What is a Small Claim and how can I recover one?

The recovery of money from a debtor is often a stressful process. In the current economic climate it presents a real possibility that the failure to recover such sums may result in severe consequences for the person or business seeking to recover those sums.

If you are owed £10,000 or less then you have three main choices; pursue the matter yourself, instruct solicitors, or do nothing. Whilst the value does not necessarily indicate the degree of complexity, people do still find the prospect and the reality of litigation daunting, notwithstanding the efforts to make it more user friendly. The courts also now support an online issue and management process.

It is always advisable to try and avoid being in a position where you are owed money and left considering litigation. As a first step you should consider whether you can resolve matters amicably. It is always good to have a written paper trail to show what steps you have taken in this regard, if that does not work then you can consider issuing proceedings or using the court’s mediation service. Guidance can be found at https://www.gov.uk/make-court-claim-for-money/overview

A key consideration in attempting to recover sums owed is what is the financial position of the debtor? If the debtor does not have any assets to pay the sums owed to you then it is unlikely it will be worth taking further steps, as this is only likely to result in you incurring further costs and thereby adding to the sums owed to you with little prospect of a recovery.

Debts for £10,000 or less fall into the category known as ‘a small claim’. Generally speaking legal costs are not recoverable in small claims save for exceptional circumstances. The small claims procedure is supposedly more accessible and aimed at litigants acting in person and without the benefit of lawyers.

This article focuses on general debt recovery only. Slightly different rules may apply if the sums owed relate to a variable service charge under a lease where a lessee challenges the reasonableness of the sums claimed.

Karen Bright is a Partner at Bishop & Sewell, Dispute Resolution Team. Tel: 020 7631 4141