Civil justice reforms

The civil justice system is being reformed and many new provisions are to take effect from 1 April 2013 including changes to the small claims threshold, legal aid and no win no fee arrangements.

Small claims track threshold changes

If a landlord wishes to pursue a tenant (or former tenant) or guarantor for unpaid rent for example, the claim would be made in the county court. The forms to make the application (known as a particulars of claim) can be made on the papers or by the Money Claim On-Line service.

When the claim is made, it is allocated to a track of which there are three available:

  • Small claims track
  • Fast track
  • Multi track

Small claims track

The small claims track is the normal track for any claim which has a value of not more than £5,000 or, any claim which includes a claim by a tenant of residential premises against a landlord seeking an order for repairs or other work to the premises where the cost of the repairs or other work is estimated to be not more than £1,000 and the value of any other claim for damages is not more than £1,000. The small claims track is also the normal track for any claim for personal injuries where the value of the claim is not more than £5,000 and the value of any claim for damages for personal injuries is not more than £1,000. [1]

The small claims track is supposed to provide a simple and informal way of resolving disputes. Although lawyers may be instructed, the costs that can be recovered by the successful party in a small claim are strictly limited.

Fast track

The fast track is the normal track for any claim which the small claims track is not the normal track and which has a value of not more than £25,000. It’s normally the appropriate track only if the court considers that the trial is likely to last for no longer than one day and oral expert evidence at trial will be strictly limited. [2]

The multi-track

The multi-track is the normal track for any claim which the small claims or fast track is not the normal track. [3]

The successful party would normally expect to recover their costs from the losing party when the fast track or multi-track is used.

Consultations

In March 2011, the Government consulted regarding plans to simplify the courts. [4] In the consultation, proposals were put forward to increase the small claims limit to £15,000 (not including claims for housing disrepair or personal injury) and to keep the figure for damages for housing disrepair or personal injury at £1,000.

The Government responded to the consultation in February 2012 [5] where it said the small claims track limit would be raised to £10,000 with the aim to further increase it to £15,000 in the future after full evaluation of the increase to £10,000.

Changes to small claims track from April 2013

As discussed above, the financial threshold for the small claims track is currently £5,000. The limit is due to increase to £10,000 from April 2013

Legal Aid reforms

Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 – (‘the LASPO Act’) takes effect on 1 April 2013.

Qualifying services

Although many services which will qualify for legal aid are being cut, for housing purposes, legal aid will still be available for homelessness, possession proceedings and anti-social behaviour cases in the county court. Disrepair cases will only attract legal aid where there is a serious risk of harm to the health or safety of the individual or a relevant member of the individual’s family, [6]although this wouldn’t necessarily apply in a counterclaim to possession proceedings.

Eligibility

Eligibility for legal aid will remain to people on benefits but capital passporting will be abolished, ensuring all applicants are subject to the same capital test regardless of benefits. There will also be increased monthly contributions from clients to 30% of disposable income. A cap of £100k will apply to the Subject Matter of Dispute (SMOD) and this will be extended to apply to legal help.

No win no fee

The civil justice reforms will particularly affect personal injury claims where no win no fee conditional fee agreements (CFAs) are used significantly. [7]Currently, success fees and after the event insurance (ATE) premiums, can be claimed which allows claims to be pursued with no real financial risk to claimants and with the threat of excessive costs to the defendant.

A summary of changes in the LASPO act include:

  • No win no fee CFAs remain available, but the additional costs involved (success fee and insurance premiums) are no longer payable by the losing side.
  • Damages based agreements will be available in civil litigation for the first time where the lawyer will take a percentage of damages awarded rather than being paid based on the amount of work involved. The percentage will be capped at 25%
  • Referral fees are banned will be banned personal injury cases.
  • General damages for non-pecuniary loss such as pain, suffering and loss of amenity are increased by 10%

The intention is that the reforms will make costs more proportionate, and discourage unnecessary or unmeritorious cases. In particular, those using no win no fee conditional fee agreements (CFAs) will have an interest in controlling the costs that are incurred on their behalf.

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