Receiving a letter from solicitors informing that someone is making an injury claim against you can certainly have a negative impact on your day.
Depending on the circumstances of the accident, you may be confronted with a Letter of Claim or a Claim Notification Form which set out full details of the alleged incident and injuries. But no matter what correspondence you receive there will be strict response timeframes set that you will be told you need to abide by.
Often the first reaction to this letter is one of worry, as you may not know how you are going to respond to the claimant solicitors, defend the claim or even pay the compensation.
However, the good news is that the vast majority of claims are usually covered by some kind of insurance policy and we're going to explain the scenarios where insurance may cover the claim as well as your options when no insurance is available.
Defending Road Traffic Accidents.
As it's a legal requirement that you must have at least third-party motor insurance to drive on UK roads, the claim is likely to be fully covered by your vehicle insurance. While it is likely your insurer has already been notified of the accident and subsequent claim, your first action should be to advise them of the solicitor documentation you have received.
One important item to remember is that not having the optional 'Legal Expenses Cover' on your policy will not stop your insurance company acting to defend a claim made against you. Comprehensive, fire and theft and third party insurance should all provide sufficient cover to defend the claim against you.
When you report the claim, you will almost certainly be asked about the accident circumstances, vehicle damage and any evidence you have. This will be used to establish liability (fault) for the accident which will determine how your insurance company handles the claim.
Your insurer should then deal with the matter from this point forward including complying with the various deadlines and disclosure requirements. If the case gets to the stage of court proceedings, then your insurer will also appoint a solicitor to defend the case who may also want to discuss the incident with you.
There can be instances where your insurance company refuses to cover you or when you don't have suitable insurance in place for a road collision (i.e. a cyclist injures a pedestrian). In these cases, the claim may be dealt with by the Motor Insurance Bureau who handles uninsured driver claims or you may need to seek your own representation.
Injury Claim by an Employee.
If a member of staff is making a claim for injury, usually your Employers' Liability Insurance will cover your business' legal costs to defend the claim, as well the payment of any compensation that is ultimately awarded.
Often the Claim Notification Form from the claimant will specifically request your insurer's details and instruct you to pass the documents on to them. Once this is done, your business insurer will begin investigating the incident and appoint one of their panel solicitors should it become necessary.
For most businesses that have employees, this type of insurance is compulsory under the appropriately named Employers' Liability (Compulsory Insurance) Act. However, there are some exceptions where employee insurance isn't mandatory such as:
If an injury claim is made by an employee and no appropriate business insurance covers the claim, then you will need to seek legal advice as soon as possible. There are various 'pre-action' steps and deadlines that need to be met and failing to comply with them can have a significant impact on the cost of the claim.
Injury Claim by a Customer or Member of the Public.
Unlike other types of insurance, taking out Public Liability Insurance is optional for a business. If in place, it will cover your business premises when customers visit you as well as if a member of the public is injured during the course of your work.
While Public Liability Insurance covers you for day-to-day business activities, it often doesn't cover you for injuries caused by a product you have manufactured or supplied. For this Product Liability Insurance is often required.
So you will need to consider which of your insurance policies applies to the circumstances that allegedly caused the claimants injury.
If your business has a suitable Public or Product Liability Insurance policy the claim documentation can be passed on to them. As with Employers' Liability Insurance the policy should cover legal fees to defend the case along with the payment of any compensation that is awarded by the court or agreed in settlement by your insurer.
However, as Product/Public Liability Insurance isn't mandatory and there can be various exclusions depending on the policy purchased, it is the area where we see the most claims that need to be dealt with on a private basis.
Injury Claim Against a Homeowner.
If someone has been injured whilst lawfully on your property or in your home, then your Home Insurance may cover the cost of the claim depending on the accident circumstances. The 'personal liability' or 'liability to the public' section of a Home Insurance Policy often covers the owners and occupiers if they are held responsible for an accident that occurs in or around the property.
Some Home Insurance products even provide cover for policyholders away from the property, so it is a policy always worth checking.
There can however be many exclusions to Home Insurance liability cover, so you will need to consult your policy and speak to your insurer about whether a claim is covered. Common exclusions may be:
I've a personal injury claim against me with no insurance....
After you've exhausted the potential insurance policies that may indemnify you, you may find that you're on your own in dealing with the claim.
At this point it is critical to seek a personal injury defence lawyer who can advise you on how the claim should be handled. They can review the circumstances around the injury, provide a professional opinion of the prospects of the claim and advise on the potential next steps.
Even if you don't wish to defend the claim and want to admit liability for the accident, a defence solicitor will still be able to make sure a suitable settlement is reached with your best interests in mind.
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 4 February 2019, 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 the hearing, including proposed court location, any expert evidence, witnesses and any hearing dates to avoid.
Once both parties have submitted a Directions Questionnaire, this will lead to an order from the court giving a date for the hearing, exchange of evidence and a date for paying the hearing fee.
As with the Issue Fee, the Hearing Fee will be based on the amount claimed:
Fees correct as at 4 February 2019, 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 4 February 2019, 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 £60.00 to £100.00 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 costs will be awarded back to you should your small claim be successful.
Chasing debts is rarely an enjoyable activity when running a business, and you can be forgiven for not jumping on every overdue invoice the moment your payment terms have expired.
If an approach of just tolerating late payments sounds familiar, you're not alone. Research from ABFA has found that small businesses now wait an average 72 days for payment which is 11 days longer than in the peak of the 2009 recession!
But when weeks turn into months which then turn into years, you may worry that you've missed your opportunity to take formal action. However, you may be surprised how long you have to pursue a debt before it is legally 'statute barred'.
Statute Barred Debts
Being 'statute barred' means that the defined time period you have to use certain legal avenues to pursue a debt has expired. While this doesn't mean that the money is no longer due, or the debt no longer exists, it does restrict your legal options when pursuing a debt.
The time limits that formal court action must be made by are detailed in the Limitation Act 1980 and court action is usually defined as a debt claim being issued at the county court.
There are different time limits for different areas of law, but when the relevant time limit has passed, this act is able to be used as a defence by the debtor to prevent you obtaining a county court judgment (CCJ) against them.
How long do you have to claim unpaid invoices?
Most invoices and debts fall under the definition of a ‘Simple Contract’ in the Limitation Act, meaning you have six years to commence legal action to recover the debt in England and Wales.
If money is owed in relation to a deed (i.e. a mortgage or property) then the limitation period is 12 years.
If you have already been through the court process and managed to obtain a court judgment (CCJ) against the debtor, then no limitation period applies to enforcing the judgment.
You will also need to consider any pre-action steps that have to be taken before you issue proceedings such as the Pre-action Protocol for Debt Claims that may require you giving up to 30 days' notice before starting court proceedings.
When does the limitation period start for a debt claim?
For simple contracts the Act states that the limitation period will expire six years after the 'cause of action'. A 'cause of action' can be thought of as when a breach of your agreement has occurred.
For example, this could be when:
How to claim unpaid invoices
Dealing with a debt that was incurred several years ago may seem like a complex process, but if you have documentary evidence that the amount is due it should not prevent you from pursuing the money owed to your business.
A solicitor will be able to advise you on your legal options to recover your debt, including sending a letter before action, issuing a claim and potential limitation defences. Also if the debt isn't disputed you may be able to claim late payment interest and compensation which can be significant on long overdue debts.
While six years may seem a long time, the sooner you act the more chance you have of recovering the amount owed and avoiding your debt claim being statute barred.
Catalyst Law are team of legal professionals with over 20 years' experience helping businesses and people with their legal problems.
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