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Small Claims (Courts)

: By looking it up in a book. It is not the hardest thing to find. If the hon. Gentleman wants to run through every claim, I will not be able to give him the answer. As I said, the situation means that the small claims system is not used frequently enough for personal injury cases. It has resulted in the needless clogging up of the court's fast-track system, and the expense of bringing a claim is now often disproportionate to the amount of the claim. As figures provided to the Committee by Norwich Union highlighted, in personal injury cases in which damages are more than £1,000, costs represent 65 per cent. of the damages paid—or 40 per cent. of the total sum when damages and costs are paid. That situation needs to be addressed, and the Conservative party supports the Committee's proposal to raise the small claims limit. There is also a problem of a compensation culture, and it is not the role of the state to fuel that culture by subsidising litigation. The Government's Compensation Bill recognises that there is a compensation culture, but does not even scratch the surface of the problem. We recognise, however, that the extent of the increase in the small claims limit is a valid subject for debate. Raising the limit too much could have detrimental effects. One significant problem could be that claimants would not be legally represented. The small claims system actively discourages parties from being legally represented when they should be. There is a good reason for that policy: if litigants represent themselves, the cost of cases is reduced. The discouragement can be seen in the fact that the winning party in a small claims case is unlikely to be able to recover the costs of their legal representation. The no win, no fee offers, so well marketed by personal injury lawyers, are rarely an option for claimants in small claims cases; solicitors will rarely agree to enter conditional-fee arrangements if legal costs cannot be recovered from the other side. The provisions have resulted in most litigants not having legal representation in small claims cases. The consequences of an increase in the small claims limit for legal representation would be clear: claimants in personal injury cases might find that obtaining legal representation was not viable. An increase of the limit to £5,000, as recommended by the Better Regulation Task Force, a Cabinet Office-sponsored organisation, would result in the allocation of most personal injury cases to the small claims track. In written evidence to the Committee, the Law Society stated that most personal injury cases are for less than £5,000. Even if the limit were increased by £2,500, as the Committee recommends, that would, according to figures published by the TUC, result in 30 to 50 per cent. of personal injury cases being brought under the small claims system. Will the discouragement to potential litigants from employing legal representatives result in their being denied access to justice? In some cases, it might. As has been said, if a potential claimant is unable to enter a no win, no fee arrangement or recover their legal costs if their claim is successful, they are more than likely not to instruct a solicitor. Could the claimant not bring the claim as a litigant in person? Yes, sometimes; but in some cases that would not be feasible. As the hon. Member for Hendon (Mr. Dismore) and my hon. Friend the Member for Clwyd, West (Mr. Jones) said in their well considered speeches, the complex nature of many personal injury cases means that it is often inappropriate to expect litigants in person to deal with such cases. Tasks such as acquiring and understanding medical reports, assessing the actual value of a claim, determining liability and preparing an accurate claim can make cases difficult for them. A MORI Omnibus poll on behalf of the Association of Personal Injury Lawyers indicates that 64 per cent. of people who suffer an injury through someone else's negligence would not pursue a claim through the small claims court without legal assistance from a legal representative. As has been recognised, given that defendants in personal injury cases are often insurers, which will almost certainly be legally represented, the disadvantages to litigants in person could be even greater. John Wells, president of the Institute of Legal Executives, sums up the problem. He has said that litigants in person"““are unlikely to know whether a settlement offer is a reasonable one and may feel obliged to accept an offer which is considerably lower than the value of their claim. This difficulty will be enhanced particularly in complex cases. There will be no equality of resources between the parties. Insurers would basically have carte blanche to settle claims for as little as they could possibly get away with.””" The problems that claimants will face if they have to bring a claim without legal representation could discourage some from pursuing their claim. Thus, they could be denied access to justice, and that would be a direct contradiction of the Government's stated aim of guaranteeing all litigants continued fair and equal access to justice. That problem may have been the cause for the Government's relatively short response to the Committee's report. There seems to have been indecision on the Government's part, and some direction and leadership on the issue would be welcome. I look forward to the Minister's comments. Given the strong arguments both for and against raising the small claims limit for personal injury and housing disrepair cases, we believe that a compromise solution can be found. It is clear that an increase of £1,000 to the limit is necessary, as the current figure is outdated and results in disproportionate expenses being incurred in claims for relatively minor amounts. How can that increase be achieved without denying justice to certain people? Providing adequate and improved court advice could be decisive. As the evidence to the Committee provided by both the Law Society and Citizens Advice noted, and as my hon. Friend the Member for Hornchurch (James Brokenshire) made clear, the crucial factor in supporting parties to an action is providing them not so much with legal representation, but with adequate information and advice before they come to—and, I would add, while they are in—court. Evidence indicates that the advice available to litigants in person is inadequate. Citizens Advice, which often advises litigants in person, has noted that clients frequently cannot fill in small claim forms and allocation questionnaires. Furthermore, court leaflets are often deemed difficult to understand. As the evidence given by Citizens Advice to the Committee noted, even in small claims cases"““claimants can be left in serious financial difficulty if they do not get appropriate help and advice in preparing their case””." If the claims limit is to be raised, and more claimants are to find themselves without legal representation, those problems must be remedied by better guidance. I note with interest the progress being made by the pilot small claims scheme at Reading county court. The scheme, designed to assist parties without legal representation, provides for a dedicated support officer to supply in-depth advice to both claimants and defendants. I should be grateful if the Minister commented on the success or otherwise of that scheme. The courts will have the burden of being more proactive to ensure that potential claimants have all the information and can understand the information required to bring a claim. Likewise, unrepresented defendants must be suitably informed to enable them to defend the claim against them. Appropriate advice must be supplied on matters such as filling out forms, gathering together and interpreting medical reports and determining the liability and quantum of claims. If quality and easy-to-understand advice can be provided, and district judges can continue their existing constructive interventionist approach to small claims cases, that, hopefully, will negate much of the harm caused to parties who under the present limit would instruct a legal representative, but would be forced by an increase in the small claims limit to represent themselves. Despite a sharp increase in the quantity and quality of advice to litigants in person, they will often be in a weaker position without legal representation. For that reason, recommendations from some quarters to raise the limit to £5,000 may be inappropriate. The Conservative party supports a doubling of the limit from £1,000 to £2,000, which would take into account the rising levels of personal injuries damages inflation. That figure, the same as that recommended by Citizens Advice, should not result in people being denied access to justice. We would remain open to the debate on whether the limit should be up to £2,500, but do not feel that a higher limit than that is appropriate at the current time. Most complex personal injury cases, in which a claimant would struggle to bring a claim without legal representation, are for more than £2,000 and will therefore still be allocated to the fast-track system. The report also raises a second issue of the possible introduction of a European small claims procedure. A proposed EC regulation will introduce the procedure, which will intend to simplify, speed up and reduce the costs of litigation for small claims across the EU. The Committee's report broadly welcomed the implementation of such a procedure, noting the benefits that will be provided to parties involved in cross-border cases. That point was reinforced by the words of the Committee Chairman, the right hon. Member for Berwick-upon-Tweed (Mr. Beith), this afternoon. However, there were two significant reservations to that welcome. First, a successful party will be able to claim their legal costs from the losing party, which, as I said, is the exact opposite of the situation in the small claims system in England and Wales. It could mean that disproportionate costs could be incurred in order to claim a relatively small sum. A second problem noted by the Committee is that the procedure will be available only to claimants whose claims are for less than €2,000. In comparison with the levels used in England and Wales, that amount is low. The benefits of introducing a European small claims procedure for cross-border cases are very much the same as those for domestic cases. The procedure will be particularly beneficial given the growing number of consumers choosing to shop abroad, and the increase in travel between member states. It may provide benefits through more choice and lower prices, but it could also lead to cross-border disputes. The quantity of such disputes is escalating rapidly. If consumers are to have the confidence to shop abroad, they need the assurance that if something goes wrong there is a viable means of redress. There are various problems with pursuing a claim in a foreign country. Language difficulties, geographical distances, instructing two sets of lawyers, additional travel and communication costs, and a lack of information regarding local consumer rights and applicable laws all make it a difficult process to pursue. Potential claimants to actions for small amounts may think they are better off cutting their losses and forgetting about pursuing legal action. Evidence provided by the Commission indicates that that is largely the case at the moment. To solve those problems, the introduction of a simplified and speedier system for contested small value claims is to be welcomed. However, as the report noted, the ESCP has some problems in its current form. If the procedure is to have a limit of €2,000, which is roughly the equivalent of £1,400, many cases that could appropriately be dealt with under the system would be excluded. The figure that is set must be large enough to attract a sufficient amount of cases. As the Association of Chartered Certified Accountants has pointed out, few small or medium- sized UK-based enterprises will benefit from the procedure. That is due to the majority not being involved in cross-border trade, and of those who are, in a third trade principally outside the EU. The procedure appears therefore to be a mechanism for the benefit of individuals. If individuals are constrained in their ability to bring an action because its value must be below a €2,000 threshold, the number of cases expected to be brought under the procedure is relatively few. Although the level is clearly too low, there is also a danger of setting it too high. That could have the effect that cases complex enough to warrant a full discussion or trial in a court of law will not receive that, as they will be capable of being brought under the accelerated small claims procedure. That problem needs to be addressed further. A potential problem I have spotted with the proposed regulation is that the €2,000 limit applies only to the value of the original claim when the procedure is commenced, and not to the value of the final judgment awarded. The regulation is silent in the event that the claim later turns out to be for a much higher amount, for example, if the damage incurred by the claimant later turns out to be greater than originally believed. The lack of an automatic power granted to the national court to transfer such a case from the procedure to the national court system could lead to an injustice being committed against either party, or both. In conclusion on this particular issue, the best course the Government could follow is to demand that the €2,000 limit be raised. I appreciate that the procedure must take into account the varying small claims limits and living standards in all the member states. To take account of those differences, an alternative solution might be to permit member states to set their own limits. That would allow the courts in England and Wales to set the limit at €7,000, equivalent to the £5,000 limit currently employed in our small claims system. I referred to a second problem: the losing party having to pay the winning party's costs. The right will not apply in terms of a loser who is unrepresented having to pay the other side's legal fees; the wording used in the proposed regulation refers to the fact that a ““natural person”” who is not legally represented will not be obliged to ““reimburse”” the legal fees ““of the other party””. That could create an atmosphere of injustice, as parties will often not be on a level playing field. Furthermore, such a provision discriminates against companies bringing claims, as they cannot come within the definition of a ““natural person””, and against those individuals, for example minors or the mentally impaired, who would find it difficult, if not impossible, to bring a claim without being legally represented. If the procedure is to have such a costs rule, special provision must be made for those types of situation. Many cases will involve both parties being legally represented, and therefore the general rule employed in the court system of England and Wales that the loser pays the winner's costs will apply. The provision will cause one of the problems which I have discussed in respect of why the limit for personal injury and housing repair cases in the small claims systems of England and Wales should be raised: disproportionate costs being incurred to claim back a small monetary amount.