Keeping the costs of small
Any monetary claim which has a financial value of £5,000 or
less will generally be allocated to the small claims track (court).
In this track, the strict rules of evidence and procedure do not
apply and the trial (or final hearing) is relatively informal.
For this reason, many litigants
conduct proceedings themselves rather than instruct solicitors.
Although there is no restriction on
the use of qualified representatives in such cases, the costs
recoverable under the small claims track are restricted. They do
not usually include the solicitor’s costs of preparing the case or
appearing at the hearing.
We are currently acting for a
client defending an alleged mis-selling of payment protection
insurance (PPI), where a borrower acquired a vehicle on hire
purchase through a dealer. The financial value of the claim is
within the small claims limit of £5,000 and we would ordinarily
expect such a matter to be dealt with in the small claims
However, the borrower’s solicitors
are instructed upon a conditional fee agreement (CFA) where the
solicitor can claim up to an additional 100% of its fees by way of
a success fee if the claim is successful. Determined that the
matter should not be heard in the small claims court, the
borrower’s solicitors argued that the matter was more complex than
that court could handle and that there would be at least four
Their concern that the case should
not be heard in the small claims court was also no doubt driven by
their own interest in the CFA and the success fee.
The court accepted our submissions
the claim was suited to the small claims track because:
- The borrower’s claim was
purely monetary and limited to the amount of PPI that had actually
been paid. That sum was less than £2,600, putting the claim within
the financial limits.
- The matter was not
complicated. The law in this area has been clarified by recent
cases and the legal arguments much rehearsed.
- Similar types of cases have
already been allocated.
- There were no third parties
for whom the outcome of this matter was relevant.
- It would be disproportionate
and a drain on resources for this matter to be allocated to any
Similar arguments can be raised no
matter what the subject matter of the dispute. The small claims
track allows for matters to be listed for up to one day. Where
legal arguments are clear, this will often be sufficient.
Finally, if a finance company is
successful in defending a claim, it should check its terms and
conditions. It might be entitled to its costs despite the usual
small claims court position.
The author is a partner in
Wragge & Co’s finance litigation team