Small Claims

Small Claims procedure

Lord Woolf’s 1996 Report on Access to Justice

Lord Woolf’s 1996 Report on Access to Justice promised a

‘…landscape of civil litigation …. fundamentally different from what it is now’ which demanded an ‘avoidance of litigation wherever possible’ and relied upon the idea that in the future, ‘litigation would be less adversarial and more co-operative’.

These principles were reinforced in the Civil Procedure Rules (CPR) which came into force in 1999.

The overriding objective of the CPR is to enable the court to deal with cases ‘justly’.

Parliamentary Select Committee Report

The Constitutional Affairs Select Committee Report First Report 2005 stated that the purpose of the small claims procedure is to provide a forum in which relatively straightforward, low value claims can be dealt with in an accessible and user-friendly way, quickly and at proportionate cost.

Small Claims introduction

In the county court all defended cases are allocated by a district judge to the appropriate track.

The small claims track is for lower value claims, generally up to a value of £5000, and £1,000 for injury claims and repairs to houses. The Better Regulation Task Force report Better Routes to Redress recommended an increase to the £1,000 limit in 2005. Effectively there are almost no such claims because the figure is so low.

The small claims track is generally used for consumer disputes such as:

the recovery of debt,
claims for poor workmanship,
claims for faulty goods and services;
claims between landlords and tenants.

Very few litigants are represented by lawyers and consequently, the laws of evidence are more relaxed than in other, higher value cases before the county court.

The lack of representation is due to the fact that there are firm limits on the amount of costs which can be awarded in the small claims process.

Therefore district judges dealing with small claims cases tend to be more ‘interventionist’ in approach in order to help the parties distinguish between law and fact.

Other than the costs of filing the claim, limited permitted expert’s fees (currently £200) and a very small amount in lost earnings (currently £50 per day) as well as expenses incurred in attending court and other costs, such as those of a legal representative will not be awarded.

Cost of a small claim

Court fees in detail here

From 1st October 2007 the fee for starting a very small claim, the fee is £25 (down from £30).

If there is a hearing a (new) Hearing Charge kicks in, minimum £25.

The maximum a claimant will have to pay for all fees, will be £443, this would apply in defended cases over £3,000 in value.

Fees are made up of a Starting Fee, an Allocation Fee (when the case is defended) and a Hearing Fee (which is a new charge from 1st October).

A successful claimant is able to recover these fees together with the amount claimed from the defendant.

Small Claims trials

Referral to small claims track

Strictly speaking there is no such place as the "Small Claims Court", cases are heard in the County Court using the small claims track.

When a case is referred the small claims track the District Judge will attempt to reach a decision without a hearing (on paper).

If a hearing is needed, it will often be heard in a small room, and rarely in the full court room.

Small claims since 1998

Small Claims trials are open to the public.

The normal maximum value of a claim is £5,000.

If the parties agree the money limit of £5,000 can be exceeded.

Personal injury claims can only go to arbitration if a £1,000 or less.

Procedure

The claimant files a statement of claim giving grounds for the dispute.

There may be a need for a Preliminary hearing, to clarify the issues.

If no compromise is forthcoming, a date is set for the hearing.

Experts can be called as assessors to help the process.

As a general rule judges have wide discretion to adopt any useful procedure provided it is within the ‘normal legal’ rules.

The parties have a right to cross-examine.

Evaluation

Disadvantages:

Some problems present themselves where one party is legally represented and the other is not.

Legal aid is not available in respect of small claims, and lawyers costs are not recoverable.
There is no likelihood that legal aid will be granted for a small claim.
Disputes with neighbours are better dealt with by mediation;
Some of the Civil Procedure Rules (CPR) apply others do not, CPRs are unknown to most litigants. The CPRs apply until the case is allocated to the Small Claims Track.
Small claims procedure is not suitable when the primary desired remedy is an apology or explanation or simply to prevent the same thing happening again.

Advantages:

Members of CAB and LAC (Citizens Advice Bureau and Legal Advice Centres) can represent individuals.
The procedure is more flexible;
The small claims procedure is likely to solve problems faster;

The small claims procedure is thought to be less stressful, but not all users agree;
The small claims procedure will cost less money, because lawyers are not needed and the court fees are modest.
Rules of evidence are relaxed, some parties suggesting that true justice is thereby denied;
Parties can agree to higher value claims being heard using the small claims procedure.
Standard or special directions (court orders) must be obeyed as with other courts.
Money claims (and some repossession claims) can now be dealt with via the Internet, on-line (Money Claim Online). Money claims are most suitable for the Small Claims Procedure.

Civil Justice Review 1986

Considers that arbitration works. It satisfactorily produces quick cheap and informal justice.

The Woolf Reforms 1999 did not recommend any changes.

The National Consumer Council 1993 reported that the civil courts were far from user friendly.

"Standards" in the small claims procedure were helping the business man not the ordinary citizen.

76% of ordinary citizens did not know there was a complaints procedure for them to use to criticise the small claims procedure.

Starting an Action for a Small Claim in the County Court

Her Majesty's Court Service

Useful booklets and advice on starting a small claim can be found at the Court Service Website, here.

Request

Actions start by claimant going to the county court office and filling in a form called a 'request", for the court to prepare the summons, which is the document served on the defendant giving notice of the claim.

Details of claim

At the same time, the claimant must supply written details of the claim.

It need not be in detail but should be sufficient to enable the defendant (the person being sued) to know the reason for the claim and for how much.

D has 14 days

The defendant has 14 days from the time of serving the summons to either:

Pay the claim, or
Make an admission with an offer to pay, or
Make a defence or counterclaim.

Judgment in default

If the defendant does none of these within the 14-day period, the claimant is entitled to have judgment entered for the claim.

Defence entered

Should a defence be made the District Judge will look at the claim and can:

(i) Decide that a "preliminary appointment'' is necessary to see both parties. The appointment takes place in the judge's private chambers and its purpose is to try to settle matters privately; or

(ii) Inform the parties when a hearing will take place, or

(iii) Decide that the case is too difficult to be held under the small claims procedure and orders a "trial in open court".

"trial in open court"

In this event, solicitors may be allowed to represent the parties and the losing party may have to pay the other party's costs of their legal representative.

Normal Rules

Unless the court decides, otherwise the following rules apply:

The hearings are informal and strict rules of evidence do not apply.
The judge may use any method to allow both parties to present their case.
If one party is absent, the judge may make an award to the other party present.
The judge may call for an expert to report on the matter in dispute.
Costs of the action are at the discretion of the judge. No solicitor's costs are allowed in disputes of £5,000 or less, except for:
(i) Costs shown on the summons
(ii) Costs to enforce the award (n.b. it is called an 'award' not a judgment).
(iii) Costs incurred by the unreasonable conduct of the opposite party with regard to the proceedings or the claim

Informality

The 1992 rules include

Simplifying the wording of the rules used in the court;

Allowing the district judge to help the parties by putting questions to them;

Explaining legal terms and stating the reasons for the decision.

In addition, there is the right for a claimant to be represented by non-lawyers such as friends, relatives or voluntary advice workers.

Pan European Small Claims on the horizon

The small claims procedure will be operating across all 25 states of the EU within 12 to 18 months.

This will mean a French supplier of goods over the internet or a German motorist will be as easy to sue as UK defendants are now. EU justice ministers meeting in Newcastle agreed the process last week.

The scheme will apply to debts and to civil claims for faulty goods and services, as well as to personal injury claims and damage to property.

Ministers have yet to work out full details including the maximum amount that a party can claim, but Lord Falconer thought it could be “anything up to £10,000” (in euros).

A claimant would commence proceedings in the UK and then officials would translate the paperwork if necessary and forwarded to courts in the defendant’s country, where local officials would serve proceedings. As with the current procedure, parties would not need to use lawyers.

Parties would not have to attend a hearing and they might give evidence by telephone. A judge or arbitrator in defendant’s country would make an award that would be enforced under that country’s legal system. The scheme would build on existing procedures.

MedArb (Mediation during arbitration)

Mediation as part of small claims arbitration was established in 2002.

It served to reduce the proportion of small claims disputes which had to be resolved at a hearing.

Judges were finding that the parties were usually inadequately prepared to attend the hearing.

The service began as a six month trial in Exeter, Barnstaple and Torquay courts.

The focus of the scheme for litigants was that it was a way to avoid hearing and incur further costs. For the court the focus was the saving of court, essentially judicial, time and to provide guidance to parties who did not settle at the mediation but had to go on to a further hearing.

Baroness Scotland, speaking to the Select Committee on Culture, Media and Sport on models of alternative dispute resolution stated:

“…I can tell you about a model of mediation that is being used in Exeter. In June 2002, Exeter started a mediation pilot to deal with small claims cases, so that when a claim was made an opportunity to mediate would be offered to the participants, and that had a very good take-up rate. From June 2002 until now they had a 70% success rate overall and in recent months the success rate of that small claims mediation has been about 90% plus, but overall we have about 70%.”

(Evidence to Select Committee on Culture, Media and Sport, Fifth Report, HC458-I (16 June 2003).

The process of attempting to get parties to resolve their case (mediation) before continuing to have a decision made by the judge has grown and is now found in many legal forums for example shipping and intellectual property rights.