Changes to Small Claims Track

New rules came into force on the 22 May 2024 for Small Claims (under £10,000). If a claim is issued on or after 22 May 2024 and a defence is subsequently filed, it is now compulsory that all cases are referred to the Small Claims Mediation Service (SCMS) and that both parties must take part in a free one-hour mediation appointment, provided by HMCTS’ Small Claims Mediation Service in an attempt to settle the claim without the need of additional court time and costs incurred for the parties.

The aim of this new requirement is to reduce the number of defended claims reaching court, thus freeing up to 5,000 judicial sitting days annually in order to focus on more complex cases.

Key benefits of mediation:

1. A free one-hour mediation appointment, provided by HMCTS’ Small Claims Mediation Service therefore being a cheaper alternative than going to trial if settlement is reached.
2. Mediation sessions are generally organised within 28 days however the mediation meeting may be a few weeks after this, that said, it is envisaged that it will be a lot quicker than going to trial.
3. Mediation tends to work because HMCTS mediators speak to each side separately in a calm, non-judgemental environment and work between the two parties to find a solution that each side can agree on. If an agreement is made then it becomes legally binding.
4. HMCTS has more than doubled the number of mediators employed, from 25 to 64. Extra administrative staff have also been recruited, and online systems improved however it is yet to be seen whether the number of staff will be sufficient.

Potential downsides of the new changes:

1. Every case is not appropriate for mediation and therefore this 'one size fits all' will have a detrimental delay on cases which could have progressed to trial.
2. Whilst HMCTS has more than doubled the number of mediators, previously only a proportion of cases would go to mediation. With new rules in place this means that ALL Small Claims must go through mediation. According to GOV.UK, of 35,000 claims issued in Q1 of 2024, the total amount of claims allocated to Small Claims was 25,000 (72%). In 2022 the SCMS dealt with 20,000 therefore a simple mathematical equation suggests over 100,000 cases will need to be dealt with by the SCMS - this equates to 5 times the volume in 2022 with double the staff previously employed.
3. Potential abuse of process by defendants - there is a risk that a defendant will not attend mediation and therefore it is yet to be seen what the court's stance will be with those offenders. The court has discretion to apply sanctions or even strike out a claim but will they, is the million pound question... Should the court fail to use its discretion then this process is undermined and serves as a further delay to an already lengthy process. The average small claim takes approx 52 weeks to get to trial.

Conclusion: In theory, the changes to Small Claims mediation should result in more settlements therefore less costs incurred by the parties but also freeing up valuable court time however given the predicted volumes and amount of cases required to go through the mediation process, it is unclear if HMCTS will be able to cope with current staff allocated. Hopefully, the court will use its discretion to penalise those that fail to adhere to the court's orders therefore reducing caseload even further.  At the very least, an Unless Order should be made against the offending party to attend the mediation otherwise the claim/defence will be struck out.

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You can read more about this by clicking the following links:

Faster resolution for small claims as mediation baked into courts process

Preparing for the requirement to mediate in small claims: What you need to know

Civil justice statistics quarterly: January to March 2024