How to sue in the UK small claims court

How to sue in the UK Small Claims Court

As part of our Cowboy Customers series we have covered how to deal with a customer that won't pay your invoice, now it's time to take it up a notch.

So, a customer has not been just a slow payer. They have either ignored all your reminders to settle their outstanding debt, made a series of promises that they haven’t kept or simply refused to pay.

You have now concluded that they will never pay unless you find a different way of going about things. The question is can you sue someone that owes you money and is it easy enough to be worth doing?

The short answer is “yes” and it almost always involves the “small claims court”. This article is designed to give you a good overview of how to sue someone by going down that route.

First of all, a disclaimer. This article is not meant to constitute legal advice. It is just a layman’s overview of the process. To be absolutely sure of your ground, you should seek legal advice from a qualified solicitor specialising in litigation.

Why use the Small Claims Court?

The problem with chasing debt is that it can be a one-way process. You do all the running whilst the debtor simply sits around doing nothing. They feel they can because there are no consequences.

Once you use the small claims court that all changes. If they do nothing and you have a reasonable case, you will get a default judgement. With a default judgement, they will have a CCJ (County Court Judgement) against their credit record. This will significantly impact their ability to borrow money. And if they still don’t pay up, you can appoint a bailiff who can seize their assets to meet the debt. There are also several other options, all of them unpleasant for the debtor.

When you file your case, you must be able to show that you have tried to settle the claim before taking court action. This means:

• You should have made your claim in writing, giving the other person a reasonable amount of time to pay.
  
  
• You should have warned them that you will take court action if they fail to pay within the time that you state. A suggested communication is shown later

Before you use the Small Claims Court

In order to be in a good position to take legal action when a customer doesn’t pay, it will help enormously if:

You have a written agreement about the work you did and the cost involved

You have proof at each stage of what things happened. For instance, this could be photos of the work as it was completed, and ideally signed statements from the client about the completed work

You have proof of your chasing the debt – emails, texts etc. If you had a phone call a follow up email confirming the conversation can help enormously
If you don’t have this, it doesn’t mean that you cannot pursue your case. After all, verbal agreements are legally binding. However, it does mean that there is more risk that you won’t win. If you used an app to generate your quotes and invoices, you are more likely to have all of the evidence available.

The thing you must do, however, is to show that you have given them notice. That is you must have tried all that you could to get payment. Do this by sending two statements by email and then a final one through the post by recorded delivery with a red sticker waning them that this is a final request. You can get these red stickers from www.LabelsOnline.co.uk and search for "final".

What qualifies for a small claims court case?

Suing in the small claims court applies to a total amount claimed of up to £10,000. Claims over £10,000 are more complex and expensive and won’t be covered here.

Apart from the £10,000 limit (in Scotland the “simple procedure” maximum is £5,000; in Northern Ireland it's £3,000 both with similar processes), the following must apply:

• The claim needs to be made by a single person or organisation against a single person or organisation both based in England or Wales. The process is different in Scotland and Northern Ireland
• If they are individuals, the claimant and defendant need to be 18 or over
• The claim needs to be for a money amount and not related to a tenancy or injury
• Claims in England, Wales and Northern Ireland must be lodged within 6 years and within 5 years in Scotland

Small claims are actually handled by the standard local county court, but with special rules to make the whole process as quick and easy as possible. Strictly, the process is the “Small claims track” rather than a special court. Cases that actually make it into a court hearing are expected to take 2 hours or less.

Can you take a national company to the Small Claims Court?

The short answer is yes. As long as the conditions above apply, it doesn’t matter how large the business is that owes you money.

Is £500 worth going after someone in small claims for?

That really depends. If you have never done a claim before, it may be that the hassle of learning the process outweighs the benefit. If you are a veteran of previous claims, it may well be worth it.

What are the costs for using the Small Claims Court?

The fee for filing a court claim online ranges from £25 for a claim of less than £300 on a sliding scale up to £410 for a claim for between £5,000 and £10,000. When submitting your claim, never leave the “Amount claimed” blank.

The big benefit is that costs are fixed for both parties so you can't be hit with a huge legal bill from the other side if you were to lose.

You may get interest on the outstanding debt at a rate of 8% per annum (at time of writing) for residential customers and the rate specified in your terms and conditions for commercial customers. You don’t include this amount in your “Amount claimed”.

If there is unreasonable behaviour by either party or the case is complex with many witnesses the small claims process may not apply. It may then need to go down another track. The judge will decide if this is the case. However, it’s fairly unlikely.

Resolving the dispute

The court encourages the parties to go to mediation before going down the legal route but this isn’t compulsory. If there is a genuine dispute about the work and therefore the price that should be paid, you should definitely try mediation. If the debtor isn’t responding and the facts are straight-forward, it’s probably best to get on with the court filing.

Mediators to help with genuine disputes can be found at civilmediation.org/for-the-public/about-mediation/.

Starting the process, example Small Claims Court letter

As the first step, I would recommend sending a letter or email that reads something like this:

“Dear xxxx,

After repeated attempts to ask you to pay the attached invoice, I still have no record of receiving payment from you. I am therefore giving you seven days notice that I will be commencing legal action. Once I file the case with the court, I will not stop the process until all costs have been met, including court costs and statutory interest. The next seven days is therefore your last opportunity to settle this amount without incurring further costs.

If you have already settled this invoice, please ignore this communication. If I do not receive cleared funds in my account by dd/mm/yy I will commence legal action on that date and the next communication you receive will be from the court asking you to file a defence.

Yours etc.”

Filing the case at the Small Claims Court

It is highly recommended that you file the case online which is both cheaper and will be much more efficient in the long run. You do this at www.gov.uk/make-money-claim.

After you have gone through the questions that determine that you can validly use the small claims track, you will need to login or create an account.

You will be asked to complete each of the following sections:

• How you have attempted to resolve the dispute before making a claim
  
  
• Your details
  
  
• Their details
  
  
• Claim amount - Most important
  
  
• Claim details

The “Claim amount” should list each thing that you are claiming for each with the associated amount claimed, not including interest or any court costs.

The “Claim details” is your statement of the case. It should cover what happened, who is responsible and why. You should simply state the facts in plain terms without adding any emotive commentary but make sure that you include a fair amount of detail. You supply a detailed timeline separately.

In the first box for simple cases you could put something like:

“I was asked to quote for a job xxxxxxxx by X. I issued the quote (see Appendix 1). X accepted the quote.

I visited X’s house on three occasions to complete the work exactly as outlined in the quote. When I finished, X did not raise any issues.

I invoiced the agreed amount (see Appendix 2). X has not paid what is due after 3 further requests which he completely ignored except after I said I would take legal action when he said he was dissatisfied with the work without specifying why.”

Obviously, the description could be significantly longer than this.

Once this summary has been entered there is a list of dates with descriptions where you put your timeline of events.

The next page has the list of evidence so this is where you would put “Appendix 1” and “Appendix 2” from above. You do this for the judge to make it easy to find things. The evidence consists of:

• Contracts and agreements
  
  
• Expert witness (only allowed if the court has agreed to this)
  
  
• Letters, emails and other correspondence
  
  
• Photo evidence
  
  
• Receipts
  
  
• Statements of account
  
  
• Other evidence

Your objective is to establish that what you are claiming is on the balance of probabilities the truth. Remember if someone is given a contract and pays the money related to it and the work is done, the contract exists whether it has been signed or not as it has been “accepted by conduct”.