This week, the Government’s published its consultation on “Reducing the number and costs of whiplash claims”. One of the central proposals is to raise the small claims limit for such cases (but not either types of injury) from £1,000 to £5,000.
This would mean that if the injury element of a claim is worth between £1,000 and £5,000, the whole claim would now fall within the “small claims procedure”. This will include injuries causing pain and discomfort for nearly 2 years. The small claims procedure exists for straightforward cases where lawyers are not required. In such cases if the winning party obtains legal advice, the cost is not recoverable from the losing party. Since these are low value cases, it is therefore only economic to pursue a small claim without legal assistance.
The stated aims of the increase in the small claims limit in whiplash/road traffic accident claims are to:
- reduce the number of claims being brought;
- enable the insurance industry to challenge perceived fraudulent or exaggerated claims which are apparently not currently challenged because the insurers have to pay the legal costs of doing so unsuccessfully; and
- make savings which will supposedly be passed on to motor policyholders by way of reduced premiums.
I have been thinking about some of the road traffic claims that I handled in the early years of my career that may have been affected had the small claims limit been set higher. I remember Mr H, a 63 year old who was a passenger on a bus that was involved in a collision with another vehicle. Mr H did not know the accident circumstances and had no details other than the bus route. It turned out the bus company was not the party responsible. His personal injury was worth about £2,000, and without my assistance it is unlikely that he would have brought a claim. Another example is Mr O, a cyclist whose personal injury was just below £5,000, but with financial losses of more than £10,000. Despite supporting evidence in Mr O’s favour, the defendant’s insurers denied liability and it became necessary to issue court proceedings. Then there was Miss S, a driver who was offered £3,000 in settlement of her whole claim even though she was suffering from ongoing symptoms at the time the offer was made. Her claim eventually settled for a six figure sum. It is likely that she may have been pushed into accepting an amount that did not reflect the true value of her claim without legal assistance. There are many more examples that come to mind.
If this change is implemented, who could those without legal representation turn to for help with identifying the defendant or dealing with the issue of medical causation for example? It is all very well saying more support will be offered to “self-representing claimants” by expanding the number of court centres with personal support units, but these are highly unlikely to be a substitute for proper, independent legal advice.
There is a very real risk that a vast majority of genuine claimants whose injuries may appear to be less than £5,000 will be deterred from bringing a claim when faced with the possibility of going to court unrepresented. Many will be undercompensated particularly those that settle their claims early for what they thought was minor injury but later turns out to be much more serious.
No doubt the insurance industry will relish challenging any claim that is brought where there is the slightest doubt, in the hope that the claimant will buckle under pressure and give up their claim. As for savings, there may well be savings but whether this will be passed on by reduced premiums is doubtful.
Much debate continues on whiplash injury and the Government accepts it is a complex issue. So how will it help to increase the small claims limit for such an injury other than to prevent claims being brought by those deserving? Access to justice will be further reduced by this proposal being implemented in a system that will be facing challenges on an unprecedented scale from April 2013.
One thing is for sure the government and the insurance industry will achieve their goal in reducing the number of accident victims being compensated for injuries caused by another’s negligence. As always, it is likely that the most vulnerable in our society will suffer.