Examination of Witnesses (Questions 100-119)
BARONESS ASHTON
OF UPHOLLAND
AND MARK
ORMEROD
1 NOVEMBER 2005
Q100 James Brokenshire: That should
mean people are bringing the right documents and contracts with
them, all the basic material to ensure that from a legal perspective
you have got the nuts and bolts there to argue the case. Do you
foresee that if the pilot is successful you would need additional
resource to roll it out across the country?
Baroness Ashton of Upholland:
I have got the resource to do it. We are making sure we have got
it right in terms of whether we need this person to be full-time,
what kind of skills set and so on, but if it works, which I think
it will in some form as it is, then as soon as we have looked
at it properly we will be able to roll it out and we have the
resources to do that. It will invest to save because it will save
the court time if people arrive with better documentation and
they are clear about what they are doing.
Mark Ormerod: One of the unexpected
side effects of it is that people are settling earlier and not
pursuing the case through, which we had not expected at all. It
is very early days; it only started in June.
Q101 Chairman: One of the methods
that the Department favours for improving enforcement is the use
of Charging Orders, which only works if people have got property
on which the order can be placed. There are a couple of anxieties
about this experience to date. One is—and this is an anxiety
expressed by debt advisers, for example, the CAB and others—that
people who have already made an arrangement and are paying a regular
arrangement suddenly find that the high street lender comes along
to the small claims court or to the county court and slaps a Charging
Order on them which effectively defeats the benefit they thought
they had got by making regular payments. The other is that when
high street lenders do it against small individuals the high street
lender then has a charge on the property but is still charging
19% interest, if it is credit card debt or something like that,
so they are paying an unsecured rate of interest on a loan with
ample security.
Baroness Ashton of Upholland:
This is an important area. We think Charging Orders are important
and they have a place. The issue about the rate of interest and
the issues around perhaps not such reputable lenders of money
as perhaps the high street would be is something that we are pursuing
with the Department of Trade and Industry because, as you will
know, the Consumer Credit Act 1974 is now being reviewed. What
we hope to do is look at the question of ensuring that credit
is done properly and effectively so people do not end up in huge
debts with the kind of interest rates that are exorbitant. We
would not want to move away from Charging Orders per se because
they have a place. The issue that we would want to see addressed
we will address in a different way. I hope that will mean that
Charging Orders will have a better reputation because they are
used more effectively and where you have exorbitant rates of interest.
Q102 Chairman: The businesses that
are using this are often household name credit card providers
who find it a way of dealing with the debt problems they encounter
and one which gives them the benefit of a charge, but they still
have the high rate of interest they had when it was a credit card
bill.
Baroness Ashton of Upholland:
I take your point. I think we have got to look at this on the
basis of the Consumer Credit Act. The issue of what has happened
is that you have a court judgment which puts it in a slightly
different position than it was in before.
Q103 Barbara Keeley: I want to ask
some questions on the European Small Claims Procedure proposal
which I understand the Department has begun giving some priority
to during our EU Presidency. Firstly, will that procedure apply
only to cross-border cases between EU Member States?
Baroness Ashton of Upholland:
The proposal is that we will interpret Article 65 to mean cross-border
only. Certainly in all of my discussions with the Council of Ministers,
when I chaired the Council of Ministers on civil justice issues
and in talking with the Commission, we are very clear that that
should be the case. Belgium is still particularly keen to try
and get both the order for payment and the small claims to apply
internally as well. The view we have taken as Presidency is that,
beginning with 21 states and now ending with 24 states, there
is absolute clarity that this should be cross-border only and
if people wish to adopt the procedure internally, that is for
them to do within their own national legislation.
Q104 Barbara Keeley: We would have
the two distinct systems with the European Small Claims Procedure
applying where goods were purchased from individuals or countries
in other individual Member States. Could you tell us what implications
you foresee now? In one case you would be entitled to legal costs
and not in the other. I just wonder how you view that. You could
say that is a degree of complication to have two different sets
of standards applying.
Baroness Ashton of Upholland:
One of the interesting things about the working groups where all
Member States come is that everyone arrives with their own system
as being the model and, as you can imagine, there are 25 systems
and 25 models. The principle we have adopted is that this is never
going to work unless it is very simple, straightforward, easy
for people to use and it is cheap and that means a largely paper
based system so that you make your claim on paper and if you have
to appear for a particular reason, we try and use, where we can,
new technology to do that, so video conferencing and so on. As
I mentioned earlier, I brought some Members of the European Parliament
from different countries over to look at small claims. One of
the things some of them were particularly interested in is the
role of using telephone conferencing, not to try and settle the
claim, but to try and deal with some of the issues. In a sense
we have tried to develop the scheme as far as we can that way
because if we get into the business of trying to replicate a system
here we will end up with huge costs and huge difficulties. There
are going to be difficulties, for example, about translation.
One of the proposals we have just put forward into the working
group, if you think of the number of documents you can have in
a small claim, is rather than having all the documents translated,
you simply have a list of documents available to the court and
the court determines which, if any, it feels it needs to have
translated to keep costs down. We have not yet got a fixed position
across Member States on costs because some would want to be able
to recover all the costs of the person who lost. Our view is we
want to have a system where people deal with their own costs as
far as possible with perhaps the reservation of the court if there
were particular circumstances. It is not meant to be a comparable
system because it is trying to deal with a very particular set
of issues about people purchasing or dealing with goods across
Member States. However, if it were a system that was very successful
I anticipate some Member States—maybe us, I do not know—might
begin to adopt, at least in part, some of the principles of the
scheme because it works very well.
Q105 Barbara Keeley: Are there implications
in terms of equipping courts with video and telephone conferencing
facilities? Presumably there are.
Baroness Ashton of Upholland:
There are. What we have to do is work with the technology of each
nation state. There are also cultural differences. For example,
German colleagues in the European Parliament cannot deal with
the idea of using the telephone to do anything because it is not
at all what you would do in Germany, which is why they were keen
to come and look at what we were doing. In some courts they have
fairly sophisticated systems and in others they do not. I think
we have to work with states as they develop this, enabling them
to get involved in the scheme. Meanwhile we are going for the
paper based system because everybody can deal with that.
Q106 Julie Morgan: Does the Government
have any plans to raise the small claim limit for housing disrepair
cost cases?
Baroness Ashton of Upholland:
We have a consultation which is about to begin looking at the
issue of raising costs. You will know that there are very different—and
I think you had equal and opposite views on this—and very
strong views about, particularly because housing disrepair and
personal injury tend to get locked together, what is an appropriate
level where people do need expertise and guidance from legal advice
and equal and opposite views that say you do not and that nowadays
when you think about what you can get on a personal injury claim,
£1,000 is very low.
Q107 Chairman: We will come on to
personal injury in a moment. We are just trying to deal with the
other cases.
Baroness Ashton of Upholland:
We are going to consult right across the board on this to see
whether we can get some general consensus on it.
Q108 Julie Morgan: Are you aware
that in the Wales and Chester circuit there were only 24 non-possession
housing disputes disposed of in 2004? It does seem such a small
number that I wonder if tenants, in particular, are not deterred
from going into the small claims court because of the lack of
representation, the lack of Legal Aid and whether this small number
reflects the fact that they think there is no point in going.
Baroness Ashton of Upholland:
That is one of the reasons for having the consultation. In some
areas of housing Legal Aid is still available. There is an issue
about the most vulnerable tenants, who are often very vulnerable
people, being supported appropriately and that is what I want
to explore as part of the consultation. If we simply raise the
limit but do not deal with the vulnerability of the individuals
then I am not sure we will have achieved what we want to do. I
did not know about the Wales and Chester circuit. There are examples
we need to look at as to where the courts are finding that people
either are not coming forward or where they are very certain that,
if people are going to come forward, they are going to need advice
and the support perhaps of a solicitor in order to do that, and
I want to check and test that out very carefully before we make
any decisions.
Q109 Julie Morgan: Has the Department
done any research on that at all?
Baroness Ashton of Upholland:
We have not done any specific research on it as far as I am aware,
but there will be research going on to inform what we send out
in the consultation paper. I have not seen the consultation paper
yet because it is not due to come to me until the end of this
month and therefore it has not yet reached the pile on my desk.
We are trying to get from our stakeholders and people who are
involved in the small claims world some very clear views as to
how best we can take this forward because small claims is a success
story and we need to make sure we keep it that way.
Q110 Julie Morgan: At the moment
a £1,000 small claims threshold applies only to those housing
disrepair cases with claims for outstanding repairs. Should £1,000
apply to all housing disrepair cases?
Baroness Ashton of Upholland:
I want to think about that. There are arguments that you could
easily make that say it would be logical to extend it, but we
need to make sure that we have got this right. I pick up that
there are different views about what makes most sense again depending
on what you are trying to achieve for the individual concerned.
I just want to check and confirm that we have that right before
we make any moves in that direction. I am not trying to avoid
answering the question. I genuinely do not know at this stage
whether we should or we should not and it is much better to consult
people who can tell us what would make most sense.
Q111 Chairman: If you know what the
repair cost is and the landlord has persistently refused to do
it and you have got a couple of estimates which give you a reasonably
reliably indication of what it would cost you and it is £1,500,
is not a £1,000 limit unnecessarily restrictive and your
opportunity to do it at minimal cost by going to the small claims
court?
Baroness Ashton of Upholland:
If that were the issue then that makes a lot of sense. We will
have to check the way in which we have set up the system and make
sure the opportunities people have to get local support fit together.
I do not know whether that means we should raise the help or whether
we need to be clearer about the kind of cases that are appropriate
for small claims. We just need to test it out properly. I am not
evading your question; I just think we need to think about it.
I do get very different views depending on who one talks to about
whether we ought to raise the limit or whether we ought to think
more carefully about the use of Legal Aid or do it slightly differently.
Q112 Chairman: What is the Government's
general view on raising the limits because not to do so economically
would be to assume that the small claims court should somehow
freeze and take a decreasing proportion of cases? To raise it
by a modest amount might be to recognise that the small claims
track could do rather more with things like that, where the amount
involved is not really so large in modern terms that you want
to incur serious legal costs by going into the normal county court
procedure.
Baroness Ashton of Upholland:
That is precisely why we are consulting. You are absolutely right,
it is important that we keep in our minds whether the limits are
right at the moment or whether they need to go up. I do not want
to prejudge the consultation. We want to ask people what they
think should happen and then we will look at, both in terms of
housing and personal injury; whether we need to do something different
and I do not want to prejudge that. When we have got the results
of the consultation I will be very happy to come and share them
with you.
Q113 Chairman: The Better Regulation
Task Force has views on the subject.
Baroness Ashton of Upholland:
It certainly does.
Q114 David Howarth: I just wanted
to ask whether the consultation will cover the particular phenomenon
that a lot of us are seeing when we go to the small claims courts,
which is that the party themselves agree to the small claims track
even with higher value claims or that they litigate only one part
of their claim to keep within the limit. Does that not show there
is some sort of market demand out there for the small claims track
and that that is perhaps an argument for raising the limit?
Baroness Ashton of Upholland:
Indeed.
Mark Ormerod: You can argue it
the other way round, that in some circumstances the limit is immaterial
because the District Judge can assign or the parties can agree
in relation to where it goes. I think that cuts both ways. There
is provision if the case is just over the limit for District Judges
to allocate it.
Q115 Chairman: With the consent of
the parties.
Mark Ormerod: That is true.
Q116 Dr Whitehead: I think you have
anticipated some of the thoughts that the Committee might have
about personal injury. As you certainly alluded to, we have had
a lot of evidence about small claims already before us on this
Committee. On the one hand, an argument that as far as personal
injury is concerned, litigants would be desperately disadvantaged
because there would be no equality of arms because by and large
in personal injury they would be facing perhaps an insurance company
or a well-supported defence without legal representation of their
own and, on the other hand, evidence that the vast majority of
personal injuries would be outside the limit now and information
about small scarring on the male visage would not be within the
small claims area, for example, and virtually no personal injuries
other than whiplash from which you have recovered almost immediately
would be. There seems to be irresistible force meeting movable
objects arguments. Where do you think the Government stands on
the force of those particular arguments, particularly in terms
of arguments on inflation and indeed what the Better Regulation
Task Force considered?
Baroness Ashton of Upholland:
This is precisely why I want to consult on it. As you rightly
say, the strength of feeling on this is very strong. There is
a concern that when you are dealing with personal injury you quite
quickly get to a point where people may need real expertise and
possible legal support. On the other hand, as you rightly say,
if you look at the kind of costs or the way in which redress happens
and the amounts of money, you are very quickly beyond the limit.
At this point I am not sure which way we ought to go and that
is why I think one of the great advantages of doing a genuine
consultation—and this is—is to try and get a sense
from the different parties involved, not just the obvious and
equally opposite parties, about what would make most sense for
the Government. We will be very mindful of not making people more
vulnerable, that is the critical underlying issue for me, but
if we believe that by changing it we create more vulnerability
for individuals, where they are not able to get the support that
they need to achieve what they need, then I would not want to
do that. We need to be very clear about that. The starting point
is what is best for the individual in making these claims, how
would the small claims service be able to provide support, what
are the kind of limits that there ought to be and then we will
discuss it and, of course, the Lord Chancellor will make his decision.
Q117 Dr Whitehead: A suggestion for
a starting point could be a number of anomalies would continue
to exist in the world of small claims generally, for example the
extent to which claimants in personal injury would be able to
recover legal costs for relatively trivial personal injuries where
they made a full recovery, but were they to enter a comparable
claim, not on personal injury, they would not be able to recover
legal costs. Presumably that anomaly would need to be tucked in
to whatever might be decided.
Baroness Ashton of Upholland:
Yes. You could also argue the anomaly is a very important factor.
If you have got somebody who is injured and therefore in a very
particular way vulnerable then they may incur particular costs
which they could not possibly avoid in order to get the expertise
they need to make their claim. I know you can argue it in other
areas as well, but I would argue that in personal injury it is
a particular issue. Then you would have to be clear that what
you describe as an anomaly is not actually just a very good way
of making sure those people get the best support. The plan is
to look very carefully at what people need to make a good and
genuine claim, what are the limits that make most sense where
you are not making people more vulnerable by increasing the limits
and how we make sure that we recognise the amounts of money that
are genuinely and generally payable to people at this stage. If
we can try and find some way through that then hopefully we will
end up with a policy at the end of it that takes on board all
those issues and may or may not change the limit and may or may
not iron out what might be an anomaly but also could be seen as
a positive.
Q118 Dr Whitehead: Have you undertaken
research as a Department, for example, on the extent to which
having a lawyer present in relatively low value personal injury
claims does bring any value compared with, say, other equally
complex claims not of the personal injury nature where perhaps
there is no added value but nevertheless a resolution is achieved?
Baroness Ashton of Upholland:
I am smiling partly because of the concept of added value in a
case. My experience of small claims is that I have sat through
cases where I am not sure the lawyers did bring much added value
and I have sat through cases where, not having a lawyer, the people
conducted their own prosecution or defence magnificently. I do
not really know how we would go about looking at what is genuine
added value in that sense because I think it depends on the quality
of the legal advice and it depends on the particular set of circumstances.
Having said that, I take your point, which is that the purpose
of the small claims process generally is to allow people to conduct
themselves, with the support of the judge, with better advice
in advance and not to have to have recourse to lawyers if that
is not what is needed. The ultimate objective is to make it as
simple and easy a process that people feel confident with in order
to deal with what are minor but important issues for individuals.
Q119 Dr Whitehead: Indeed. There
is at least an arguable claim put forward certainly on behalf
of District Judges that the added value perhaps comes from the
different ways in which the court operates and the guidance is
thereby given. Would your consideration include those sorts of
aspects in terms of what you yourself mentioned was the difficult
concept of added value as far as the intervention of a lawyer
is concerned?
Baroness Ashton of Upholland:
My overall ambition for small claims is that people only involve
the legal profession, who have got plenty to do in other areas,
where that is necessary and ideally for many of these claims what
we are looking for is people to feel able to come into court.
The judges I have seen working do a fantastic job in helping and
guiding people through the process and making it very simple and
very straightforward, at the end of which they are able to dispense
justice and people feel they have got something out of it. It
has been cheaper for them, it is cheaper all the way round and
I would argue it is as good a system as having the more formal
situation with the legal profession there. That is an ambition.
It does not mean that in every circumstance it is inappropriate
to have legal advice present in the form of a lawyer or a junior
barrister. I have seen all of these in operation. My ideal is
that, where possible, people do not feel the need to do that.
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