Costs in Small Claims Cases
| Author | Patricia Pearl/Tim Parker |
| Pages | 189-202 |
Chapter 9
Costs in Small Claims Cases
9.1 OVERVIEW
Following the delivery of judgment, the judge will have to decide who should pay any costs, and, if so, how much they should pay.
This chapter considers the special rules limiting costs in the small claims track and, starting at paragraph 9.5, the judge’s discretion about costs.
9.2 THE LIMITED COSTS RULE
The limited costs rule at a glance
The basic principles are that:
• Any award of costs is discretionary
• The loser is normally ordered to pay the winner’s costs
In small claims, costs are normally limited to certain items, chiefly:
• court fees (commencement fee/application fees/hearing fee)
• the fixed costs for legal representatives shown on the claim form, if they issued the proceedings
• if a claim was made for an injunction or order of specific performance, up to £260 for legal advice and assistance about that
• experts’ fees up to £750
• expenses incurred by the party and witnesses in travelling to and from the hearing, or staying away from home in order to attend
• loss of earnings for the party and any witnesses (up to £95 per day)
190 Small Claims Procedure in the County Court
If the winner has instructed lawyers to represent them, the lawyers’ fees are not normally recoverable from the loser, but see paragraph 9.4 – further sums may be allowed if the judge decides that a party has behaved ‘unreasonably’
The limited costs rule also covers appeals against decisions made in small claims (CPR 27.14(2))
9.2.1 Definition of costs
The term ‘costs’ means fees, charges, disbursements and expenses, including those paid to a solicitor, barrister or lay representative.
9.2.2 The rule
CPR 27.14 sets out the costs rules for small claims. It is this rule which limits costs relative to fast track and multi-track cases. See Appendix 8 for the full text of the rule.
9.2.3 Quantifying costs
If any costs are awarded for unreasonable behaviour, they will be assessed at the hearing by the summary procedure (CPR 27.14(2)(g)).
See paragraph 9.6 for more about the summary procedure.
9.2.4 Overall discretion
Subject to the general limitations on costs in small claims, judges have an overall discretion about what costs order to make (CPR 44.2). See paragraph 9.5 for more detail about that discretion.
9.2.5 Offers of settlement and compliance with the Practice Direction – Pre-Action Conduct and Protocols
Parties are encouraged to try to settle their cases out of court and should, therefore, make offers to settle. If they do not, or if good offers to settle out of court are rejected, this may be taken into account when the court considers whether there has been unreasonable behaviour (see paragraph 9.4).
Both parties must comply with the Pre-Action PD by exchanging information and considering settlement options before the start of court action. This is discussed
in detail at paragraph 1.4. Litigants who behave unreasonably before the start of court proceedings may attract an adverse order for costs (see paragraph 9.4).
9.2.6 Exceptions to the limited costs rule
There are two situations where the winner of a small claim may obtain a larger costs order than is allowed for by the limited costs rule.
The first is where the loser has behaved unreasonably (see paragraph 9.4).
The second is where the loser has a contractual liability to pay higher costs: see paragraph 9.10.
9.3 ROUTINE AWARDS FOR COSTS
This paragraph discusses the various items of costs which the court may award without deciding that the paying party has behaved unreasonably.
9.3.1 Court fees
A winner will, almost as a matter of routine, recover any court fee paid (CPR 27.14(2)(c)) (see Appendices 1 and 2 for details of court fees).
Sometimes, if the claimant recovers less than the amount claimed in the claim form, the judge will reduce the costs awarded in respect of court fees. For example, if someone who had claimed £1,750 (incurring total issue and hearing fees of £285) was only awarded £450 (for which the total court fees would have been £105), the judge might limit their costs to £105 rather than the £285 they had actually paid.
9.3.2 Fixed commencement costs
CPR 27.14(2)(a) states that a party may recover:
(a) the fixed costs attributable to issuing the claim which –
(i) are payable under Part 45; or
(ii) would be payable under Part 45 if that Part applied to the claim.
Fixed costs are only relevant where a legal representative has issued the proceedings; they are not recoverable by a litigant in person (CPR 45.1(1)).
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Where the claim is for a specified sum, the costs are inserted in the claim form in accordance with the scale set by the rules (see paragraph 2.3.16). That scale appears at Appendix 3.
Where the claim is not for a specified amount, the judge will determine what costs are payable by the loser based on the amount awarded at the hearing. The amount awarded will be based on the scale set out at Appendix 3.
The rules do not clearly provide for the reimbursement of any fixed costs on a counterclaim.
9.3.3 Experts’ fees
As discussed at paragraph 8.8, the parties must have permission to use an expert evidence and will almost always be directed to appoint a single joint expert. The judge will control the amount payable to the expert and decide who pays it – usually each side pays half in advance.
The judge may award up to £750 towards the cost of employing each expert (CPR 27.14(2)(f) and CPR PD 27A, paragraph 7.3(2)). The figure of £750 is meant to be a realistic sum to cover the cost of an expert in a small claims case, and the parties may have to ‘shop around’ to find someone who will provide the advice within budget.
If you intend to claim for an expert’s fees, bring their invoices to the hearing.
9.3.4 Witness expenses
The expense of attending court for the parties and any witnesses can be reimbursed under two headings: loss of earnings and travelling expenses.
Loss of earnings/loss of leave
The judge may award the winner and the winner’s witnesses up to £95 per person per day for loss of earnings or loss of leave due to attending a hearing or staying away from home for the purpose of the hearing (CPR 27.14(2)(e) and PD 27A, paragraph 7.3(1)).
The loss must be real and not illusory, and is easiest to recover in the case of employees working on a daily or hourly rate. The judge may make a rough calculation of a daily rate based on net weekly or monthly pay: you should bring to court a recent payslip to demonstrate...
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