Small claims court - on the right track

As the head of commercial litigation, Anis Waiz has over 20 years experience in commercial and property litigation. In this article he provides a brief explanation of the small claims track (previously known as the small claims court), addressing some key questions raised and the benefits of the process that can save your business money.

At some point most businesses need to issue proceedings to recover unpaid invoices or money paid for poor goods or services. Very often solicitors are instructed to issue proceedings for relatively modest amounts, but as surprising as it may sound, wherever appropriate we often suggest clients follow the more cost effective route of issuing their own proceedings through the small claims track.

What is it and can I use it? There are three different tracks depending on the size of the claim and the small claims track is only relevant for claims that have a value of less than £10,000. Not all claims are suitable, for example if the matter is complicated and requires expert evidence. However for recovering outstanding invoices or settling straightforward disputes about the quality of goods or service, this route can be the better option.

How do I start proceedings? Before any proceedings are issued, a letter must be sent to the other party explaining the claim being made and referring to any relevant documents and terms of contract. A claim form must then be filled in and a court fee paid. It’s recommended that a solicitor reviews the potential claim and claim form to avoid any issues arising out of the proceedings.

What’s next? If a defence is served, the court will consider the case and then make an order telling the parties how to prepare for the final hearing where the court will decide the matter. At this point a client should seek advice as to whether they can apply to the court to strike out the defence if there is no reasonable ground to defend the claim.

Do I need a solicitor to act? The small claims tracks is designed so that the hearing will be informal and complicated rules of evidence do not apply. Many people prefer to be represented but it is not necessary. Where the claim is properly set out and the relevant documents are before the court, a judge can quickly assess the issues and make a decision.

The simple reason for acting without a solicitor is costs. In the small claims track, even if a party succeeds, they are limited to recovering the court fee and costs incurred for the purposes of attending the hearing. Usually they cannot recover any legal costs unless the court finds that a party has behaved unreasonably.

Therefore, in a modest claim of £2,000 where a solicitor is instructed to act and advise, the costs to the client could exceed the claim and may not be recoverable. A good commercial solicitor will point this out at the beginning and save the client considerable costs. What should I do? If you have a potential claim, it’s best to seek professional advice. Speak to a member of our commercial team who can set out the issues and potential costs, advising you on the best solution even if it means not acting for you!