Ministers are consulting on increasing the value of disputes that will be allocated to the small claims court from £5,000 to £15,000, or even £25,000, as part of radical shake of the court system as we know it.
The small claims track, which is not a court but a procedure within the county court is designed to serve as a low-cost, user-friendly, informal forum for resolving disputes without the need for a lawyer. A key feature of the track is that in the vast majority of cases legal costs are not recoverable from the losing party which reduces the risks for both sides and encourages economic settlement.
There have been many different opinions on this change ranging from welcoming the news because it will make it easier for consumers to take cases without the risk of exposure to costs, to the concern that a lack of legal representation will lead to inequality between the parties when one party can afford a solicitor and the opposing party can not.
The agents reading this blog will obviously have concerns about their ability to recover small debts. When they call us for advise they are told that in most cases it is not economical to instruct us to pursue the matter on their behalf. There is also the risk that by increasing the threshold of the small claims track parties will have no incentive to settle sooner rather than later. The financial incentive to save costs rather than pursue a expensive litigation matter will no doubt be eroded.
However mediation assessment meetings will be made compulsory in small claims, so to a large extent mediation will become almost impossible to avoid. Agents are therefore advised to familiarise themselves with the mediation process in order to ensure the swift and cost effective resolution of future disputes.