Bankruptcy limits increase

21/01/2016

It has always been the case that the Small Claims Court can be a very useful resource for small businesses who are either trying to recover payment under an outstanding invoice or who have had experience of bad workmanship. Any outstanding debt up to, and including, £10,000 will be dealt with as a small claims throughout your local County Court. Going to Court, however, should always be the last resort before claiming any outstanding payment due.

The Small Claims Court has been in existence for the last 26 years and the small claim level started at £300 and has increased over the years to today’s level of £10,000.

The Government is now suggesting that the Small Claims Court level should increase from £10,000 to £15,000.

As with any Court claim you must get your “ducks in a row”. You must prepare by getting documentation in support of your claim and copies of these documents need to be served upon your opponent as these are the documents that you wish to rely on in respect of your claim.

Your debt may be, for example, £8,500, and although the Court would allocate this to the small claims track, the information and the detail surrounding your claim can be in some circumstances very technical and would need considerable detail to set out your claim in order for the Court to make a decision. In some circumstances experts may be needed if, for example, it was a building dispute or a boundary dispute.

If the Small Claims Court level increases the unknown at the moment is the question of costs. At present the general rule is that no costs are recoverable if you are successful in respect of your claim. You are entitled to recover basic costs, ie the Court fee which you paid on the issue of proceedings, expenses of any witness who has reasonably incurred travelling to and from the Court, and any loss of earnings due to your attending the Court (up to a specific maximum).

There is one specific rule, which has been around since the inception of the Civil Procedure Rules, that says the Court may order a party to pay a sum to another party in respect of that other party’s cost, fees and expenses, on the basis that the Court finds that the party has behaved unreasonably in relation to their conduct in defending a claim. Unfortunately, there is no guidance either in the Rules or any Practice Directions as set down by the Court as to what amounts to “unreasonable behaviour”. It may well include making unnecessary applications, refusing to negotiate, failure to comply with pre-action protocols, deliberately mis-stating the value of the claim or failing to attend Court.

We’ll issue further guidance as and when any changes are made to the procedures or the level of debt recoverable at the Small Claims Court.

For further information about recovering monies owed to you please contact Richard Anderson on 01782 205000 or email richard.anderson@beswicks.com