Small Claims Action Costs: our recent exception to the norm

“I know my claim is for less than £10,000. The defence is nonsense and the defendant knows that. I’m told that I’m highly unlikely to recover any of my legal costs. But I can’t take the risk of losing because there are really important principles at stake…”

Have you ever contemplated this dilemma when your small claims action is heading for trial? Do you wonder about the lesser evil, and end up contemplating settlement on terms that would stick in the craw and leave your opponent with an undeserved windfall gain? Or do you accept that a day in court with legal representation will come at a price?

The court rules do indeed impose a “no costs” regime in small claims actions, to encourage an informal approach to their disposal. But there are exceptions. One of them is “costs as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably”.

What might count as unreasonable behaviour? We had a good example recently. It involved a defendant who claimed that he had never received goods worth just under £10,000. At the time, he showed none of the natural shock and outrage that might have been expected at their apparent non-arrival. He then declined to engage with a Royal Mail investigation, but waited a few weeks before clawing back his credit card payment, leaving our clients out of pocket. He also closed his mind to the fact that he had agreed terms and conditions including the designation of his home address as a tracked mail delivery point.

After the issue of proceedings, in the course of the next 15 months before trial, he chose not to comment on an item of crucial evidence, namely the GPS tracking information that showed the time, date and location of the delivery. He also denied that the signature on the tracking device was his, despite his somewhat unusual name being printed below the signature.

Against that background, no one expected him to change his mind and pay the claim in full with barely two weeks to go before the trial. But that was exactly what he did.

We arranged for this scenario to be put to the District Judge. We presented an outline of actual costs incurred by our clients in pursuing the claim, around £4,500 worth. The DJ accepted that the defendant’s conduct had been so unreasonable that it justified treating this action as an exception to the norm, and awarded our clients just over £3,500.

The moral of the story? Know the rules, and they may serve you well. Or, as the case may be, beware of the rules because they may catch you out when you most deserve it.

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