Examination of Witnesses (Questions 1-19)
GEORGINA SQUIRE,
ALLAN GORE
QC AND JAMES
SANDBACH
11 OCTOBER 2005
Chairman: Georgina Squire, from the Law
Society, Mr Gore, President of the Association of Personal Injury
Lawyers, and Mr Sandbach from Citizens Advice, we welcome you
all and are very glad to have your help on this short but, I think,
important inquiry from the point of view of many of our constituents.
We have an obligation to declare any relevant interests that we
might have as Committee Members before we start the proceedings.
Jeremy Wright: Only that I have formerly
practised as a barrister in criminal law.
David Howarth: I am a legal academic
who has published several books on the law of tort.
Keith Vaz: I am a non-practising barrister;
my wife holds a part-time judicial appointment.
James Brokenshire: I am a non-practising
solicitor and a member of the Law Society.
Q1 Chairman: As I say, we are very
glad that you have given the time to come before us today. We
also very much appreciate the written evidence that we have received
from some of the bodies which are represented in front of us.
Have you any general comments you want to make initially about
the working of the small claims track?
Allan Gore: Not for your part,
other than that we would wish it to continue working as it is
at the moment—with the possible consideration of the European
procedure being rolled out across the board for small claims procedure
in this country.
Q2 Chairman: We will come to a specific
question about that. That is running at the same time as our current
inquiry. Mr Sandbach, are there particular problems that you think
are faced by litigants in making use of the procedure?
James Sandbach: I think there
is a wide variety of problems. I think it is a very timely review
because there are so many issues that are now being looked at.
The Commission's Directive on the small claims procedure—and
it is about legal costs—is being debated amongst the new
community Civil Justice Council and others, and possibly new measures
and new regulations coming in through the legal services reform
white paper that may affect working law, but not how lawyers costs
are regulated. This is a very timely inquiry because the small
claims process is supposed to be there for the ordinary consumer,
for the ordinary person, who is not easily able to afford the
whole array of insurance providers and legal service advisers.
I think there is more and more concern building up rapidly, and
it is actually very difficult for an ordinary person litigant,
say, to represent themselves adequately in the small claims court.
Georgina Squire: I think that
is one of the issues that has come out of the Law Society's deliberations
on this.
Q3 Chairman: You are putting it forward
as your view—the Law Society and CAB—that it is difficult
for the litigant in person in the small claims court?
Georgina Squire: Indeed, yes.
I think if we look at it from a value perspective, £5,000
is a lot of money to me, presumably it is, therefore, a lot of
money to an individual. There is a huge difference between someone
handling a claim over, I do not know, a wonky hoover for about
£50 to them dealing with a claim which is right up at the
£5,000 end, which might be an extremely serious issue for
them personally as an individual; their house may be collapsing
if they have a problem with their builder, for example, and they
are in a desperate situation. If they then have to run that claim
themselves it might have quite complex issues within it and they
are not able to afford legal representation which they know they
have to pay for out of their own pocket in addition to the loss
of the money that they are suing for. I think that is where the
issues come in about the access to justice and actually the balance
of fairness to the individual in terms of being expected to pursue
that claim without any legal advice. I think there is a huge differential
over the range of value up to £5,000, between claims which
are very easily dealt with by anyone and are really quite simple,
to those which are up at the complex, higher end of that spectrum
where the same rules at the moment apply. We are finding, anecdotally,
views coming back that people would love to have some advice and
assistance where issues are complex but they just are not able
to afford any.
Chairman: We will come back to the limits
a little later in our proceedings.
Q4 Jeremy Wright: I want to concentrate
a bit on costs. I suspect, from what you have just said, I can
guess what some of your answers may be to these questions. May
I just invite your comments (I suspect from all three of you in
fact) on, first of all, whether or not you believe that the principle
of limited costs recovery in small claims courts has something
to commend it? I accept, obviously, that what you are saying to
us so far is that it has negative aspects because people are not
able to afford legal assistance. Do you see advantages to it?
Georgina Squire: In being allowed
to recover a certain fixed level of costs?
Q5 Jeremy Wright: A limited amount.
Georgina Squire: Yes. I think
at the more complex end of the small claims raft of claims, yes,
definitely there could be benefit there. In unusual situations
there is the recovery of something in the region of £260
(I recall) at some levels. That sort of limited financial assistance
in terms of legal costs could be enormously beneficial to a private
individual who actually just needs some help on a complex point
that has arisen in the course of their claim. I would definitely
think that the Law Society would advocate that. Obviously, it
would have to be kept proportionate and be sensible and restricted
in order to allow the small claims track still to work in a sensible
way.
Q6 Jeremy Wright: What about the
CAB point of view? Do you see advantages to this?
James Sandbach: Yes. The difficult
areas are where costs are actually hidden. If your costs are predictable
and you know what you are doing at the beginning of the case and
how much it is going to cost you, then the principle that you
find a way of paying for that, whether it is through public subsidy
or through some other system and that should not be recoverable
from the other side because we should not get into the whole litigation
type of culture, I think that is a defensible premise, but so
many costs of taking a claim tend to escalate once you start the
process off. You might think an expert report from your GP will
cost you £50 but the GP might say: "You need a specialist
to establish this level of injury" so your costs will then
go up from £50 to £250. So often litigants find their
costs are not as predictable as they thought they were originally
going to be. That puts people off claiming, if you think you are
going to get into a cycle of increased costs after increased costs
with a bill coming at you from somewhere you did not expect it
to come from. So if you have taken out an insurance policy to
underwrite your costs—
Q7 Chairman: We are talking about
the small claims court.
James Sandbach: I know we are
talking about the small claims court, but even in the small claims
court you can pay legal insurance to cover your costs.
Q8 Jeremy Wright: Is what you are
really saying that you can only recover a certain amount from
the small claims court? The limit is capped, is it not? Specifically
in relation to expert witnesses there is a cap of only £200
for the expert report. Are you saying that some people may find
that although they expected their expert report to cost £200
it actually cost £250 so they would be bearing the extra
£50? Is that what you are saying?
James Sandbach: It can do, yes.
I think it is misleading. I think we tend to see costs within
the isolated context of the legal process, but you have actually
got to look more broadly at what the costs are to the consumer
of going down a particular avenue of pursuing the claim and what
are the costs to them, not only in financial terms but in personal
terms as well—if they have to take time off work to take
the case and represent themselves in court, travel distance. So
one has to look at costs in the wider sense and ask whether this
particular avenue that the consumer is going down is proportionate
to what they are trying to achieve.
Q9 Jeremy Wright: This, I think,
is a question you can probably help us with as well. Moving on
to the practicalities of things, are you confident that, within
the limitations you have set out, people who are able to recover
limited costs are able to do so practically and that there are
no obstacles to them actually collecting the money? Does the system
work as it should in that regard?
James Sandbach: Not at the enforcement
end. I think one of the weaknesses of the small claims system
is that if you have got a successful court order you do not necessarily
get that enforced. You might have to go back to court to get another
enforcement order in order to get the other side to pay up. There
seems to be a double process. I think it does need to be viewed
as to whether a double process is needed or whether any court
judgment should have some sort of automatic enforcement order
attached to it.
Q10 Jeremy Wright: So it is bound
up with the enforcement issues? I do not want to steal other colleagues'
thunder when we are going to come on to that. Let me ask you about
something else. Perhaps this is something for the two lawyers
to comment on. The issues that arise from the small claims track
are, first of all, what happens if the case is transferred from
the small claims track to another track within the civil justice
system; so the litigant in person presents his case to the District
Judge expecting it to be tried on the small claims track and,
in fact, it is transferred elsewhere, where the costs are dissimilar?
Is it your view that as and when that happens the cost implications
for the litigants in person in question ought to be capped or
restricted in some way?
Allan Gore: From the perspective
of personal injury litigation I am not sure it happens very often.
Personal injury cases enjoy a slightly different position within
the small claims procedure compared to other categories of litigation,
which is why the Association is able to support the current arrangements
but with the rider that extending to a degree costs recoverability
through, for example, the European procedure if implemented would
in fact promote access to justice. We would entirely agree that
the absence of recoverability of costs and the potential for costs
disadvantage, which is one of the issues that arises in your question,
is an inhibition on people bringing claims. You will have seen
from the evidence that we submitted in the context of personal
injury litigation that Mori have conducted a survey that indicates
that 64% of the public who responded in their thousands would
be disinclined to pursue a claim for personal injury if they did
not have access to advice and representation from a professional
adviser. Under the current arrangements, that inhibition only
applies in relation to the small claims track, and while the limits
are set at the position at which they are set, that acts as an
inhibition in a relatively small proportion of personal injury
cases. The concern that the Association has is that extending
the limit to any significant degree substantially increase the
size of the class of litigants who will suffer that inhibition
through the inability to recover costs. We have submitted, and
indeed that is endorsed by the submission of the Association of
District Judges, that in the particular context of personal injury
litigation where the injured person faces usually an insured if
not a corporate defendant, that inhibition is a powerful inhibition
and represents an inequality of arms that offends the overriding
objective that lies at the heart of the civil procedure rules.
Q11 Chairman: Let us leave personal
injury aside for the moment. Mrs Squire, if I was the litigant
I think I would be more inhibited by any fear that the thing might
go out of the small claims track and I could be landed with the
costs of the other side. I would be more ready to pursue my claim
for a modest compensation confident that it was going to stay
in the small claims track and I was not going to be landed with
the other side's costs.
Georgina Squire: I think the corollary
to that is: "If my claim is a good one then why should I
not be able to recover my costs from the other side for pursuing
it?" If that is a deterrent—
Q12 Chairman: Cases that people think
are good are overruled in courts every day of the week.
Georgina Squire: Indeed, but there
are also some people who are inherently litigious and love to
sue for everything and do not necessarily have the right to sue,
and the defendant who receives those claims then has a major headache.
I think if that is encapsulated within a low threshold then, effectively,
there is a limitation on how horrendous that headache can be for
the defendant who is having to deal with a frivolous claim from
someone who really has no grounds on which to pursue it, whereas
if that were allowed to rise into more complex issues then I question
whether the level playing field and the balance exists because
these days anyone with a meritorious claim with a value in excess
of the small claims limit should be able to go to a solicitor,
obtain a CFA and be able to run on a no-win-no-fee type basis,
as is becoming very common now. That is just an assessment of
the merits.
Allan Gore: There may be one procedural
answer as well, if I may be permitted a short second bite? The
claimant who wishes to limit the extent of their claim to the
limit of the small claims track might, in fact, be able to purchase
protection in relation to the costs arrangement within the small
claims track so as to diminish exposure to that type of risk.
The downside of that, of course, is that they may be restricting
the ambit of their claim in order to buy that protection to a
level that does not properly reflect the justice or the merits
of their claim.
Q13 Keith Vaz: Mr Gore, in answer
to the Chairman, said that he thought the procedure was working
okay, in principle although obviously there are individual concerns
about certain aspects of the procedure. Are you happy with the
procedures that are in place for the enforcement of judgments?
Georgina Squire: I think enforcement
of judgments is a wholly different arena all of its own because,
of course, we have, as I understand it, the same methods of enforcement
for small claims as, indeed, for any claims. It is fair to say
that all those methods are very varied; some quite long, some
quite complex and, usually, all quite expensive for anyone seeking
to enforce a judgment of any size. What Mr Sandbach said is entirely
right; once someone has got to the stage of achieving a judgment
and then cannot actually see payment it is very frustrating to
have to start on a second raft of litigation. Speaking from a
personal perspective, my clients feel equally frustrated whatever
the value of the claim if they have got to start again from scratch
and then look at methods of enforcement to try and recover money.
Q14 Keith Vaz: Mr Sandbach, how many
complaints would you get from litigants about the procedures that
we have at the moment? They have gone through the system, they
have filled in their forms, the judge has been very polite and
courteous to them, they have got their judgment in their hand
but they cannot get their money. What sort of level of complaint
is there about the end of the process?
James Sandbach: We have a lot
of complaints not just over small claims but tribunals as well.
Off the top of my head, I think we had about 800 on this last
year.
Chairman: This might be something you
could give us a note on if you have the opportunity to check the
figures.
Q15 Keith Vaz: Ten thousand is an
absolutely enormous level of complaints. Is it on the increase
or has it always been at that level?
James Sandbach: It is on the increase.
This is applied right across the spectrum of courts and tribunals
about the problem of enforcement.
Q16 Keith Vaz: Who is at fault in
trying to make sure that people get their judgment enforced?
James Sandbach: It is the whole
system, the whole service, not really delivering on what it is
structured to do. At the enforcement end I think there is a lot
of policy debate going on about what are the best methods of enforcement.
Is it sending round bailiffs or are there better methods? So I
think there is confusion in enforcement policy as to which methods
are best.
Q17 Keith Vaz: Do you think there
is sufficient awareness for the litigants when they begin the
process that at the end of the process they may have to start
the whole thing again because they cannot get their money? Should
more be done to make them think long-term?
James Sandbach: I think more should
be done to make potential litigants think long-term, but the big
gap, though, is that there are other ways of resolving these disputes.
What we need to look at are ADR route alternatives—
Q18 Keith Vaz: That is a different
issue. We are talking about the bit at the end, after they have
got their judgment. Mr Gore, what about from your point of view?
What are we going to go about this enforcement issue?
Allan Gore: Again, I think personal
injury litigation is in a special position in this regard because,
usually, the defendant in a personal injury will be insured and
recovery of the damages tends not to be a problem. In the small
claims track, where there is no recovery of significant quantities
of costs, what is a problem in the fast track, which is the recovery
of the costs, therefore, does not arise. I think personal injury
claimants enjoy an advantage compared to others in the small claims
arena in that regard.
Q19 Keith Vaz: Are there any procedures
that anyone can think of that would make the system work better
as far as enforcement is concerned?
Georgina Squire: Just thinking
off the top of my head, obviously without any reference back to
the Law Society (and I am very happy to go back and see if there
are any ideas that we can submit to you afterwards), it just strikes
me that one of the issues right at the outset is: is the person
you are suing good for the money? It is a basic question, and
someone could actually do a relatively quick check. Certainly,
as solicitors, we have a professional obligation not to sue someone
if they are, say, bankrupt or, if it is a corporate organisation,
if they are insolvent. That is a check that is routinely done
as a general, professional obligation. I would have thought something
to get a claimant to think about before they start their claim
on an unrepresented basis is whether it is actually worth their
while in what they are trying to get at the end of the day.
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