What is a Small Claims Court in the UK?

As a business owner, you will likely encounter the small claims court when attempting to settle a dispute. For instance, if your business needs to recover money from another person or business, the small claims court can be particularly helpful. However, the amount of money you intend to claim must be £10,000 or less. Additionally, you must be confident that you will win your case. This article will explain the small claims court, the type of court action you can bring through a small claims track, and some features of the small claims process.

What is the Small Claims Court?

Taking someone to a small claims court refers to when a person files a court claim to recover money owed by another person or a business. Typically, the County Court in England handles these cases. 

A court will often refer a claim to the small claims track if the claim is of low value. Typically, this includes most personal injury cases. A district judge will then hear the claim, who will use a more informal procedure and a modified set of rules from the normal court process. 

Features of a Small Claims Court Hearing

A small claims case will have different procedural rules than a normal court hearing. This is important to remember if you are considering starting a small claims action, as it will influence the risk you are undertaking. 

For example, in a small claims case, you will not be able to recover all of the legal costs involved in bringing the action. The only legal costs that you will typically be able to recover will be the: 

• court fees; 
• export report fees (to a certain cap); and 
• some of the fees for expert witnesses. 

As a result, many individuals who bring a small claims action will choose not to hire a solicitor or barrister and instead represent themselves. While this reduces the risk of expensive, irrecoverable legal costs, it also lowers your chance of success.

Therefore, if you are taking your case to small claims, you must be very prepared with your evidence and know how you will explain your version of the events to the judge. You must also be sure that you are happy to take on the risk of losing the case. Therefore, it would be helpful if you were confident in your chances of winning.

What Cases Are Heard by a Small Claims Court?

The small claims court will generally hear claims for less than £10,000 concerning any area of civil law. For example, you could bring forward a:

• personal injury case; 
• a case about faulty goods; or 
• a case for debts that you are owed. 

This is not a strict rule, and a County Court will have the power to refer cases to the small claims track as they wish.

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Online Court Systems

The introduction of Money Claim Online (MCOL) has dramatically simplified debt recovery in the UK. While small claims court typically handles disputes up to £10,000 and requires physical court attendance, MCOL allows claimants to pursue debts up to £100,000 entirely online.

Unlike the paper-heavy small claims process, MCOL users can submit claims, pay fees, and track progress with a few clicks. The system serves claims electronically, dramatically reducing wait times compared to the postal service used in small claims.

Additionally, its streamlined response system for defendants is far more efficient than the small claims court’s often lengthy scheduling process. While both systems offer mediation, MCOL facilitates this online, avoiding the need for in-person sessions common in small claims. This digital approach makes debt recovery significantly more accessible and efficient than the traditional small claims route, particularly benefiting small businesses and individuals by reducing the time, costs, and complexity associated with pursuing rightful claims.

The Small Claims Process

If you are considering bringing a small claim case, you should first try other ways of resolving your issue. A court may penalise you if you cannot show that you have tried to resolve your problem in other ways before bringing your legal action. For example, you could reach out to the other party and try to negotiate a settlement. Alternatively, you could hire a professional mediator to help you negotiate a settlement. This can be helpful to you, as it can save you the time, money, and effort involved in bringing a court claim. 

If this does not work, you will want to write a formal ‘letter before claim’ to the other party. Often, a Citizens Advice Bureau can help you deal with the legal rules of writing this type of letter. If the other person does not reply to your letter of claim (or you are not happy with their reply), then you can begin the formal process of bringing your claim. This will involve filling in a claim form or using the online Money Claims service.

On the whole, it is usually a good idea to get some form of legal advice before you commit to bringing a formal legal action because of the costs and time involved with the court process.

Key Takeaways

As a business involved in a dispute, you may want to bring a small claims action against another party. However, this is appropriate for claims typically less than £10,000. Additionally, using this method of dispute resolution is usually best if you have already tried to recover debt through other ways. 

If you wish to bring a claim to the small claims court, our experienced disputes lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.

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