SMALL CLAIMS

The Small Claims track in the County Courts is designed to be user friendly. It encourages people to represent themselves in court for the purposes of pursuing simple claims for comparatively small sums.

The District Judges in the County Courts are used to dealing with members of the public, hearings are less formal than in other courts and the normal strict rules of evidence do not apply.

WHAT IS THE SMALL CLAIMS TRACK?

The Small Claims Track is a simplified procedure within the County Court for dealing with claims for amounts of money under £5,000. Although it is not a separate court, it is often called the Small Claims Court.

The small claims track covers the following types of case:

Save in exceptional circumstances, small claims cases are dealt with and heard by a District Judge. A District Judge would normally sit in a room known as chambers and would not wear a wig or gown. The parties sit around a table and the procedure is less formal. The alternative type of judge you will come across in the County Court is a Circuit Judge who is more senior, normally sits in formal courtroom and wears a wig and gown.

The Advantages of the Small Claims Track

Currently, you may not sue for an amount larger than £5,000 on the small claims track although the District Judge has a discretion to refer a matter involving more than £5,000 onto the small claims track.

If your claim is more than £5,000 and you think it is straightforward, you can ask the court to have your case dealt with as a small claim.

If you believe you are entitled to more than the current small claims court limit, you can voluntarily lower your claim to bring yourself within the limit. This may be advisable if, for instance, you think your claim is for £5,200. It may be sensible to sacrifice the additional £200 in exchange for a faster recovery without legal fees.

You cannot use the small claims track in the County Court for possession proceedings.

SETTLING OUTSIDE OF COURT

How do you win in court?

One short answer is to avoid it. You could be a winner by resolving your dispute before you get to court which should always be regarded as the last resort. The judicial system should only be used where all else fails. Why?

• Courts take time
• Courts involve costs
• Courts involve risk.

Before you issue proceedings you should ask yourself if you have done everything reasonably possible to settle your case with the other party.

You should consider the following at least:

1. Telephone call. You will be surprised how successful a polite telephone call can be.

2. Demand. If a telephone call fails to achieve the desired result your next step is to send a demand letter.

Why is this useful?

• It is useful in trying to settle your dispute.
• You can use it as evidence in court.
• It is a good way to outline your case before the Judge.

The demand letter should be brief and set out all relevant facts. Remember that you are not just writing to your opponent - the letter may well end up as evidence in court and be scrutinised by a Judge.

3. Compromise. Contact the person you are having trouble with and try and work matters out. A small compromise may allow you to settle right away. If you enter into negotiations which may involve a compromise, you should ensure that all conversations and correspondence are clearly stated to be "without prejudice".

If you reach a compromise you would be well advised to put your agreement in writing. If you cannot reach a compromise you may also want to put that fact in writing. At a later date you could show the letter or document to a judge and this may be appreciated by the court.

THE LAST RESORT

If all else fails you will have to consider commencing a small claim. Before you go to court you should satisfy yourself of two key issues:

1. Can you win your case?

2. Can you collect on your judgment?

I will deals with each of these in turn:

What makes a winning case? Liability. You will not get any money from a Defendant until you prove that he or she or it is legally responsible for your loss. You must prove liability. Your loss is not enough to make a winning case. It must also be the other side's legal fault. You must state facts to the Judge to demonstrate that your Defendant should be held legally accountable.

The Judge will listen to your evidence and decide whether you have a case. It is for you to establish the facts in as favourable a way as possible. A Judge will rule on the legal position.

Even if you win, your victory is worthless unless you can enforce the judgment. If your Defendant is genuinely unable to pay, he or she may not be worth chasing, even if no defence is offered. Unfortunately there is no simple way to investigate the finances of the Defendant unless you are prepared to pay for a credit search but this is seldom cost-effective in a small claim. At best you can make enquiries, such as a court-ordered oral examination to learn what you can about the Defendant. You may find your adversary has more creditors, some of whom hold judgments ahead of yours.

It is important to be practical.

The small claims track only make sense when you have a reasonable chance of winning and collecting enough money to make the exercise worthwhile.

COURTS

Small claim cases are always dealt with in a county court. You can start your claim in any County Court. However the proceedings will be transferred automatically to the Defendant's local court if:

a) The Defendant is an individual, and

b) It is a liquidated claim i.e. for a fixed sum, and

c) The Defendant replies to the court intending to defend the claim.

Clearly it is best to keep proceedings in your own County Court, particularly if the Defendant lives some distance away.

How do you find the County Court?

They are located throughout the country. Find one near you by referring to the telephone directory under Courts. They are open Monday to Friday from 10.00 am. to 4.00 pm.

COSTS

There is a fee required to start a small claims case (£20 minimum) so it is important to have confidence of recovery before you issue proceedings. The exact amount you will be required to pay will depend upon the amount of your claim. Fees change - you should cheque with the court on issue.

If you win your case you can recover the following:

• The fees paid to issue a case, the fee paid when you lodge your Allocation Questionnaire and any other court fees.
• The fixed costs for issuing proceedings if you did instruct a solicitor (somewhere between £25 and £62).
• The fees and some costs of enforcing your judgment.
• Any witness expenses such as travel or loss of earnings which are limited to £50 per day.
  

You should also be aware that cases can be transferred by a judge out of the small claims track onto the fast and multi tracks in circumstances where the judge feels it is too complex, legally and factually, even though its value is less than the current small claims limit. If a transfer takes place the winning party can, from the date of transfer, recover the costs of instructing a solicitor.

PARTIES

If it is you who is bringing the claim you are the "Claimant". The party you are suing is the Defendant. There can be multiple Claimants and multiple Defendants.

You can sue just about anyone.

You should always take care to consider who you actually name on the court document. Be careful to get the actual company name right and to consider whether or not there may be more than one party liable for your claim.

If you are able to get a judgment against more than one person, in the event that you have trouble collecting from one party, the others may be willing to assist.

How much should you sue for?

If your claim exceeds the amount currently allowed using the small claims track, you must either reduce it or bring your action on another track.

It may be appropriate to bring more than one claim in order to take advantage of the small claims procedure. Consider the following example:

You are a painter and owed £6,000 by a Mrs Smith for work done. You sue Mrs Smith for failure to pay. You could claim that there were three contracts, and therefore three claims - one for failure to pay for paint, one for failure to pay for painting the house, and one for failure to pay for the hiring of scaffolding. By arguing that there are three separate contracts you might be able to collect more than £5,000 on the small claims track.

STARTING THE PROCEDURE

It is not difficult to start a claim on the small claims track.

A variety of forms are available at court and also on the court service website - www.courtservice.gov.uk.

For most claims you will need three copies of the Claim Form N1.

Once you have fully completed the form you will need to give it to the court staff together with a fee. You can either go to a court in person or send it by post. In return you will receive a Notice of Issue.

It is a requirement that the Defendant should be properly served with a copy of the Claim Form together with a Response Pack which the court will put together for you.

A Defendant may be served in two ways:

1. The court can be asked to serve the Defendant which they will do by first class post.

2. You can arrange to serve the Defendant yourself either personally or by using a Process Server. You can also send out the court documents by first class post.

Once the Claim Form is served strict time limits must be adhered to.

A Defendant has 14 days to respond and indicate whether or not they will be defending the action. If the Defendant fails to respond you can enter a judgment in default.

After service

A Defendant has 5 options once he has been served with County Court proceedings:

1. Attempt to settle the claim.

2. Admit owing all the money claimed.

3. Admit owing some of the money claimed.

4. Deny owing the money claimed.

5. Ignore the Claim Form.

I shall comment on each in turn:

1. Issuing a Claim Form can be a good way of encouraging settlement. Unfortunately it sometimes takes proceedings to convince a Defendant that you are serious about your action. As I said before if negotiations begin you should ensure that they are without prejudice until the negotiations are concluded. When discussing settlement amounts you should bear in mind the court fees incurred as a result of the proceedings.

2. A Defendant does not often admit to owing the full claim. When it does happen it normally does because a Defendant realises that he has no valid Defence and he usually just needs time to pay. When completing the appropriate response form a Defendant in these circumstances will normally ask for time to pay. Your choice then is to:

a) Accept the payment proposal.

b) State how you want the Defendant to pay.

c) Refuse his offer to pay.

If you accept the court will send the Defendant an order to pay you the proposed instalments. If the Defendant has admitted owing you money but has not proposed how to pay, you can ask the court for a judgment which specifies either instalments or a one off payment.

If you refuse the Defendant's offer the issue will have to be decided by a court. You are not bound by the court's decision concerning the repayment proposal. You can request a District Judge to review the court's decision by asking for an appointment.

If the Defendant admits to only part of your claim he will fill in what is known as Form N9B (Defence) and Form N9A (admission). Form N9A will give you financial information about the Defendant's ability to pay part of the debt. Form N9B will set out the Defendant's Defence to the other part of the claim.

If the claim is contested the Defendant must state his or her reasons on form N9B (Defence).

WHAT HAPPENS NEXT?

Once a Defence has been served you and the Defendant will both receive an Allocation Questionnaire. This must be completed and returned by the parties within a specified time limit, normally 14 days. As a Claimant you must pay a £80 fee on filing the Allocation Questionnaire.

Once Allocation Questionnaires have been filed they will be considered by the District Judge. He or she will then make a decision as to whether or not the case should be placed on another track i.e. the fast or multi track.

If the court decides to take your case out of the small claims track you should carefully reconsider whether or not it should be pursued. It may be that the risk of losing it and having to pay the other side's costs is not a risk worth taking.

If your opponent ignores the Claim Form and fails to respond within 14 days you will be in a position to enter a default judgment. In order to do this you should complete and return to the court the Notice of Issue form which you will have received shortly after the proceedings were issued. You should pay particular attention to how you want your judgment paid. Naturally you will want payment at once but you may be more successful in collecting if you grant reasonable instalments. You should always request payment in full.

A Defendant can apply to the court to set aside the judgment in default although he would have to explain why he failed to respond to it and why he disputes it. The court may set aside the judgment if it is satisfied that the Defendant has a real prospect of successfully defending the claim or there is some other good reason.

WINNING YOUR CASE

Familiarity with the small claims track will not ensure a victory. You must know how to present your case.

It is essential to assemble the critical facts concerning your dispute including evidence, witnesses, exhibits, documents and any other elements needed to prove your case.

To save time at the hearing I would send advance copies of your written documents, photographs and any sketches to the Defendant asking him to agree to their authenticity and accuracy. Once he agrees he may not prolong the proceedings by raising objections in a hearing or courtroom.

Good preparation and a clear logical presentation are essential to winning your case. If you have prepared your case thoroughly you will greatly improve your chances of success. Remember, using the small claims track is for amateurs. You are not expected to be a solicitor or barrister.

TOP TIPS

The following are my suggestions to put yourself in the best possible position:

1. Practice your presentation.

2. Visit a court hearing.

3. Act properly.

4. Be prepared.

5. Do not be too legalistic.

6. Use witnesses properly.

7. Detail your case.

8. Keep your documents in order.

THE HEARING

As I already mentioned small claims hearing usually take place in the District Judge's room or chambers.

Although the hearing is informal it is nonetheless a court hearing in from of a Judge. The hearing is in public and it is possible that members of the public can attend although it is unlikely.

The parties sit either side of the judge at a table.

A party may present his own case at a hearing or a lawyer or representative may present it for him. As the Claimant you present your case first and explain to the Judge briefly what your claim is about and what you want. Take the Judge through any documents you have and then call your witnesses.

Once you have finished with each witness, the Defendant may cross-examine him or her. After this you may again question the witness if the cross-examination raised any new points or if you need to clarify any earlier points.

The Defendant answers your case by presenting his version of events and setting out those areas of your case he disagrees with, again referring to any supporting documents and calling any witnesses.

Both parties present a final summation and the Judge makes his decision. He usually will do this immediately but he may want to consider the matter and decide later.

The court will keep a written record of the Judge's decision which explains why you won or lost. This is important if you consider an appeal.

If you are unsure about anything that has happened you should question the Judge before you leave chambers.

Good Luck!

This article represents an outline of a presentation given by Mark Summerfield and Simon Murphy to an AIMS seminar at Regents College in London on 23rd May 2001.

Courtesy Solomon Taylor & Shaw -legal briefing 6