The CJC’s final report on small claims has been published and recommends a radical approach of compulsory mediation in all cases except personal injury. It can be found atCivil Justice Council calls for improved procedure for claims under £500 | Courts and Tribunals Judiciary
The recommendation is for compulsory mediation for cases under £500. Unfortunately no mention is made of the effectiveness of online mediation. No mention is made of the existing ADR Regulation 2015 system for consumer/business disputes. Refusal to engage within 6 weeks will result in cases being struck out.
The working party makes a number of recommendations which it hopes will help to improve the management and resolution of the more than one million small claims which are commenced in the County Court each year.
Data provided to the working group showed that around 50% of small claims issued between March 2018 and April 2021 were for a value of £500 or less, leading the working group to suggest a more proportionate process for lower value claims.
The Civil Procedure Rule Committee is asked to introduce a specific pre-action protocol for claims under £500 and to amend its rules to allow the Court to determine cases by telephone/remote hearing or on the papers, where appropriate.
The report refers to recommendations in its interim report including:
b) If they consent to an ENE/settlement hearing in advance of the final hearing.
There should be a review of the third-party mediation pilots and consultation by MOJ and HMCTS with mediation providers with the aim of setting up the facility of private third-party mediation for all small claims. Consideration should be given to a further pilot at a court with referral across all claims tracks
Other recommendations call on HMCTS to consider the information available to litigants before they make a claim and once initiated, including the production of short videos to improve public understanding of the small claims process and the options available to litigants. In relation to mediation, HMCTS is asked to produce improved information to educate litigants and to conduct further research as to why parties opt out of mediation.
In the Interim Report, the Working Party recommended that HMCTS should have a target that no case in which the parties have opted into mediation should reach a court without a mediation appointment having been offered.
It was also stated that if this standard could not achieved in the near future, then further investment in the service should be considered.
HMCTS accepted this recommendation.
By 21st July 2021, HMCTS was able to confirm that the Small Claims Mediation Service (SCMS) was offering a mediation appointment in every case that was referred to mediation, unless mediation was deemed not suitable (such as where a case had been discontinued or had already settled).
The report then goes on to set out the current position:
CPR 26.4A makes provision for mediation in small claims:
(1) This rule applies to claims started in the County Court which would normally be allocated to the small claims track pursuant to rule 26.6.
(2) This rule does not apply to—
a) road traffic accident, personal injury or housing disrepair claims; or
b) any claim in which any party to the proceedings does not agree to referral to the
Mediation Service.
(3) In this rule, ‘the Mediation Service’ means the Small Claims Mediation Service operated
by Her Majesty’s Courts and Tribunals Service.
(4) Where all parties indicate on their directions questionnaire that they agree to mediation, the claim will be referred to the Mediation Service.
(5) If a claim to which this rule applies is settled, the proceedings will automatically be stayed with permission to apply for—
a) judgment for the unpaid balance of the outstanding sum of the settlement agreement; or
b) the claim to be restored for hearing of the full amount claimed, unless the parties have agreed that the claim is to be discontinued or dismissed.As set out above, the Small Claims Mediation Service has recently undergone significant change to ensure better performance and a mediation appointment is now offered to all suitable claims.
Up to recently mediation has been a voluntary “opt in” process. However, since May 2018, OCMC has piloted an “opt out” mediation referral process.56 The opt out mediation pilot started with defended claims up to £300, and then £500, because of a concern about mediator resources available. Initially, the pilot saw a higher level of users opt out of mediation than had been anticipated (73%) and telephone interviews were conducted by the HMCTS Insight & User Research Team with claimants and defendants.
As result of feedback new “screens” were introduced in the online process to increase users’ awareness of mediation and its benefits. From May 2021 the opt out has been extended to cover all claims within the OCMC i.e. up to £10,000. The Experience and Insight Team are now undertaking further evaluation of the pilot (with results due before the end of 2021).
The Working Party believes that there should be careful consideration of the reasons given by parties for opting out and the extent to which they can be addressed by the provision of education/more information about the benefits.
Personal injury cases are not referred to the mediation service. However, claimants in very low value (less than £5,000) personal injury claims arising from road traffic accidents must (from May 2021) follow a new pre-action protocol. Before initiating a claim, the claimant must provide certain information via a new, dedicated online portal, and in cases where liability is admitted the defendant’s insurer must make a settlement offer within a set time frame. The protocol makes clear that parties are expected to attempt to settle the claim, and failure to follow the protocol by either party will result in costs consequences in any related litigation.
(The introduction of this portal was controversial and the uptake by Claimants has been limited)
As set out in the Interim Report, a system of interim/dispute resolution hearings has been operating in some County Court centres. The aim has been that, in appropriate cases, there should be a form of judicial mediation to seek to achieve consensual resolution.
Recently there is a clear shift in emphasis towards encouraging settlement through mediation in smaller value claims.
In June 2021, the Civil Justice Council published a report entitled “Compulsory ADR”. It was stated not to be in the context of any specific proposals for the introduction or extension of compulsory ADR rather to inform possible future reform and development in this area.
This report addressed two questions:
a) Can the parties to a civil dispute be compelled to participate in an ADR process? (Thishas been described as the “legality” question—which is fundamentally a question of the law of England and Wales, and human rights law in particular), andb) If the answer is yes, how, in what circumstances, in what kind of case and at what stage should such a requirement be imposed? (The “desirability” question).The authors concluded that the answer to the first question was in the affirmative.
(https://www.judiciary.uk/wp-content/uploads/2021/07/Civil-Justice-Council-Compulsory-ADR-report.pdf.
The authors were Lady Justice Asplin DBE, William Wood QC, Professor Andrew Higgins and Mr Justice Trower. See also ADR and Civil Justice: Interim Report; The Civil Justice Council ADR Working Group; October 2017.)
As for the desirability question the authors stated that they believed that they had identified conditions in which compulsion to participate in ADR could be a desirable and effective development. The conclusion was that appropriate forms of compulsory ADR, where a return to the normal adjudicative process is always available, are capable of overcoming the objections voiced in the case law and elsewhere and could be introduced.
Reference was made in the report to the argument advanced by Tony Allen in his book on mediation
“A civil justice system is surely able to protect its users from themselves and to try to make sure that whatever is litigated in front of the courts justifies that level of judicial input.”
Compulsory attendance at mediation for small value claims
The Working Party believes that attendance at a Small Claims Mediation Service appointment, or engagement with some other form of court approved dispute resolution, should be compulsory for defended claims of £500 or less. The Civil Justice Council has previously noted the success of alternative resolution schemes for more modest sums (e.g. that 60 million disputes amongst traders on eBay were resolved each year through online dispute resolution).
Further, the Working Party believes that potential parties to small value litigation should be clearly informed that mediation/engagement with a dispute resolution procedure is compulsory in defended cases (so it is sensible to attempt to achieve consensual resolution before issuing a claim). It is believed that an increased number of these modest value claims could be resolved with clear advantages to the potential litigants/litigants (who would be spared incurring further costs and devoting more time to the claim) and a beneficial effect upon the availability of judicial and administrative resources for other claims.
As the compulsory use of the SCMS for claims of this value would be “court sponsored” and so costs-neutral for the parties; the requirement should not be viewed as too burdensome or disproportionate in terms of costs and time. As it is a telephone service it should ordinarily cause no additional difficulties for vulnerable parties. It may be that in due course other forms of dispute resolution (including online) may be appropriate for some or all low value small claims
If compulsion is to be effective there has to be some effective sanction if a party refuses to mediate. The Working Party believes that:
c) If a Claimant refuses to mediate, the claim should be stayed (to allow compliance),and thereafter struck out after a set period of time; and d) If a Defendant refuses to comply, there could be costs sanctions (the rule could be amended to provide a rebuttable presumption that the refusal was unreasonable for the purposes of CPR 27.14 (2)(g).
The Working Party believes that, as stated in the interim report, greater education about the mediation process, its advantages and the repercussions of refusing to engage, is essential, particularly to allow informed consideration pre-issue (including the production of a video).
The Working Party understands that HMCTS has formed a working group to begin looking at types of “bulk case” with a view to proposing different ways of dealing, other than referral to the SCMS. An example is car parking charges claims. There is a preliminary view that such bulk cases may benefit more from an ADR process rather than full mediation. It is hoped to test the concept in a pilot. The Working Party welcomes this step.
Given that litigants, in claims with a value of £500 or less, will be informed that mediation will be compulsory, the Working Party considered whether it would be possible to have a scheme for pre-issue mediation or ADR, whether using the SCMS or some other method/provider.
(No mention is made of the ADR Regulation 2015 system)
It was recognised that access to HMCTS resources without the payment of a fee would impose an additional and potentially significant financial burden. However, the Working Party believes that the issue should be considered by HMCTS; an obvious vehicle being the Working Party considering bulk small claims.
(This step could be ordered administratively by an officer of the Court. But not any counterclaim. The time frame should be limited e.g. six weeks.). The Working Group noted that in employment cases ACAS provided a service pre-issue.
Third party mediation
For claims above £500 the SCMS will remain available on an “opt out” basis. As stated in the Interim Report,73 the Working Party believes that the use of local private mediation schemes should also be an option available for small claims and suitably encouraged within case management. If, at the directions stage, both parties have indicated a willingness for mediation and the claim is of a nature and complexity that means a telephone mediation is not suitable, then a judge should be able to refer the parties to external third party mediation (with reference to a locally approved list). This would save judicial resources and enable longer mediation meetings.
The Working Party remains of the view that there should be a review of the mediation pilots and national consultation with mediation providers with the aim of the availability of third- party mediation for all claims (albeit that travel may be necessary from some courts to larger centres). An initial step could be to set up a fresh pilot scheme in a court with a strong local mediation network to include claims across all tracks (i.e. small, fast and multi-track), possibly with the provision of facilities within court building operating hours.
It is encouraging that mandatory mediation is being considered for small claims but disappointing that no mention is made yet again of the ADR Regulations in relation to traders and consumers. It is as if the CJC is not aware of it. Yet again EBay resolution is referred to but not the fact that it is very buyer favourable and is not a proper ADR process by anyone’s standards. Also no mention is made of online mediation which is very effective and cost effective.
Nevertheless this report may signal that mandatory mediation is coming to a Court near you.