As restrictions are lifted and government financial assistance, whether to individuals or firms, is removed, there’s no doubt that debts will increase, and there will be an increasing need to relay on the limited court provision available.

The small claims court is a relatively low-hassle way to take legal action for up to £10,000 against a firm or individual in the UK, and this can be done cheaply by self representing as a LIP – litigant in person. The small court system is after all designed for individual actions.

But you must be confident that you have a good case – good documentary evidence to support your claim and a defendant who can afford to pay you – before you start the process. Fees are payable which could mean you are throwing good money after bad if you lose. You will probably get your costs back if you win, but that’s not guaranteed.

Do not rely totally on these general guidelines which apply primarily to England and Wales. They are not definitive statements of the law. Before taking action or not, always do your own research and seek professional advice with the full facts of your case and all documents to hand.

Using the Small Claims Court to Recover Debts

From April 2013 the limit for a Small Claim was increased from £5,000 to £10,000

Landlords, letting agents and businesses in general often have reason to resort to the Small Claims Court for smaller debts.

This Small Claims system has several advantages in that the process can be handled by the lay person – the litigant in person (LIP). You may seek the services of a solicitor to help you put your case together and represent you in court, but often the cost is out of proportion to the debt in question.

If you DIY a small claim, all that’s involved is the court fee and your time, though you do need to develop some knowledge of the process.

Anyone considering a legal claim in England & Wales can start the process off through the government website: Money Claim Online

Small Claims – The Key Points:

  • The Small Claims Process is designed for the lay person to bring a civil action for small amounts without incurring expensive legal costs.
  • If you do use a solicitor, legal costs will not be awarded in the Small Claims Track, though they are in the Fast Track and Multi-Track.
  • Get your act together and you will find the Small Claims System is a very effective way of collecting debts and rent arrears.

Rent Arrears, Service Charge Disputes, Deposit Disputes, Disrepair and Dilapidations Claims, plus general debts are all common reasons why small-scale Landlords, Tenants and Letting Agents would consider using the Small Claims Court.

The Small Claims Court in England and Wales is designed to resolve disputes where the sum involved is £10,000 or less.

The court proceedings are relatively informal and lawyers do not normally need to appear because of the “no costs” rule in the Small Claims Track.

Litigants in Person (LIP) will have to present their own cases, so if you’ve always fancied yourself as a bit of a Philadelphia Lawyer, here’s your chance!

Claims can now be started off on-line, using the Court Service’s Money Claim site.

Guidance can be found using the links on this page and the Civil Procedure Rules Practice Direction – Small Claims Track.

In England & Wales it’s the County Courts that deal with Civil disputes, as opposed to criminal cases, which are dealt with by Magistrates and Crown Courts.

The County Court is often situated in the same building or near the Magistrates Court, and administrative staff are there to advise on procedural matters, but not legal matters. However, a lot of the small town courts have been closed during the austerity cuts over the last few years, so you may need to travel to find one.

The County Courts have District Judges who are appointed by the Lord Chancellor from the ranks of solicitors with at least 7 years experience. It is these judges who hear the Small Claims cases.

The County Court Procedures involve 3 possible tracks:

1. The Small Claims track – £10,000 or less
2. The Fast track
3. The Multi Track

When a defendant decides to file a defence to a claim, the court will serve an allocation questionnaire which, when completed, helps the court to decide which track is appropriate.

Having decided you have a legal claim, perhaps having taken some advice, you should always try to negotiate a settlement with the other party (defendant).

Before entering into any Money Claim you should make sure you have followed the pre-trial protocol set out in the Civil Procedure Rules. These are designed to help you reach a settlement before resorting to the courts.

Always make sure that after your negotiations have broken down you send a Letter before Action (final demand for payment) giving 14 days to pay, before starting the court process takes off.

If you are aware of your legal position and you set out the facts clearly and concisely, preferably in writing (for use as evidence if this subsequently goes to court) you are more likely to reach an agreed settlement.

You may have to compromise on the settlement unless there are absolutely clear breaches of contract, so it may be expedient and less costly in the long run to accept a lower figure.

You also need to consider that there are absolutely no guarantees as to the outcome of the case, and that the preparation for a case involves time and effort if you are to stand any chance of winning. It’s a good idea to purchase one of the inexpensive guides which are available – see below.

You should also be aware that even if you win, your debtor may not be able to pay the debt. There’s no point in wasting time and money on a “man of straw” as one lawyer once told me. If there’s no chance of collecting now on or in the future, then you may need to put the debt down to experience and move on.

However, don’t give up easily: it’s been known for debtors to approach landlords years after the case to pay-up and have a CCJ removed – CCJs prevent debt defendants getting tenancies, finance and insurance for years to come.

If your debtor is a company, you need to establish its ability to pay. The directors will not be liable unless you have personal guarantees from them, and they can go into administration quite easily if your claim compromises their business, which means you may get very little of your debt when the company is wound-up.

If your debtor has moved address, you may need to use the services of a tracing agency to get their address – you cannot sue someone unless you know where they are living. If they have gone abroad, I’m afraid you have little chance of recovery.

Tips on putting your case together

  • Read one of the inexpensive guide books on small claims – Amazon or book stores.
  • Download the necessary court claims forms
  • Set out your Particulars of Claim clearly and concisely. Remember, a judge does not want to spend his or her valuable time reading through a long essay to justify how you feel about the defendant’s behaviour – stick to the facts and keep emotion out of it. If it’s rent arrears, state simply, my claim if for rent arrears of x amount.
  • Gather your documentary evidence together, organise and reference it in your particulars of claim.
  • Proving that money has not been received is tricky, I suggest you take along original bank statements to show the judge.
  • Make several copies of everything, keeping the originals for yourself to use in court and send the requisite number to the court administrators.
  • In some cases you may need an expert report, for example in disputes over service changes a chartered surveyor’s report would be handy, but you will only get the costs back if the defendant has agreed to it.

Appearing in Court

These hearings are quite informal with a judge sometimes sitting round a table with both parties. My advice is to go smartly dressed, behave in a respectful manner to the defendant and the judge (referred to as sir or madam) and stick to the facts, with no long emotional tales, even if the defendant resorts to this.

If you wind the judge will usually ask you for and estimate of the fees to-date which may be different from those at the time you applied. You can also ask for costs. The judge will then decide how much you are awarded for your costs on top of the claim amount.

Once you get the County Court Judgement you will need to enforce it. There are several ways of doing this:

Enforcing a Judgment

If you win, you may have to ask the court to take steps to collect the payment. You will then have to pay extra court fees – contact your local court for details.

Establish what the person or business can afford to pay

It might be worth finding out what the person or business can afford to pay. You can ask the court to order a debtor to attend court to provide evidence of their income or spending, bank account statements etc.

If the debtor is a company, you can ask for an officer from the company to attend court, to give details of their accounts.

Next you need to decide how your will try to collect. Your options are:

Use the court bailiffs

You can ask the court bailiffs to collect the money. To do this you have a choice of one of the following:

  • complete warrant of execution form – get this from the court or on-line
  • use Money Claim Online website

The bailiff will ask the judgement debtor for payment within 7 days. If the debt is not paid, the bailiff will visit the debtor’s home or business to ascertain if any property is available to be sold to pay off the debt.

Attachment of earnings – have the money deducted from wages

You can ask the court to send an order to the person’s employer. This will order the employer to deduct money in stages from the debtor’s wages to pay the debt. To do this you will need to complete an Attachment of Earnings Order.

Apply for assets or money in an account to be frozen

The court can order a bank or building society to freeze a private or business account. To do this you must complete a Third Party Debt Order. It is up to the court to decide if money from the account can be used to pay the debt.

Apply a Charge to the debtor’s land or property

You can ask the court to charge the debtor’s private or company’s land or property. To do this you need to complete a Charging Order. This means that if at a future date that land or property is sold, the charge must be paid before the debtor gets his or her money.