February 19, 2015

Virtual courts becoming reality for small claims

Virtual courts

The existing small claims procedure

The civil justice system in England and Wales currently allocates claims for money into three tracks, the ‘small claims track’ for disputes of up to £10,000, the ‘fast track’ for claims up to £25,000 and the ‘multi track’ for claims over the £25,000 threshold.

All three tiers require parties to jump through various procedural hoops and, unless settlement can be achieved, will result in at least one hearing requiring the physical attendance of the parties before a Judge. In 2014, small claims accounted for almost 70% of hearings in civil courts in England and Wales.

Changes in recent years have already attempted to simplify the small claims process. One key change was to prevent the winning party from recovering legal costs from the losing party, a step intended to limit the number of parties to small claims engaging the services of a solicitor to keep costs proportionate to the value of the dispute.

The proposals

The proposals, set out in a report published by the CJC this week, would go one step further by increasing the small claims limit to £25,000, totally eliminating costly hearings and freeing up court resources to deal with higher value claims. Costs of pursuing a claim are intended to be “sensible” and fixed by reference to the amount at issue.

Although £25,000 is still a significant amount of money for many businesses, issuing court proceedings under the existing system for this amount or less can often be disproportionate due to the legal fees that will be incurred. Tackling this head on, the proposals aim to restore access to justice for parties to whom public funding is not available, or for whom legal costs are prohibitive.

The new online service is intended to operate much like the resolution centre facility on eBay and the complaints and redress service operated by the Financial Services Ombudsman. The CJC’s report breaks the process down into three tiers:

  • Tier 1 will involve the parties being invited to set out their grievance and categorise their claim.
  • Tier 2 will introduce online “facilitators” who will assist with achieving a “speedy fair conclusion without the involvement of Judges”.
  • Only where tiers 1 and 2 are unsuccessful will the claim progress to tier 3, where a Judge will decide the case online on the basis of the papers submitted to him electronically.


Significant changes to the small claims system are badly needed. The system, even with the recent reforms, leaves parties who have no other option but to issue court proceedings staring down the barrel of a long-winded and often expensive process.

Commenting on the report, Lord Dyson, the Master of the Rolls and Chairman of the Civil Justice Council has said,"Its aim is to broaden access to justice and resolve disputes more easily, quickly and cheaply. The challenge lies in delivering a system that fulfils that objective."

The report recommends that the judiciary should formally pilot the proposals as soon as possible alongside consultation with members of the legal profession and beyond. It may be some time before virtual courts become a reality but the report is certainly a step in the right direction.

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