The Small Claims Court has previously been a venue for claims of £5,000 or less to be resolved quicker, at less cost and more informally for Claimants.
As a result of recent changes to the rules as to how our Courts are run, claims with a value of £10,000 or less are to be dealt with by the Small Claims Court (different rules apply in respect of personal injury and some tenancy cases). But is a claim of £10,000 really a small claim? It is certainly not a nominal amount for any individual or, indeed, a small or medium-sized business.
One key aspect of the Small Claims Court is that the usual rule in respect of legal costs do not apply. In particular, win or lose, there is usually no provision made for who should be responsible for the legal costs incurred. Instead, a successful Claimant will usually only recover the Court fees incurred. But is this really fair? The amount at stake is not necessarily representative of the complexity of the case and, if you have to bring a claim against a reluctant Defendant, why should you not be able to recover the legal costs which you have understandably incurred with your solicitor? In some respects, these rules may discourage smaller claims being brought and reduce access to justice.
Primarily, any business should consider amending its Terms and Conditions of Business to include provision that, in the event that they have to issue proceedings against their customer, perhaps to recover an outstanding invoice, then if they are successful there is a right to recover reasonable legal costs. A case recently before the Court upheld this principle which technically gets around the Court rules on costs.
Secondly, it is important to remember that the Court does still retain the power to award costs against a party if they feel someone has acted unreasonably. For example, bringing a claim which is completely hopeless. This is an option which I would like to see the Court develop and use more frequently to ensure fairness.
Thirdly, do not rule out instructing lawyers just because their legal costs cannot usually be recovered. Most lawyers are able to offer initial advice or to act as a consultant to help you through the procedure at a cost which is proportionate to your own time and that of the claim.
With these considerations in mind, it should be possible to retain the integrity of the Small Claims Court which has been a feature of our legal system for many years.