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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 519-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CONSTITUTIONAL AFFAIRS COMMITTEE
Tuesday 11 October 2005 GEORGINA SQUIRE, ALLAN GORE QC and JAMES SANDBACH DISTRICT JUDGE MICHAEL WALKER and DISTRICT JUDGE DAVID OLDHAM Evidence heard in Public Questions 1 - 78
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Constitutional Affairs Committee on Tuesday 11 October 2005 Members present Mr Alan Beith, in the Chair James Brokenshire David Howarth Barbara Keeley Mr Piara S Khabra Jessica Morden Julie Morgan Keith Vaz Dr Alan Whitehead Jeremy Wright ________________ Witnesses: Georgina Squire, Chair, Civil Litigation Committee, Law Society; Allan Gore QC, President, Association of Personal Injury Lawyers (APIL) and James Sandbach, Social Policy Officer (Legal Affairs), Citizens Advice, examined. 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 10,000 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 AVR 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. Q20 Keith Vaz: Who should make the claimant think? Should that be in the literature or should it be the District Judge? Georgina Squire: I would have thought if something were put in the literature of the claim form, something like a health warning. Chairman: There is, I think, something there now. Keith Vaz: Apart from that, you cannot think of any new procedures that would help? Q21 Chairman: We will give you the opportunity to go back and think about it. Georgina Squire: I will, absolutely. Q22 David Howarth: It has just occurred to me that one of the problems of doing that is that it will encourage, in the end, potential defendants to look for ways of making themselves judgment-proof. What would you suggest in the following situation (which is actually a real case - it happened to a constituent of mine): he got a judgment for £2,000 but it was against a self-employed person, so an attachment of earnings did not work. He tried a warrant of execution and found that the goods belonged to the wife, not to the defendant; he had the same problem with the charging order, that the house was in the wife's name, and then having got to the third party debt order was told that she could not find out which bank had held the accounts of the defendant because that was private information and it was therefore a data protection problem. Georgina Squire: Sounds familiar! David Howarth: Is there any way through this? Are there any suggestions that people have come up with in the past, as this is obviously a very familiar situation? Q23 Chairman: As a supplementary to the same thing, I was told it is not the court's business to try to trace bank accounts; that is your job as the person who has been given the judgment. If you have any ideas on any of this do come back to us. Georgina Squire: We certainly shall. Q24 David Howarth: Particularly on the working of the third party debt order, which was offered as a solution to a lot of these things and apparently has not worked. Allan Gore: These are some of the issues that the national enforcement service will need to look at. There are proposals to establish what has been called the national enforcement service. No doubt it will probably be more of a virtual organisation but there might be additional capacity there to address some of those issues. Q25 Dr Whitehead: Returning to the question of personal injury claims, the Better Regulation Task Force did suggest the raising of the limit for personal injury claims to £5,000 along with other routes in small claims. Mr Gore, the evidence the Association of Personal Injury Lawyers has submitted is that you think personal injury cases have no place in the small claims court. I assume you are levelling that with the fact that you would agree with the present £1,000 limit? Allan Gore: Yes. We are not strongly advocating the removal of all personal injury cases from the small claims track. That issue was considered at another time during the civil justice review that led to the civil procedure rules. It was acknowledged at that time, in 1998, that special rules were justified in relation to personal injury litigation and we are not advocating a removal of those rules as they currently operate, subject only to our endorsement of the European procedure as a model for small value personal injury claims that may be adopted across the board in the future. It is our position that what justified that decision in 1998 remains true today; there is an inequality of arms in relation to the conduct of personal injury litigation that does disadvantage injured people compared to those that are the usual defendants in that class of litigation. That disadvantage is acknowledged in the evidence of the Association of District Judges, and it is also supported by the Mori poll to which we drew attention, identifying the reluctance of injured people to pursue claims if they do not have access to advice and representation. The Better Regulation Task Force, as I understand it, did not in fact advocate the increase of the small claims limit for personal injury litigation to £5,000 but merely advocated that that was one of the issues that could be properly explored. We do not dispute that exploration of that type of issue is justified but we do submit, for the reasons set out in our written submission, that an extension in the particular context of personal injury litigation would be inappropriate. Q26 Dr Whitehead: Yet, according to the evidence that you have submitted, as it happens, the vast majority - as you very helpfully pointed out - of personal injury claims are under £5,000. You suggested 70% are under £5,000. Allan Gore: A distinction has to be drawn for this purpose between the overall value of the clam, which is what that research was directed to examining, and the present jurisdictional limit in the small claims track which looks only at the level of award for pain and suffering and loss of amenity without any reference to financial loss. So there is a sense in which the two questions invite a comparison of apples and pears rather than comparing the same. The present limit relates to the valuation of the appropriate award for the injury itself, and the class of case that our research was drawing attention to, where overall settlements were above that limit, are cases where there was representation so that, by definition, there were claims for in excess of £1,000 for the value of the injury. Q27 Dr Whitehead: So, in fact, if we bear in mind that, I think, there are only five types of injury where damages even started out to be under £1,000, yet taking into account the additional, as it were, inflationary costs, you might say, by way of representation, that suggests a good number, perhaps half, of the cases fall into the category of, let us say, £1,000 to £2,500/3,000. Indeed, in the category suggested by the Association of district Judges as a possible compromise figure. Allan Gore: I saw that interesting reference to the level of awards suggested by the Judicial Studies Board for personal injury cases. My understanding of the legal position is that there is, in fact, no minimum sum that a claimant is entitled to recover for injury or illness. Although the Judicial Studies Board guideline figures may indicate what they do indicate, they do not reflect the fact that there are no minimum limits below which the court cannot award. So that, in that sense, we would dispute that there are, in fact, only five classes of case where as little can be awarded. Even if that were not the case, as Ms Squire has indicated, the figures in the £2,000 to £5,000 category are a lot of money to injured people. These are sums that can have and do have a significant effect on their day-to-day lives. Q28 Dr Whitehead: I understand, perhaps, the higher end, the £2,000-£5,000 but, as the Committee noticed, I did not declare any interest as being a lawyer because I am not one, so from a lay-person's point of view the idea of £1,000-£2,500 would not suggest there are fundamentally different notions of personal injury in a claim that is, say, £1,500, £2,000 as opposed to £1,000, which the Society accepts should remain within the small claims procedure. What sort of injuries would that represent? Would the compromise idea of £2,500, perhaps, retain the idea that people in the higher brackets ought perhaps be represented, but actually put cases that are rather similar together? Allan Gore: It implies the level of injury from which there is usually a full recovery. That is not universally true. For example, in current litigation before the courts the guideline figure suggested by way of provisional award for pleural plaques in asbestos litigation is £3,500, and this is a health concern that people who suffer from that condition face for the rest of their lives. It may not be disabling but it is something that is ever present in their psyche and affects them, therefore, for the rest of their lives. So it would not necessarily be correct to think that all awards at that kind of level are for conditions from which there is a relatively full recovery. I come back to the point that our research and evidence suggests that if you increase the small claims threshold at this kind of level it would act as an inhibitor on people bringing claims that at the moment they do bring and they do bring with conspicuous success. If that is an inhibition it will operate adversely on the access to justice because it will operate to prevent or disincline people to bring good claims for tortuously inflicted injury that, at present, they can bring and do succeed in. Q29 Dr Whitehead: Conversely, in terms of what one might say is the good administration of justice, the evidence that we have received suggests that a non-contentious claim, which might attract damages of, say, £3,000, will have, routinely, £2,000 costs attached to it - ie, inflation in terms of the procedures that have been suggested is getting on for 100%. Allan Gore: I think that is a different question. That question, of the proportionality between damages and costs is also being focused on perfectly properly by the Better Regulation Task Force. Indeed, also, by the members of the organisation that I represent and their usual opponents, the insurance industry, in the sense that we are always actively looking at ways by which the process can be simplified and the costs involved in pursuing it can be reduced. But that is a quite separate issue from the question of whether people should have confident access to advice and representation in the knowledge that they can recover costs, thereby promoting their willingness to seek the compensation that the law is saying that they are entitled to. Georgina Squire: I think, from a general perspective, not being a personal injury practitioner, the way I would look at this is that a claim for personal injuries, in terms of a legal claim, is actually quite a complicated claim. It requires expert evidence. There are numerous different ways in which people recover from injuries. It is fair to say, as Mr Gore has already mentioned, that the large majority of defendants in this area of work, uniquely, are represented because the claims are being funded by insurance companies. That is primarily the case, as I understand it. It is therefore quite a different type of claim to any other sort of routine claim that one might imagine would suitably go in the small claims track because those insurance companies do have highly experienced lawyers, claims handlers, claims assessors and people investigating those claims on their behalf whose primary aim is, of course, to seek the lowest possible level of settlement as far as the claimant is concerned. So all I would say on this is whatever the ultimate decision in terms of a level of appropriate damages for the purposes of cut-off in the small claims, I think one should be aware of the fact that there is an imbalance, and if one has an unrepresented claimant trying to recover what to them is a very important amount of money, albeit only £1,000 or £2,000 because of the impact on their life, they are going to be up against someone who is infinitely more experienced than them and, probably, with the benefit of a lawyer. Q30 Dr Whitehead: Is it not possible to simplify the law procedure for the purposes of small claims? For example, a statement from a GP rather than expert medical advice and representation? Georgina Squire: Potentially. It would depend on the level of the problem. There are situations where, say, for example, someone puts in a claim to an insurance company, the insurance company sends someone round who says: "You need a bit of physio. Take five or six sessions of physio. That'll do. That's fine, isn't it? Sign the form. Thank you very much" - end of claim, and then actually the claim develops into something else and, of course, it has been signed off. Q31 Chairman: If it is a broken finger from which you have recovered fully you know that sort of thing ---- Georgina Squire: Absolutely, and that is the difference. It is where the level changes from the broken finger to something that could have more, potentially, long-lasting effects. Q32 Chairman: If I calculate rightly, the level has been at £1,000 for around 14 years. So if you go on at the present rate you would eventually receive Mr Gore's objective that you do not get any personal injury claims in the small claims track. Georgina Squire: I do not think there has been much inflation. Allan Gore: I saw the written submission of the Norwich Union in that regard and their reference to 1991 is accurate. However, in the meantime there has also been a wholesale reconsideration of this issue at the time of the Civil Justice Review conducted by Lord Woolf. Not only did that consider the question of the general threshold for the small claims track, but it also specifically considered, and indeed changed its mind, in relation to the limitation so far as personal injury litigation is concerned. So that although there has been no change since 1991 there was an acknowledged justification for the retention of those levels in 1998. There has been, we would submit, relatively little inflation since 1998 when those figures were last considered and last revised. In that regard, if there has been any movement it more closely approximates the sort of limitation that is suggested in the European procedure where the 2,000 euro limit is suggested, which if my arithmetic has not deserted me accords with about £1,400 sterling today. Q33 James Brokenshire: It seems to me as if there are two approaches here. You can have quantum and you can look at the complexity of the case, and quantum may not necessarily be linked inextricably with the complexity of the case. Is there any merit to taking a different approach when assessing and actually looking at complexity rather than looking on the actual quantum that you are likely to recover on that injury? Georgina Squire: Very much. From the Law Society research of the sorts of areas where, perhaps, unrepresented claims could warrant some representation on which they can recover their costs, I think complexity is the key. There may be a very simple claim with a value of £5,000 or more, which can easily be handled by someone on their own; they feel perfectly confident and they can go through the court process on the small claims track. Conversely, there could be a claim of a £2,000 value which has complexities in it because it is to do with things like building works, which is slightly more difficult, where they could value a lawyer's assistance, and I would strongly support that because I know that is the Law Society's view. Q34 James Brokenshire: So would you say it is more a question of an assessment on the tracking and not necessarily getting so hung up on the quantum or the threshold level on the small claims track? Georgina Squire: Yes. I think something on that could be done through the allocation questionnaire. Those of you who may be fully familiar with the litigation process will know that when a claim is issued there is a decision made almost immediately on allocation by virtue of the parties having to fill in this huge form called the allocation questionnaire, which is actually very difficult to circumvent and quite a lot of lawyers find it quite difficult to complete, so I question how unrepresented claimants find it. The Law Society is certainly advocating a review of the questionnaire so that it is made more relevant. One of the issues that could be brought into it is complexity so that the judge then looking at the case can allocate more fairly. Q35 James Brokenshire: I wondered if Mr Gore had any thoughts on that, given that obviously he was advocating very firmly that there should not be an increase in the limit at all. Allan Gore: That remains the position of the Association. Can I add that complexity very often depends on the eye of the beholder? What appears not to be complex to me as a personal injury litigator who has been undertaking this sort of work for over 25 years now may not be the same as viewed from the perspective of the injured person who is forced to face the decision about whether or not to claim. Indeed, with respect to the perspective of the Association of District Judges, in that respect I would venture to suggest that their perspective is similar to mine and is based on experience. If you contemplate making complexity the yardstick for this purpose it ought to be judged from the perspective of the user of the services, namely, in relation to personal injury, the injured person claimant. James Sandbach: I think one further consideration is how claims are settling out of court as well and whether that has any bearing on where is the level for the small claims track. At the moment, a large proportion of claims, under £2,000, are simply settled out of court by the insurers. I think, coming back to the costs of this process, when you start to do research on low value personal injury claims we found, particularly for the cases that were settling out of court, that it was not always clear who was bearing the costs of this process, and that particularly the claims handlers at a very early stage, before anything was ever getting into court, were getting people to sign up to insurance agreements - ie, consumer type agreements to underwrite whatever the costs in the final process were going to be. A lot of these products turned out to be very, very costly to the consumer, and in a lot of those cases, in fact, people, several years later, are still getting bills from their creditors who have funded loans to take these cases. Q36 Chairman: That is not covered in your written evidence. If you wanted to add, please do. James Sandbach: Certainly, yes. Q37 David Howarth: I think we are now at the heart of the matter, which is: what added value do the lawyers bring? We have been talking all along about this, but I suppose there are several more points to make. One is, how much added value? One of the things we know from research is that 75% of people get some legal advice before making claims in the small claims court. It might not be very much, it might be from a variety of sources - and, obviously, the CAB comes into play. So the question is what is the margin of that in getting more legal advice (?)? I was wondering whether there was anything in the research that shows anything about that - whether, for example, represented claimants are more likely to win cases that are contested or whether they are more likely to get a higher settlement than those not represented? That is my first point: is there any quantitative evidence of improvement in the position of the litigant because of representation? I heard what you said about perception but this is not about perception, it is about whether it works. The other two points, I suppose, are these: how would you respond to the, perhaps, cynical view (though this is the view of the economic research in this field) that shifting from the "each side bears its own costs" basis (the American) to the English rule "winner takes all" has two effects? One is to make people drop cases early when they find out the risk of the extra costs and that especially affects risk-averse claimants (and risk-averse claimants are usually individuals whereas companies tend to be risk-neutral). So shifting from the American rule to the English rule, which is effectively what we are talking about, favours organisations against individuals. The second point is that that move also causes people to invest more in legal services if they are optimistic and have decided not to drop. That is because the stakes are getting higher and so it is worth investing more in legal services. So, of course, the two legal representatives have an obvious interest in arguing for the English rule to be adopted in as many cases as possible. Allan Gore: Can I deal with the first part of that question? We have in fact offered you some quantitative evidence in our answer to the questions that you raise. Firstly, in relation to the Mori polling that was taken, which is referred to in our submission, that suggests that 73% of respondents would be unable to work out the value of their claim in relation to personal injury if left to their own devices, and 80% of those respondents also felt that they would not be confident that what they would be offered by insurers would necessarily be the correct and proper level of compensation justified by their claim. The second piece of quantitative evidence that we submitted to you related to our own survey of our own members on the class of cases and litigation, to which Dr Whitehead referred in the questions that he asked me. In those respondents we found that the final settlement figure achieved in those cases, by and large, was 50% higher than the level of compensation that may first have been offered by the insurer on the other side. So that, insofar as you asked the question: "What value do lawyers add within the context of personal injury litigation?" we would answer, firstly, "To inform and advise injured people as to what their entitlements really are and, secondly, then to negotiate the delivery of that in accordance with the advice that they have been given". The public in that sense - the community of injured persons - would lose if deprived of those services in that way. You asked the questions of me as a representative of the providers of legal services, but in fact the core aim of the Association of Personal Injury Lawyers is to represent the interests of injured people, and it is injured people that I speak for in this regard, not lawyers. Q38 Chairman: Ms Squire, perhaps you would like to look at the same issues from the rest of the area, not just the personal injury area. Georgina Squire: Indeed. I have not got any qualitative research to hand but I will certainly refer back to the Law Society and if there is anything we will submit it to you afterwards. In terms of what do lawyers bring to the process, I think we as lawyers do bring to the process value in terms of, as Mr Gore said, a proper assessment of the value of the claim. Sometimes someone has a problem but they do not know what to do about it and they do not understand the basis upon which a recovery can be made. If they are a defendant they do not whether they have a defence or not or whether they are properly liable and they are, therefore, looking for guidance and assistance in that respect. Then, secondly, assisting to negotiate and compromise and resolve the claim in the most practical and sensible way, using the court process or alternative methods of dispute resolution - indeed any of the processes that are available these days, and giving that sort of advice and achieving the result. I think that is really what we bring. Q39 Jeremy Wright: I know that in what you have both said neither of you have mentioned advocacy in the course of the court hearing itself. We know that District Judges are supposed to take a very interventionist line on the small claims track because they are supposed to do a lot of what, perhaps, the advocates might do in other claims tracks. Is it your view, therefore, that we do not really need lawyers to present the arguments within the small claims track because the District Judge's way of doing it is adequate to meet those needs? Allan Gore: I am not sure that I agree with that. I discovered in preparing for giving evidence to you this afternoon the paper that was prepared for the Department of Constitutional Affairs considering the position of litigants in person and unrepresented litigants in first instance proceedings by Professor Moorhead, which I discovered has now been posted to the Department of Constitutional Affairs' website earlier this year. It does draw attention in that regard to judicial concern about departing from the role of what they call passive arbiter in the process in order to provide for the equalising of the process that you are referring to. They also draw attention to what they report to be some judicial misgiving about that role and indeed a possible inconsistency of approach and the questioning of whether unrepresented litigants' interests are, in fact, being effectively handled in that type of arena. It was posted on the DCA website in February this year. Georgina Squire: I think the small claims track is there for a good reason, which is to allow people to be able to dispose effectively and quickly with disputes. I think the issues that the Law Society have are to ensure that the right sort of disputes go there and that to the extent an unrepresented claimant needs some representation they are able to achieve it. I would not necessarily say that there is a need for a lawyer advocate in all small claims cases as if they are perfectly simple there is no reason why the District Judge cannot deal with the proceedings and help them along. So I think my view is perhaps more tempered in that respect. Q40 Chairman: Mr Sandbach, do you want to add anything? James Sandbach: An important element is that claims are actually grounded upon a legal basis, and that is having the argument set out clearly on paper. I think the more that the process encourages the involvement of highly skilled legal professionals there is almost an inevitable dynamic by which costs are going to be padded, and by which costs are going to be increased because there are too many incentives within the system to do that. So it is extremely important at the front end that there is advice available and advice that is actually based on the legal analysis of cases, so that less vexatious cases go through to the courts and that claimants are properly supported through the whole process, or whether we evolve, at the other extreme, the kind of culture whereby we are involving more and more professionals and intermediaries in the process. Q41 Barbara Keeley: Returning to the European small claims procedure, on which we have touched on a number of points already, there are a couple of points there. Views may differ about whether this should replace the current small claims court procedure but of course it does include an award of costs. Are there any points you want to add or to emphasise about that because we have touched on it quite extensively in terms of personal injury, but perhaps there are other types of cases? If it were the case that we ended up with that same procedure what impact would introducing cost recovery have on litigants? James Sandbach: With respect to the European procedure, if it is going to be adopted widely around the European Union and you have a situation whereby you can sue somebody in another country and get your costs recovered but you cannot here, that does raise an issue about whether our proceedings are more fair compared to other jurisdictions. So I think it is how the European claims process is implemented within our jurisdiction which is going to be quite a pressing question. Georgina Squire: I think I would endorse that view. The Law Society's view generally is that the European proposal is a very good one and makes sense. It allows people to be able to deal on a cross-border basis, and I think more and more these days we are seeing that there are transactions at a very basic level and we need something in place that makes the system more simplified. At the moment it is incredibly complex. We are also of the opinion that there would need to be fairness in the system because if it were to run in parallel with the domestic system it should be similar; it would be quite wrong, as Mr Sandbach has already said, for costs to be irrecoverable just because the claim was a cross-border claim as opposed to a purely domestic claim. Then the claimant would question why they have to pay a court fee as well, for example, if it is only a domestic claim, whereas they do not if it is a cross-border claim. I think the idea of the judgment being enforceable across the EU without any further process is a very good one as well, coming back to the issue of enforcement that was discussed earlier. Perhaps we could look at that more closely in terms of our domestic process too. Allan Gore: I would endorse what Mrs Squire has said. In relation to personal injury litigation, it would seem to us to be odd that an injured person from London should be at an advantage if the cause of his injury was a Frenchman rather than an Englishman on the streets of London. That would be the position if the European procedure was confined to cross-border claims. We would therefore advocate what I think the Department of Constitutional Affairs call Option 3, which is the rolling out of the procedure to apply to all small claims, for the reasons that we have already advocated. We understand why there might be concerns about costs recovery under Article 14 in the procedure. So far as personal injury litigation is concerned, we believe that that could be met by an amendment of Article 14 so that an unsuccessful claimant would not have to bear the costs penalty of meeting the costs of a successful defendant where that defendant had been insured in respect of the liability that was under consideration. So that in the context of personal injury litigation that would not visit any unfortunate cost consequences on the injured people. Mr Khabra: What is the relationship between the legal costs and the level of the claim? In certain cases the legal costs are so high, and it means that some of the people, if they wish to make a claim, are restricted in their ability because, at the end of the day, it is not worth taking. Secondly, when a claim is valued, is it after conviction or when the claimant, in the personal injury case, actually makes a claim? Q42 Chairman: The first question goes back to the discussion we were having earlier about the deterring of claimants once costs go beyond the present small claims track. Georgina Squire: I think there are other schemes being considered and, indeed, I think there is a scheme enforced for RTA - Road Traffic Act - cases whereby the costs are restricted. Certainly, if there were any recoverability of costs in the small claims track, then, as mentioned earlier, it would certainly be sensible for them to be reflected in some respect so that they were proportionate to the value of the claim because otherwise there is the problem that you indicated where the costs can soon outweigh the value of the amount at stake. In terms of the other point, that is probably something which Mr Gore will be able to comment on more because it relates to personal injury. Allan Gore: A partial answer to your question must focus on the way in which the claims are conducted by both sides. Our empirical research, as we have drawn attention to in our written submission, draws attention to one feature which clearly has an effect on escalating the volume of legal costs associated with the handling of personal injury claims and that is that the admissions of liability are only made in the protocol stage of the process in about one third of the claims in which compensation is eventually paid. That necessarily means that a significant quantum of costs are incurred in progressing a claim to a much more advanced stage when that could be avoidable by an earlier recognition of responsibility or liability. We recognise that there has to be an encouragement to promote early and economic resolution of disputes in the context of personal injury litigation. In that respect, the representatives of injured people work closely with the insurance industry, in particular, to explore avenues by which those frictional costs can be reduced. Q43 David Howarth: Just to be clear, was that all cases, small claim cases? Allan Gore: That was in the raft of cases which we undertook the research in relation to which Dr Whitehead referred to, those claims that achieved a settlement of £5,000 or less within that category. An early admission of liability was only made in one third of the cases which ultimately attracted compensation. Chairman: Thank you very much for
your evidence this afternoon and for your willingness to bring forward any
further information which you may find.
Thank you very much for your time.
Chairman: District Judge Walker and District Judge Oldham, welcome to our proceedings. Thank you very much for giving your time to help us look at this matter and for the assistance we have also received in enabling members and officials of the Committee to come and look at procedures in the small claims track in county court. Some have already done so. I am going tomorrow, I think we all find that very helpful indeed. Perhaps we can press on. Q44 David Howarth: Can I start with your reaction to the question we have been pursuing in various ways about the added value which lawyers bring to the proceedings, given the remark we have already heard that district judges often take a more proactive role in small claims and track cases. Is it really worth changing the system so that lawyers become more involved? District Judge Walker: When you say that district judges often take a proactive role, I think, to be honest, I would disagree with you. We always take a proactive role, that is the nature of the beast. A district judge is always interventionist in small claims cases and that is what really distinguishes it from a fast-track or multi-track trial. It is a hearing where you are endeavouring to get to the bottom of the case as quickly and as simply as possible. The presence of a lawyer often helps; sometimes it may not be quite as helpful as what you would wish. Where lawyers have a real point of helping, which does not happen at the moment, is that many cases come before us where people obviously have not had legal advice before they brought the case. They do not understand how to present their case, if they are defending, they do not understand what their defence may or may not be. There is great scope for lawyers giving assistance to people at that stage, even if they do not go on to represent either the claimant or the defendant at the actual hearing. Help beforehand would be immensely helpful. District Judge Oldham: I have nothing really to add to that. Chairman: We will now adjourn for a short division of 15 minutes. The Committee was suspended from 5:45 pm until 6:00 pm for a division in the House
Chairman: I think we can resume at this point. The good news is we are not expecting further votes during the time of the meeting. Q45 David Howarth: You were saying that the more effective time for legal advice would be early on in clarifying the situation. I was wondering about your experience of legal representation at the trial stage and to what extent you have observed the legal representation to be an advantage or perhaps a disadvantage to a litigant? District Judge Oldham: My experience would be that principally legal representation occurs in road traffic cases. That is by far the greatest proportion of cases where both parties are legally represented, usually by counsel. It depends on counsel as to whether it is an advantage. Undoubtedly there are cases whereby taking a more interventionist approach one can deal with the issue much more quickly, but it is unfair on counsel to be suggesting that is their fault. In other cases it is much rarer, but there are obviously cases where there are important legal issues, important points of law, which need to be addressed. Very often it may be helpful to have counsel - hopefully we have picked up on them anyway - point us in the right direction and to explain the situation to the other party if they are not represented. Q46 David Howarth: What about cases where one side is represented and one is not? Is it a great advantage for the representative to be represented in your experience? District Judge Oldham: I would say not necessarily. A lot of the litigants in person have done a lot of homework before they come, they have found out about their case. I think there is still a need for much greater opportunities for people to get some advice before they come, to find out what the real legal implications of their case are. I certainly would not say it is inevitably an advantage if one party is represented and the other is not. Q47 Chairman: Is it more difficult for you if one is represented and the other is not? District Judge Oldham: No, I do not think it is more difficult. I think it is part of the process that we are used to. Obviously if we are having propositions of law put to us we have to make sure that we explain or make sure that the unrepresented party fully understands what it is that is being talked about. That is part of our job in adjudicating. Q48 James Brokenshire: In the previous session we had a discussion about tracking and how you assess a particular case in terms of whether it is appropriate to take it down the small claims track and the difference between assessing something on quantum and assessing on complexity. I wonder if you have got any comments on the issue of complexity as to how you go about assessing and whether there are any ways in which we could look at the procedure in order to make your job a little easier and perhaps allow some cases with higher quantum to come through if they are not as complex. District Judge Walker: Mr Brokenshire, we could not do that at the moment. We can allocate a case up if it is complex but of low value, but what we cannot do is allocate a case down unless both parties agree, if the value were taken into a higher track. If you have got a case of £10,000, that is going to be in the fast track unless both parties say yes, they are comfortable with it being allocated to the small claims track. If they are unrepresented, they may well be and, in fact, we will try and encourage that, but you could only do it with their agreement. Q49 Chairman: That does happen? District Judge Walker: Yes, very often. It is not uncommon that I would have a fast track trial of £10,000 with unrepresented parties on both sides. The very first thing I would say to them at the commencement of the trial, knowing that they are both unrepresented so that costs are not an issue is, "Would you like me to allocate this case down to the small claims track? It means I can adopt an interventionist approach, I can help you with the way you present your evidence, I can ask you questions, otherwise I might not be able to, and generally take that much more proactive approach". On the whole litigants will say yes, that is what they will prefer. Q50 James Brokenshire: Do you think that is something which should be encouraged? District Judge Oldham: I think it is widely known that it is something which district judges can do and do do. Going beyond what Michael said, quite often a case will come in purely on paper for the purposes of allocation and when we look at it one can see that the claim is said to have a value in excess of £5,000. Even on paper one can then send out a notice to parties saying, "The court thinks this maybe suitable for small claims, do you consent to this being dealt with as a small claim?". Sometimes the parties themselves will have indicated on the allocation questionnaire that they would like it dealt with as a small claim. One has to be slightly careful about that because they may not fully understand the implications of it, but certainly at a number of stages we can try and promote an allocation to the small claims trail. Q51 James Brokenshire: In terms of access to justice, part of that is ensuring that cases are dealt with promptly, efficiently and effectively. If a case has been allocated to the small claim track, how long on average would it take to go from the start to finish, if I can put it like that, and how would that compare with cases on the other tracks? District Judge Walker: The Department's target is 15 weeks from allocation until the final hearing, and I think that is well met in most courts without any difficulties. Q52 James Brokenshire: Listing arrangements in terms of the actual practicalities of being in court and having to wait around for your case to be heard and allocated, do you think there are any improvements that could be made in terms of people's experiences of coming to court and that part of the whole procedure? District Judge Walker: Of course the problem there is do you list for the convenience of the judge or for the convenience of the parties, inevitably it is a problem. If you list for the convenience of the judge, you list lots of cases at 10 o'clock or 10:15 or whatever, and they might not get on until 11:30. If you list for the convenience of the parties, you give them fixed slots and then, of course, cases settle, they are not effective for whatever reason and your waiting time just extends way into the next decade, that is the difficulty. It is a pragmatic approach. If you want to give people quick hearing dates, the only way you can achieve that, with the resources we have got at the moment, is to block-list and occasionally people will wait an hour, an hour and a half or so for their hearing. One does not do that without any warning, the notices which tend to go out these days will tell people that whilst they are listed for a certain time, they may not get on until lunch time and they should be prepared for that and make their arrangements accordingly. Q53 James Brokenshire: Do you feel that this is an acceptable and satisfactory arrangement at the moment? District Judge Walker: To be honest, it is the best one can do with the resources we have got. That is the trouble, it is inevitably a compromise. To take an example, in my court this morning we had all our cases listed for 10:15 and by 11:30 every one of those cases had started, so people had not waited that long. Q54 James Brokenshire: When you talk about resources, what do you mean? Is it purely financial issues, is it human resources? District Judge Walker: It is judicial time, judicial buildings, court room space and things like that. Q55 James Brokenshire: Obviously the court system and the whole legal system is, in general speaking, quite paper driven and in other cases we are seeing a lot greater use of technology, document management systems, scanning of the documents on discovery and those sorts of things. Do you think there is a greater role in terms of IT support coming into the county court, the small claims process? District Judge Walker: Inevitably there is a need for more IT in the county court. Undoubtedly, anyone who visits the back office of the county court is just amazed by the amount of paper which is chased around on a minute by minute basis. At the moment it is an entirely paper based system which has not really got to 106 of the county courts. There is great scope for change, but it is immensely expensive and the resources, I am afraid, are not there. There is £25 million a year for investment in IT and civil and family business, and £25 million does not go very far between the 220 county courts. Q56 James Brokenshire: In practice, what sort of IT support do you have to support this process? District Judge Oldham: The judiciary have IT provisions, the courts have various IT provisions, but the two cannot speak to each other by and large which is not always helpful. As Michael says, clearly the administration is the area which perhaps needs the greatest emphasis on better IT. Lord Woolf, when he prepared his report, of course, stressed the need for IT for civil justice generally and that largely has not happened. In certain areas the use of telephone hearings for certain types of application have been very successful and, as you know, the Department has proposed some increases in that. That is more difficult in dealing with final hearings in small claims, which is what we are concentrating on here, because a lot of litigants would feel very uncomfortable about having to deal with matters like that on the telephone. Q57 James Brokenshire: Can you explain the use of the telephone at the moment? Is it more like a directions type approach? District Judge Walker: I think perhaps most case management hearings in the larger claims are dealt with by telephone. These are cases where we are setting a timetable for a case of any size or complexity to bring it to a conclusion. The advantage we find of having hearings on the telephone is very often the parties - apart from the obvious cost-savings, they are not having to travel to court from courts which may be somewhat distant - they get their heads together in advance, they discuss the Directions they think are appropriate, they can send those through, we can discuss them with them over the telephone and the whole thing can be done very simply and in a straightforward way. Q58 James Brokenshire: Would it be fair to say that there is a need to certainly increase the IT and potentially the use of telephone hearings particularly at the earlier stages of a trial? District Judge Oldham: Yes, although, of course, small claims do not have earlier stages generally. So, yes, certainly in the larger claims. District Judge Walker: The Department piloted the use of extensive telephone hearings in three courts, and there is a consultation paper out at the moment which is suggesting that is nationally rolled out, and I think there is general support for that. There are arguments about the periphery of precisely what it extends to but there is general support. Q59 Chairman: You do not know where you are in the Department's plans for IT development in the civil courts? District Judge Walker: At the moment, as I understand it, it is £25 million a year, which, as I said already, does not buy you very much, certainly not when you need to write comprehensive new software packages. You would get nothing for £25 million, that is what we desperately need. Q60 Keith Vaz: Judge Walker, welcome back. You have given evidence so many times to this Committee that you really ought to be on this side of the table. In your evidence to us on this inquiry you describe the enforcement of judgments as being in a deplorable state of affairs. That is very un-judge like language. Why are you so cross? District Judge Walker: Because what we try and do is offer people not a role choice service, but at least a decent service to get them to the point of a judgment, and we would like to think that we get to that point and the cases get the judgments which the cases deserve. Then the winning party is left to his or her own devices effectively to enforce that judgment. The courts' response is a reactive one to the enforcement of judgments rather than proactive. We will do what the successful party asks us to do. As we said earlier on, the problem is very often that the bailiff will say there are no goods on which it is possible to levy execution, one gets an attachment of earnings' order and the debts will have moved on to another employer. If indeed they were an employee in the first place. You may not know where they bank, there is a whole issue relating to enforcement which, in fairness to the Department, it has recognised and recognised for some while. There are numerous problems. There is the big issue of separating the "can't payers" from the "won't payers". The "can't payers" just cannot pay and at the end of the day some people cannot pay, they are just unable to. On the other hand, there are people who are just not going to pay, the "won't payers", and one has to try and distinguish the two. So there is the big issue of the "can't payers" against the "won't payers". There is also the issue of information where there is a big issue between the need to have information and human rights. A data disclosure order may be fine, but that a creditor could get a disclosure from the DWP or the Inland Revenue or whoever as to where a debtor is working. Of course, on the human rights' side people will say that is a gross intrusion of their human rights and should that happen. There is a big debate about things like that. Q61 Keith Vaz: This has been going on for many years. How many years have you been a judge? District Judge Walker: Eleven and a half years. Q62 Keith Vaz: This has been a real problem with the system, but there seems to be absolutely no improvement. Presumably you have raised these concerns with the Lord Chancellors' Department, as it was then, and the Department of Constitutional Affairs, but still there has been no progress? District Judge Walker: There has been a lot of progress. The Department, in its evidence to this Committee, does set out some of the ideas which it has in the hope that it can get the legislative slot and get those provisions on the statute book. Q63 Keith Vaz: What do you think of those ideas? Do you think they will help? District Judge Walker: Yes, every one of them. There has been a lot of discussion over a long period of time. None of what is in the Department's evidence came as a surprise to us; it is what we will support. Q64 Keith Vaz: I wonder if you can explain this: they have been through the system, as you said, they have appeared before yourself and your colleagues, they have done whatever is required of them and they cannot enforce their judgments. Do they blame the judges or the court system? District Judge Walker: They have become very disenchanted with the system. Interestingly Professor Baldwin - who has sent in evidence - some while ago interviewed people three months after the hearing and asked them the simple question, "Have you recovered your money?". He discovered that in a third of the cases people had, in a third of the cases they had not recovered anything and in a third of the cases they had recovered something. After that period of time people were beginning to think they had got all they could recover. You have a third of the people who are just wholly dissatisfied with the outcome of the proceedings; they have won and they have lost. Q65 Keith Vaz: Do you think there is a responsibility - perhaps Judge Oldham can join in here - on the judges themselves, right at the start of the process, to advise the litigants that this is a two-way, two-stage process, winning is just part of that process and after that you have to get your money back. Maybe the judges should take a much more proactive role in advising people right at the start of the process. District Judge Walker: I think the difficulty about that is if one starts off by saying to the litigant, "We are happy to hear your case, but really you do not have much chance of recovering it", it does not appear to me to accord with access to justice. It is a very difficult situation. The usual time when it may well be discussed with the judges is at the conclusion of the case when the litigant says, "How do I go about getting my money". As judges all we can do is indicate the sorts of options which may be available, we cannot make recommendations or offer advice. We can point them in the direction of where they can get appropriate advice, but it is very unsatisfactory. Earlier in the afternoon it was suggested that the litigant has to start all over again from scratch and I think that is wrong. Of course they have got a judgment, but that is not worth a great deal to them unless they can turn it into money. That is where the system is letting them down at the moment. District Judge Walker: If I may say so, what I have discovered is the most effective remedy, it of all is pointing out to the paying party that if they do not pay within whatever period of time I allow them that judgment will get registered with the registry of county court judgments. The trouble is that works as a manoeuvre the first time but, of course, if the response is, "I have several already", it is a waste. Q66 Keith Vaz: You have not seen a particular enforcement order in any other country or in any other jurisdiction which is something we do not have that we could perhaps adopt that would make our process slightly better? District Judge Walker: No, but certainly what the Department is now suggesting, the data disclosure orders, better attachment of earnings' orders and the like, I am sure will make a significant difference. Q67 Chairman: I think the issue which Mr Vaz raises is one which many of us have experienced with constituents, the small man who does not get his money either from a relatively large payer or from another small player. There is another issue which has cropped up which is where you have got big players, finance houses, pursuing debts within the small claims jurisdiction area who obtain charging orders. By this means they get themselves into the position that instead of having an unsecured debt for which they are charging 19 % interest, they have actually got a secured debt for which they still charge 19 % interest, this seems to have grown exponentially recently. Is my impression correct? District Judge Walker: Yes, it is. It is acknowledged to be a problem. The DTI are certainly well aware of it. At the moment, however, there is nothing much one can do to prevent it, save to say this, the unsecured lender may get his security, but getting an order for sale is something totally different. They may have their judgment, they may have the security of the charging order, but if they then make an application for an order for the sale of the property, what we would very much do as district judges is bend over backwards to ensure that debt is paid by instalments and not at the expense of the property being sold. Q68 Chairman: That would apply if the borrower had in the first place obtained a loan against the value of the house because the sale issue still exists for the lender. District Judge Walker: To be honest, I would say it is easier for a high street lender who has lent on security to get an order for possession than for an unsecured creditor to get an order for sale, to be honest. District Judge Oldham: I think the number of applications for orders for sale is very, very low compared with the numbers of charging orders which are made. Certainly in my experience we see very, very few applications for orders for sale. Q69 Julie Morgan: Why do you not want to see the European small claims procedure extend into domestic cases because I know you support the concept of cross border co-operation, but not domestic cases? District Judge Oldham: In our written evidence we have identified two particular areas where we think our system is better. One is the financial limit and the European scheme, which is 2,000 euros, is obviously substantially lower than £5,000. The second is in relation to costs. There has been a lot of discussion this afternoon about costs, but costs are a very big issue and costs overall in litigation, civil litigation particularly, have really become a major concern all round. They always were a concern. Lord Woolf had a significant concern about them. He hoped that his access to justice arrangements would result in a reduction in costs overall, but I think it is generally accepted that in most spheres that simply has not happened. It is in the smaller cases where the costs have become completely disproportionate to the amounts that are actually being litigated about. That is why we feel the small claims scheme, as it currently is, with the very significant limits on costs, which there are, is very valuable as access to justice. For most people it means they know they can go to court and seek a remedy without any significant burden in terms of costs coming on them. Q70 Julie Morgan: Would it be fair to have two similar systems ready, do you think, where you think you could have very similar cases but just considering you are suing somebody who is abroad then you are entitled to the costs and there are different financial benefits? District Judge Oldham: I do not think it would be unfair. As we have already said, I think the European scheme obviously has advantages for cross-border disputes. There is a single cross-border dispute mechanism effective, but internally we believe the current small claim system, subject to any refinement that may be needed, is a preferable system. Chairman: The situation probably as unfair is not having any readily accessible recourse at all. Q71 Jessica Morden: The Association says that there could be a case for increasing the £1,000 limit for personal injury claims to £2,500, and obviously there is some opposition to this. We had some discussion about that earlier today. One of the reasons, as you say, being the disadvantage to lay people. I wonder if you can expand on why you feel there is an advantage to going up to £2,500. District Judge Walker: I am so glad you asked me that. I brought with me this afternoon the seventh edition of the Judicial Studies Board Guidelines for the Assessment of General Damages in Personal Injury Cases. Effectively it is the bible on damages awards. It is not just the judiciary who have this, professionals have it as well. The seventh edition is the most up to date edition, it was May 2004, so the figures are 18 months old. If you look at the sorts of claims which are now valued at £1,000 or more: a male, trivial scarring, minor only, £1,000 to £1,900, in other words, one would not have a male scar at all now coming within the small claims track at all now. A female, in exactly the same situation, gets £2,150. The loss or damage to one front tooth is £1,250 to £2,150, so the sorts of cases Lord Woolf was thinking about in appeal, the trip on the pavement or the slip in the supermarket, are now going to be completely outside the small claims track, and we think there is an undoubted argument on inflation grounds alone for saying the figures have got to be increased. Q72 Jessica Morden: Do you think that the actual value that is being put to these accidents is going up? District Judge Walker: Obviously it goes up with inflation. Q73 Jessica Morden: Beyond inflation? District Judge Walker: No, I do not feel it is. Indeed, in fairness to the profession, the way they are always argued in front of us, normally the fast track, is to look at the value of previous reported cases and apply an index factor to them. There is no attempt to increase the general level of reward. Q74 Jessica Morden: In successful personal injury case which was worth over £1,000 but under £2,500, how much would the defendant expect to pay in legal costs on average? District Judge Oldham: It is a difficult question to answer because it would depend on what issues had to be resolved. It is unusual for cases in that bracket to be litigated or to come to trial purely on the quantum of damages, it is far more usual where there is an issue on liability. In fact, large numbers of road traffic cases that we deal with as small claims are deliberately issued purely for the insurance excess of £100 so that a decision is obtained on liability and there may be other issues which may include personal injury that will be resolved between the insurers. The numbers of cases that actually come to trial on quantum only for between £1,000 and £2,500 I suspect is extremely small. Undoubtedly, if such a case were to come to trial, the costs would certainly exceed £2,500, it could well be double it - I would have thought - because there are conditional fee agreements, there may be after the event insurance policy premiums and there may well be a success fee element, all of which build up the costs to very considerable amounts. That is one of our particular concerns about keeping the existing level or eliminating personal injury claims altogether from the small claims process. There has to be a balance struck between the proportionality of the legal cost which might be involved and the awards themselves. Q75 Chairman: One of the issues which was raised in the earlier evidence session that if there is not a lawyer involved, the litigant may be unaware that he would be justified in seeking a larger claim. Is that something you might point out? District Judge Walker: The danger is it might not get to us at all on that basis. I think the concern which is being expressed is that a claim may be intimated simply by a litigant writing to the other driver's insurers. Claims handlers become involved from the insurers and they then attempt to settle the case, possibly by offering a figure which is well below the true value of the case. In many ways that is an argument for keeping such claims within the small claims process, so that there is an impartial adjudicator available to the litigant at minimal cost who can make a reasoned decision based on experience as to what the proper level of damage should be. Q76 Chairman: Would you ever say to a litigant, "Perhaps you should think again about whether this is the appropriate level of claim to be making"? District Judge Walker: The only time that really arises is if we are being asked to approve a settlement for a child. Cases involving children still need the court's approval for any settlement. Very often we may look at the medical evidence which has been provided and we may ask the child and the litigation friend, the mother or father, whoever it is: "Has Charlie recovered? "Is he still getting headaches?", this sort of thing, and very often we find he says, "Yes, he is", even though the doctor had expected a full recovery within six months and we may well send it away and say "We need to follow this up, we are not prepared to approve this at the moment". We do not get the opportunity to do that in cases involving adult claimants because if the settlement is done, it is done either before court or before the matter gets to any sort of trial. Q77 Dr Whitehead: I wonder if it would be possible to clarify, as it were, the opposite. Judge Walker, you very helpfully read out some cases of people with broken teeth and minor scarring, and this leads me to think what on earth it could be that one would have to suffer from in order to lodge a claim of less than £1,000. What would those sorts of cases be? District Judge Walker: A road traffic accident with whiplash injury and one night of some discomfort with full recovery within one or two days, £750. Chairman: The claims I should have made in the past! Q78 Jessica Morden: In the cases worth less than £2,500, would it be practical to present a simple medical report? District Judge Walker: The sort of case we are talking about, to be honest is the sort of case you could decide either by just looking at the individual, quite often, or with a very simple report from a general practitioner. That is what it was designed to deal with and not the full blown PI case where you have a 20 page medical report from a consultant of 30 years' experience and the like that obviously is very expensive and very detailed and in its place extremely helpful, but for these low value cases really an extravagance which the system cannot support. Chairman: Thank you very much indeed. We are very grateful for your concise answers. You have set us thinking on a number of points which we will follow-up with ministers and in our final report. |