If you've a consumer or business issue that you've been unable to resolve with informal discussions or negotiation, the next step is usually civil legal action.
As the Claimant in a claim it will cost you time and money to issue court proceedings and there are three 'tracks' which a claim can be allocated to depending on the complexity and value of the matter.
The majority of disputes and subsequent claims fall into the Small Claims Track which is designed for use without the need of a solicitor. However, in reality, the process can be complex with various procedures, dates and correspondence all to be complied with.
But before starting down the path of issuing a claim, you need to have an understanding of how much it may cost to take someone to the small claims court.
Small Claims Court Fees.
Being the Claimant, you will need to the pay fees to the County Court to start and run the claim. These Court Fees are payable at two key stages of the claim and are required in advance, so ensure you have these available prior to starting your claim.
Should your claim be successful, and a judgment be returned in your favour, all the Court Fees you have paid will be added to the amount the Defendant must pay you.
Small claim court fees and limits and can vary across the UK as well as with different types of claims (personal injury, housing disrepair etc). In this guide we'll be referring to the process in England and Wales for Money Claims.
Small Claims Court Issue Fee.
The Issue Fee is required when you first submit your Claim Form to the court and start your claim.
A claim can be submitted with a paper claim form or via the Internet using the Money Claim Online service. The benefit of submitting the claim online is that the Issue Fees are slightly lower, and you won't have to print and post the documents. You will however need to register for an online account and you can't use this service if you don't know the exact amount you are claiming for.
Regardless of which method you use to submit your claim, the Issue Fee will be based on the amount you are claiming or the amount that you are estimating the claim is worth.
Correct as at 14 April 2020, but please see EX50 for full details and latest fees.
If using the online service this fee is payable by credit or debit card prior to submission. If you use a paper claim form, you will need to include a cheque or postal order for the correct fee.
If your claim isn't disputed or defended, then judgment will be awarded in your favour and no other court fees will be payable.
Small Claims Hearing Fee.
If the claim is defended, then the case will need to proceed to a small claim hearing unless an agreement or settlement is reached beforehand. The court will send both parties a proposed allocation to the small claims track along with a Directions Questionnaire.
The Directions Questionnaire will ask you details about your claim in preparation for a hearing, including the proposed track, court location, any expert evidence, witnesses and if there are hearing dates to avoid.
While claims are usually allocated to the track based on the amount that is being claimed, the judge can alter this based on other factors, such as the complexity of the matter.
Once both parties have submitted a Directions Questionnaire, this will lead to an order from the court confirming the track and giving a date for the hearing, exchange of evidence and a date for paying the hearing fee.
As with the other small claims court fees, the hearing fee for a small claim hearing will be based on the amount being claimed:
Fees correct as at 14 April 2020, but please see EX50 for full details and latest information.
Small Claims Mediation Service Cost.
The Directions Questionnaire will also ask if you agree to your claim being referred to the Small Claims Mediation Service. If both parties agree to this, then a mediation appointment will be organised by telephone and a mediator will attempt to reach a settlement over the course of an hour or so.
The HMCTS Small Claims Mediation Service is free of cost so should be seriously considered as an option. Also, mediation appointments will be available quicker than court hearings and you won't incur the Hearing Fee if the claim is settled at mediation.
If mediation fails, then the claim will proceed to a hearing and the Hearing Fee will become due.
Small Claims Expert Costs.
Depending on your dispute, you may require an expert to provide evidence to support your claim. You will need the court to grant permission to use an expert and if permission is granted you will then need to pay the expert to produce written evidence.
As with court fees, if using an expert has been approved and your claim is successful, the cost of the expert will be recovered from the defendant up to a maximum of £750.
What costs can be recovered in small claims?
If your claim is successful, as well as the court fees and approved expert costs, there may be other items you can claim and recover from the losing party.
There are various rules and limits around what can be claimed so it is always a good idea to get legal advice before starting your claim. Without legal advice then there is a risk you could miss out on recovering costs that you are entitled to claim from the opposing party.
Examples of small claim costs.
Unpaid Invoice or Loan debt of £1,400.00
£70.00 - Online Issue Fee (due when you submit your claim)
Faulty Goods valued at £2,800.00
£105.00 - Online Issue Fee (due when you submit your claim)
Poor Service or Workmanship costing £450.00
£35.00 - Online Issue Fee (due when you submit your claim)
How much does a lawyer cost for the small claims court?
Although the small claims process is designed to be conducted without legal representation, many people still choose to use a solicitor and can recover some of these costs as part of their claim.
The way legal representation costs for small claim are calculated is complex and relates to the claim amount, how the Claim Form is served and the number of Defendants. There are then further costs that can be claimed if judgment is entered which depends on the amount claimed and how the judgment was obtained.
Correct as at 14 April 2020, but please see CPR Part 45 for full details and latest fees.
Therefore, if you choose to use a solicitor for you small claim, you can typically expect to receive around £50.00 to £130.00 awarded towards your legal costs if your claim was successful.
The relatively low legal representative costs that are recoverable in the Small Claims Court is the reason you don't see 'no win no fee' funding being an option when dealing with small claims. So, if you do decide to seek legal help with a claim ensure you look for a law firm offering fixed fee small claims services.
Do I need a solicitor for the small claims court?
While you may not be able to recover all your legal costs as part of your claim, there are still some compelling reasons to consider instructing a solicitor for a small claim.
Firstly (and most importantly) a solicitor will be able to advise you on the law and your prospects of success. Spending money on issuing and attending a court hearing only to have no basis for a claim would be an expensive mistake.
Secondly a solicitor will be an expert on litigation and the court process, ensuring you comply with the relevant directions/deadlines and that your claim is comprehensive. If your claim is significant, missing out or even miscalculating an item such as your interest entitlement can prove costly.
Finally, even if your claim is successful and judgment is awarded in your favour you may still need to enforce that judgment. A lawyer can advise you on the most cost effective and productive enforcement methods that are available.
Should I take someone to the small claims court?
Taking a person or a business to the small claims court isn't free and not without risk. Knowing the potential costs along when fees will require paying is likely to influence your decision on if it is worthwhile process to undertake.
However, if your claim has merit and you can afford the court fees, then many of your small claims court costs will be awarded back to you should your claim be successful.
Being a business owner means that making agreements and signing contracts can be a regular occurrence. These formal agreements protect your business and ensure that suppliers, business partners and even customers uphold their end of the contract.
The clauses that are present in these contracts form the backbone of a business's operations, covering the supply of goods, delivery of services, timeframes for completion and when payments are due. As such not complying with any of the conditions in a contract will often lead to a dispute.
When a party fails to fulfil the terms and conditions in a written agreement, without a lawful or valid excuse, this is referred to as a breach of contract and you must decide how to deal with the breaking of the agreement.
But before you start filling out the court forms, a first step in dealing with a breach is to formally advise the other party with written notice, known as a 'Letter of Claim' or 'Letter Before Action'.
So it's important to understand the purpose and consequences of a Breach of Contract Letter Before Action prior to issuing one.
What is a Letter Before Action?
A Letter Before Action is the starting point of many forms of civil legal proceedings and basically sets out your legal claim. It's important to keep in mind that while a Letter Before Action is the first step in taking formal action, it should be the last step in trying to deal with the issue informally.
Calling in lawyers and involving the court at the first inkling of a problem usually won't be helpful. If an aspect of a contract has not been complied with or is outstanding, then a polite (but firm) enquiry to the other party on the reason and how they intend to resolve the issue should be your first act.
Then if informal discussions don't start the process to resolve the issue, sending a Letter Before Action is often a low-cost route to opening a dialogue with the other side to achieve a resolution.
What should a letter before action contain?
Background and context
The letter should start by referencing the specific contract or agreement that has been breached, when it came into force and what it covers. You shouldn't assume that the person who deals with the letter is aware of the existing business relationship and that an agreement is in place.
Circumstances and facts
Briefly explain what has occurred and how it is considered to be a breach of the agreement. Ideally point to a specific obligation or clause in the contract and how this obligation hasn't been met. There may also be breaches to legislation or statutory rights (such as the Sale of Goods Act) that can be referred to. If the failure has resulted in a loss or damage that can be calculated, then this should also be included.
Remedy and resolution
State how the breach can be remedied and how the matter can be resolved to your satisfaction. This resolution will be down to the type of agreement and specifics of the breach, but could involve immediate payment of an outstanding amount, the return of a supplied product, cancelling of a service/contract or a monetary payment to cover a loss.
Timeframe and response
A reasonable period should be given for the other party to comply or at least acknowledge and respond to the letter. A timeframe of at least 14 days would be a minimum, however there may be a relevant pre action protocol that the letter needs to specifically comply with such as with Debt Claims or Construction and Engineering Disputes.
Consequences and legal action
Finally, the whole point of the Letter Before Action is to set out your claim and place the other party on notice that a failure to act could lead to you starting legal proceedings. This should be stated in the letter along with highlighting that you will also be looking to recover any additional costs that are involved with court action from them as well.
Legal Advice with a Breach of Contract Letter.
Before starting down the path of court action, it's always advisable to seek some initial legal advice. While the breach may be an obvious one, a contract dispute lawyer will be able to advise you on your right of action, prospects, how any damages would be calculated and what legal proceedings may cost.
Importantly a solicitor can also draft your Letter Before Action ensuring it accurately represents your claim and that it complies with the court's Civil Procedure Rules and Pre-action Protocols.
A well-researched and professionally drafted Letter Before Action is your best chance of achieving an early and cost-effective resolution to a contract dispute, so it's well worth getting a solicitor involved from the outset.
If you purchase a second-hand item from a business, trader or charity shop, the consumer rights that you are entitled to are extremely similar to those you have when buying an item that's brand new. Namely the goods should be:
These rights in the UK are defined in the Consumer Rights Act and cover any purchase from a trader made since October 2015.
If you discover a fault with an item, this act gives you the right to return it for a full refund within the first 30 day of purchase. After the first 30 days (but within the first 6 months) you can still return the item, but you must give the retailer the opportunity to replace or repair the fault.
After 6 months, to return the item you must prove that the fault was present when it was first purchased, which can be more difficult if a product was second hand or pre-owned from the outset.
Second hand products may have imperfections and faults that are attributed to normal wear and tear. In some cases, there may be quality issues with a product due to its age and how it has been previously used.
When considering the laws on buying second hand goods and your consumer rights, it's important to remember that second hand products or refurbished goods do not have to be of the same quality as new items. Therefore, you cannot simply reject an item because it is not of the same standard as you would expect if it was brand new.
Fit for Purpose with second hand goods.
Fit for purpose means that the item must function correctly and last for a period of time that is 'reasonable'. In relation to used goods the item should function fully for the purpose it was designed and sold for. However, being a used item, it may show signs of being pre-owned and not last as long as you would expect a brand-new item to last.
Satisfactory Quality with second hand goods.
Satisfactory quality is basically a standard that a reasonable person would consider as acceptable taking into consideration the item's description, price and circumstances of the purchase. It is most often relating to a product's appearance, freedom from defect, durability and safety. Obviously, the quality of an item can be subjective, but expectations should generally be lower if you purchase an item that has been previously used.
As Described with second hand goods.
As described means that an item must be accurately advertised and described by the trader. If you asked questions about the product in store prior to purchasing, such as its warranty status, service history or how it currently operates, the information given should all be correct. Likewise, if the salesperson advises you of a fault with an item, then it is 'as described' and you can't reject it due to it having the fault.
Warranty on second hand goods.
Warranties or guarantees are an optional addition to your legal (statutory) rights as a consumer.
Warranty can be provided by the manufacturer as part of the product or able to be purchased separately and ran by a third party (e.g. used-car warranty, extended appliance guarantee etc.)
Your eligibility to claim under the warranty will depend on its terms and conditions, however it is not uncommon for there to be numerous exclusions. These can range from the age of the item (12 months from original purchase), where it was purchased from (an authorised retailer or dealership), being conditional on regular maintenance (serviced every year) or limited to certain faults (excludes wear and tear).
The specific warranty policy needs to be checked to confirm if an item is eligible for a repair or return. But it is always worth checking especially on recently manufactured products.
Buying second hand goods online.
When buying second hand goods online, over the telephone, at home or through mail order from a retailer you will also benefit from additional protections. Namely the Consumer Contract Regulations, or to give it its full name The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.
These regulations cover what was previously known as 'Distance Selling' and provides some extra rights, even when purchasing a used product. These rights include:
The retailer is entitled to expect that anything sent back is returned in the exact condition as it was received. This can sometimes be a point of dispute when returning second hand goods as they are likely to have not been in original packaging etc. in the first instance.
An important point to remember when buying second hand products online is that not every website purchase is classed as buying from a business. When you buy from sites such as eBay, Facebook Marketplace, Gumtree, Shpock or Amazon Marketplace you will need to check if the actual seller is a business or trader. As if they are a private individual, then consumer rights and contract protections will not apply to your purchase.
However many online trading sites do have their own buyer protection policies and dispute resolution processes which may be able to be used.
Consumer Rights and private sellers.
If you purchase items from a private seller via a web advertisement, local newspaper ad or car boot sale it is important to be aware that you don't have any consumer rights. For the Consumer Rights Act to apply you need to be an individual making a purchase from a business.
If you do buy a second-hand item from a private individual it only has to match any advertised description. This limited protection falls under The Misrepresentation Act for when an untrue fact or statement is made by the seller to convince a buyer to make a purchase.
A private seller isn't under any obligation to tell you about any faults or defects, and there's no requirement for the item to be of satisfactory quality or suitable for any specific purpose.
So, as you may have heard, purchasing from a private seller is a matter of 'buyer beware'. You should check the product thoroughly to ensure you are 100% happy before buying it.
Legal advice on second hand rights.
In the majority of cases once you make the retailer aware of the fault, they should deal with your concerns inline with your consumer rights. If they refuse, the next step is escalating the matter as a complaint and then involving any associated ombudsman which should be detailed in the retailer's terms and conditions.
If all these steps fail, your only available method of resolution may be to start court proceedings. If the value of your claim is less than £10,000, it will be treated as a 'small claim' which means there are set fees to issue the claim and only limited legal expenses are able to be added (see our guide on how much does it cost to take someone to court).
Therefore if the value of your consumer claim is significant, it will be worthwhile seeking legal advice on your dispute before beginning court action to ensure the consumer laws are on your side.
Catalyst Law are team of legal professionals with over 20 years' experience helping businesses and people with their legal problems.
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