Part 9: Chapter 49
PART 9: REGIMES WHERE THERE IS NO COST SHIFTING
CHAPTER 49. SMALL CLAIMS TRACK
1. INTRODUCTION
1.1 Small claims. “Small claims” are generally claims up to £5,000 in value.1 They proceed upon the small claims track, where hearings are conducted with a measure of informality. However, personal injury claims are excluded from the small claims track if general damages claimed for the injury exceed £1,000.2 Claims for housing disrepair are excluded if the estimated cost of repair exceeds £1,000 or the financial value of any other damages claim exceeds £1,000.3
1.2 Features of the small claims track. The small claims track offers a speedy process from issue to trial. In most cases there is no preliminary hearing. The trial is relatively informal and the rules of evidence are relaxed. The trial is generally referred to as the “hearing” and takes place before a district judge.4 Parties usually present their cases without the assistance of lawyers. A party may engage a lawyer if he/she wishes, but generally cannot recover the costs of such representation. The use of expert evidence is limited on the small claims track and permission must be obtained in advance. Parties may submit their cases in writing instead of appearing at the hearing, if they choose.
1.3 Court fees on the small claims track. Court fees on the small claims track are lower than on other tracks. The issue fee is between £30 and £108, depending upon the size of the claim. The allocation questionnaire fee is between nil and £35. The hearing fee is between £25 and £300. Persons of limited means may obtain relief from court fees.
1.4 Costs on the small claims track. Because the small claims track is intended primarily for litigants in person, the costs of each side are generally modest. The right of the winning party to recover costs is limited to such an extent that, effectively, there is no cost shifting on the small claims track. The costs rules are explained in greater detail in section 2 below.
1 CPR rule 26.6(3). This is discussed further in chapter 24.
2 CPR rule 26.6(1)(a). This is discussed further in chapter 31.
3 CPR rule 26.6(1 (b).
4 Or deputy district judge. In this chapter I use “district judge” to mean district judge or deputy district judge.
R
EVIEW OFC
IVILL
ITIGATIONC
OSTSChapter 49: Small claims track
Part 9: Chapter 49
2. RELEVANT RULES AND LEGISLATION (i) General provisions
2.1 Primary legislation. The small claims track is not the subject of primary legislation. Section 64 of the County Courts Act 1984, which provided the basis for small claims “arbitration” in the county court prior to April 1999, does not underpin the small claims regime of the Civil Procedure Rules. The rules concerning the small claims track have been made by the Rule Committee in the exercise of its powers under sections 2 and 3 of the Civil Procedure Act 1997.
2.2 Rules governing the small claims track. The rules governing the small claims track are set out in CPR Part 27. Rule 27.4 enables the court to give directions (either standard or tailor-made directions) leading up to the hearing. Rule 27.5 provides that permission must be given for expert evidence (in practice this is seldom required in small claims). Rule 27.6 provides for preliminary hearings. In practice a preliminary hearing is only held if (a) it is really necessary to get the case in order or (b) it is likely to lead to an early resolution of the case. Rule 27.8 governs the conduct of the hearing. This rule provides that the hearing will be informal; that the strict rules of evidence do not apply; that the court need not take evidence on oath and may limit cross-examination; and that the court must give reasons for its decision. Rule 27.9 permits a party to submit a written case instead of attending the hearing in person.
2.3 Rules disapplied. Rule 27.2 provides that a number of the more onerous provisions of the CPR have no application on the small claims track, in particular:
x Part 25: interim remedies, except injunctions.
x Part 31: disclosure and inspection.
x Part 32: evidence, except the court’s power to control evidence.
x Part 35: expert evidence, except (a) the court’s duty to restrict expert evidence, (b) the expert’s overriding duty to the court, (c) provisions re single joint experts.
x Part 36: offers to settle.
The purpose behind disapplying the above rules is (a) to remove technical complexity and (b) to enable the court to do justice with reasonable flexibility as between litigants who are often unrepresented.
2.4 Practice direction. The practice direction to CPR Part 27 supplements the above rules. The practice direction provides that a circuit judge may conduct a small claims track hearing, but in practice this seldom happens because of the potential difficulty re any appeal. Appendix A to the practice direction identifies the information which the court usually needs in common types of case on the small claims track.
2.5 Appeals. Appeal lies from the district judge’s decision to a circuit judge, subject to the restrictions set out in Part 52. Permission to appeal will only be granted where (a) the appeal would have a real prospect of success or (b) there is some other compelling reason why the appeal should be heard.5
5 CPR rule 52.3(6)
Chapter 49: Small claims track Part 9: Chapter 49
(ii) Provisions re costs
2.6 Strict limitation on costs recovery. Rule 27.14 strictly limits the costs which may be recovered by the winning party on the small claims track. The principal recoverable costs6 identified are:
x court fees;
x travelling expenses of that party or his witnesses;
x loss of earnings (capped at £50).
In the relatively rare cases where there is expert evidence, the recoverable expert fees are capped at £200.
2.7 Exception for unreasonable conduct. CPR rule 27.14(2)(g) permits the court to award:
“such further costs as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably.”
Thus where one party behaves unreasonably the “cap” may be lifted and the court may order the unreasonable party to pay some or all of the actual costs of the other side. Mere refusal of an offer which later turns out to have been sufficient does not constitute unreasonable behaviour, but the court may take this into account when considering unreasonableness.
2.8 Costs on small claims track appeals. Until October 2006 the costs of small claims appeals used to be at large. Now, however, the recoverable costs on appeal are restricted to the same extent as the recoverable costs of the original hearing. 7
3. INTERPRETATION BY THE COURTS
3.1 No guideline cases. There appear to be no guideline cases as to the interpretation or application of CPR Part 27. The rules are clear and they are applied by district judges in a common sense way.
3.2 Unreasonable conduct. I understand from district judges that the
“unreasonable conduct” exception8 is very rarely applied in practice. District judges do not generally regard it as unreasonable for a party to pursue a hopeless claim or defence. The parties are generally unrepresented and without legal advice. They are entitled to the court’s decision upon their case in which – rightly or wrongly – they believe. Nevertheless the power to make an additional costs order in an appropriate case is a valuable one. It may be used, for example, where one party’s conduct necessitates an adjournment.
6 CPR rule 27.14(2)(b) provides for the cost of legal advice (capped at £260) to be recoverable in proceedings which include claims for specific performance or an injunction. Such an award is extremely rare. The district judges to whom I have spoken do not recall ever encountering such a case.
7 CPR rule 27.14(2).
8 In CPR rule 27.14(2)(g), discussed above.
Chapter 49: Small claims track
Part 9: Chapter 49
4. PRACTICAL CONSEQUENCES
4.1 Hearing. In the majority of cases the hearing is concluded within one to one-and-a-half hours. It is not daunting and the unrepresented party is able to have his or her “day in court”.
4.2 Parties not deterred by level of costs. The court fees (set out in section 1 above) are an unwelcome burden, but are proportionate to the sums in issue. Apart from court fees, the costs incurred by each party are usually modest. The costs order made against the losing party is quite often in the region of £60 plus the court fees9 (if any) paid by the winning party.
4.3 Relatively few appeals go forward. It is not unusual for the losing party to seek to appeal. In practice, however, because of the high hurdles set by CPR Part 52,
10 permission to appeal is granted in relatively few cases. In practice, therefore, the great majority of small claims begin and end with the hearing before the district judge.
4.4 Level of customer satisfaction. I understand from “Which?” (the consumers association)11 and from district judges that, by and large, litigants are satisfied with the procedures on the small claims track. In a survey of 1,000 consumers who had used the small claims track, 85% said that they would or might use it again.12 Although no-one likes to lose a case (and litigants with claims below £5,000 are no exception), generally litigants on the small claims track (a) feel that they have had a chance to state their case and (b) are not deterred by the risk of an adverse costs order.
4.5 Issue for consideration. Is the costs regime on the small claims track suitable for introduction into any other part of the civil justice system? Or should it be confined to the small claims track?
9 There will be no court fees due to a successful defendant who has not counterclaimed.
10 Summarised in section 1 above.
11 See chapter 10 above.
12 “Improving the Small Claims Track for Personal Injury” published by the Association of British Insurers in July 2006.