November 28, 2016 at 11:09 am

  4. The Claimant goes to his GP/A&E within 72 hours as well as undergoing a medico-legal report and no matter what the prognosis – 3 days to 6 months he/she receives £400.00?

    J

    November 18, 2016 at 11:49 am

  5. Insurance Post: “insurers are celebrating the long awaited publication of the government’s plans to tackle whiplash. “. I bet they are!

    Nigel

    November 21, 2016 at 9:20 am

  6. When do you expect these PI Reforms to be implemented ?

    AB

    November 21, 2016 at 9:53 am

    • Small Claims limit- probably October 2017, but as it is now being dealt with by an amendment to the Civil Procedure Rules and not by primary legislation, it could be April 2017.
      The other changes require an Act of Parliament, so April 2018, if Parliament approves them, which is by no means certain.
      Kerry

      kerryunderwood

      November 21, 2016 at 11:07 am

      • Do you think they will increase small claims limit before other changes? Or is it likely that they will bring all the changes together. because if small claims limit is increased without any other changes this will mean CMCs will take massive advantage and may abuse the system.

        AB

        November 21, 2016 at 11:34 am

  7. Yes- definitely. Please read my post and please read the consultation paper. That is why small claims limit now being dealt with by secondary legislation, which is very much quicker. Once you read everything you will see that the government is looking at CMC’s and paid Mckenzie friends taking over small claim personal injury work.
    Kerry

    kerryunderwood

    November 21, 2016 at 11:42 am

  8. Hello Kerry, thank you for the informative post.

    Quick question, upon the government deciding on an implementation date for increasing PI SCL do you think they will bring it in the same was the previous small claims limit was brought in? I.E all claims issued after a certain date (say April 17) are now small claims.

    If that is the way they intend to do it what concerns me is the amount of client’s that we currently have who’s behalf will not be able to act due to being unable to recover costs after the implementation date.

    Surely the more sensible way to do it would be to go off the accident date so any claims pre April 2017 are not subject to the new regime. If its not done this way then many firms will have files with significant amounts of WIP on which suddenly will be close to worthless. I wonder how the SRA will deal with such issues as so many firms will go into run off.

    C Landa

    November 22, 2016 at 11:40 am

    • Yes. You have enough time if you issue CNF now to get it to at least Stage 3 in the portal process, which in my view, must count as issuing proceedings, so you should have no problem with existing cases.

      You do have a problem with new cases. Suggest 40% capped damages charge by way of contingency fee agreement and conditional agreement. All set out in last year’s lecture notes and my forthcoming book available from Amazon: Personal Injury Small Claims, Portals and Fixed Recoverable Costs.

      Kerry

      kerryunderwood

      November 22, 2016 at 1:25 pm

  9. If I had 6 month injury, under the current proposals, I would automatically receive £400.00 for PI. but I would also like to present say a claim for 3 months loss of earnings and 3 months of care and assistance. I have no representation and I am offered XX, but I don’t know if XX is reasonable or I am not happy with XX amount. As a lay person, who do I complain to that I am not happy with an insurance companies offer or am I expected to issue a small claim? Where do I get advice from that I have prospects with issuing a small claim because Solicitors aren’t going to be interested.

    J

    November 23, 2016 at 8:26 am


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