Category: Money Articles

Before you go to a small claim court you must resolve three issues:

1. Can you win your small claim case?
2. Can you collect on your judgment?
3. Can the small claim court hear your case?

Can you win your small claim case?

What makes a winning case? In short: liability.

You won’t get any money from the person you are claiming from (called a ‘defendant’) until you prove that the defendant is legally responsible for your loss. This means that you must prove their liability. Your loss isn’t enough to make a winning small claim case, it must also be the other side’s legal fault. You must state facts to the judge to show that the defendant should be held legally accountable.

The judge will listen to your evidence and decide whether you have a legal case (i.e. that you have a legal right to claim compensation from your debtor or the wrongdoer). You must establish the facts in as favourable a way as possible and the judge will rule on the legal position. If you understand some of the principles of the relevant law, this will help with your preparation and can ensure that your arguments are more easily understood and appreciated by the judge. This should lead to a better chance of success.

Look at the examples below:

• Contract dispute
  A valid contract signed by both parties has been broken by the other side and you have suffered monetary loss (e.g. an invoice has not been paid). The contract does not have to be a written one. It can be a verbal agreement.
• Negligence
  Negligence means a wrongful act or a failure to act has occurred; for example, someone cuts down a tree which falls on your car. You are entitled to claim compensation for the cost of putting right the damage to your car.
• Personal injury
  The intentional or negligent behaviour of the defendant has caused you to suffer personal injury (e.g. a road accident).
• Defective product
  You suffered loss due to a defective product and have the right of compensation from the person who supplied it and/or the manufacturer.
• Warranties
  A written or implied warranty or guarantee has been breached and you have suffered a monetary loss.
• Consumer claim
  If you are an individual and bought goods or services from a business that proved to be defective or wrong, your case may be covered by consumer legislation such as the Sale of Goods and Services Acts. These have specific rules relating to such claims that make it easier to prove them. For more information visit www.consumerdirect.gov.uk.

It’s most important that you can show that the defendant’s wrongful act caused you actual injury which can be translated into a monetary recovery. Wrongdoing without harm is not usually compensatable.

Can you collect on your judgment?

Even if you win your small claim case, your victory is worthless unless you can enforce the judgment. If your defendant is genuinely unable to pay, they may not be worth chasing and they may choose not to even defend themselves.

Unfortunately, there’s no simple way to investigate the finances of a defendant unless you are prepared to pay for an asset search, but this is seldom cost-effective in a small claims case. At best you can only make casual enquiries to learn what you can about the defendant. You may find that they have many more creditors, some of whom hold judgments ahead of yours.

It’s important to be practical. It makes no more sense to waste valuable time, effort and court costs chasing an uncollectable debt than it does suing on a financially negligible small claim.

The Small Claims Track only makes sense when you have a reasonable chance of winning and collecting enough money to make the exercise worthwhile.

Can the small claim court hear your case?

The small claim courts can only hear cases where the law of England and Wales apply. If you purchased goods abroad, the law which applies is nearly always the law of the country in which the purchase was made. Sometimes the contract will state which law applies. For example, if you purchase computer software over the internet, the contract will state which law applies. This may change in the future because the UK is a member of the Euopean Union.

Related Links:

• Making a Money Claim Online – An Essential Guide

You can sue just about anyone using a small claims court.

Always take care to consider who you name on your small claim summons. If you get the wrong party, then the small claim may be struck out and costs ordered against you. If in doubt, seek advice from the small claims court or a Citizens’ Advice Bureau.

Suing one person for a small claim

If you are suing an individual, name the individual using the most complete name that you have for that person.

Suing two or more people for a small claim

If you are suing more than one person on a claim arising from the same incident, list and serve each of them. For example, if you are suing John Doe and John Smith for the £1,000 they borrowed from you, list them as follows: ‘John Doe and John Smith’. This is also required for a husband and wife. Don’t list them as Mr. and Mrs. Smith. Additionally, each defendant must be served separately.

If you are suing more than one person on two small claims, you must sue each one in a separate action under the Small Claims Track.

Suing a sole trader for a small claim

If you are suing a sole trader, list the name of the owner and the name of the business. This would be as follows: ‘John Doe, trading as ABC Painting’.

Make sure that you know who the true owner of the business is before you sue. A judgment against an incorrect defendant is worth very little.

Suing a firm for a small claim

If you are suing a partnership, you have a choice of either suing the individual partners or the business partnership itself.

The advantages of suing the business partnership are that:

• service is easier and the proceedings are simpler;
• judgment can be enforced without special permission of the judge (i.e. without leave) against partnership property;
• judgment can be enforced without leave against the personal property of any person who was identified as a partner in the proceedings.

All business partners are individually liable for all the debts of the business, so you don’t need to specify which partner you dealt with particularly.

List the business partnership as follows: ‘ABC Painting, a firm’ followed by the address. Try to get a judgment against more than one person so if you have trouble collecting from one you may have others to collect from.

Suing a limited company for a small claim

If you are suing a limited company, list its full name and address. A limited company is considered a person. This means that you can sue and enforce a judgment against a company. Don’t sue the owners of the limited company or its managing director individually unless you have a personal claim against them that is separate from their role as part of the limited company.

Most of the time people who own or operate a limited company are not liable for its corporate debts. This is known as limited liability and is what makes forming a limited company so important.

Suing a club or association for a small claim

If you are suing a club or association, such as a football or rugby club, you must list the names of the officers of the club or association. For example, ‘Deborah Brown in her capacity as Chairman of the Dowl Association of Junior Swimmers’ and ‘Ian Trot in his capacity as Secretary of the Dowl Association of Junior Swimmers’. You also need to obtain the home addresses of the other officers as they have to be served by the court at their home addresses. The way to obtain this information is to write to the secretary of the club asking for the names and addresses of the officers of the club or association.

Suing a child for a small claim

While anyone under 18 cannot sue by themselves (except for wages), they can be sued. If your defendant is a child (i.e. under 18), you should specify this as follows: ‘James Smith, a child by [insert name of parent currently responsible for them] … their litigation friend’.

It would be wise to check whether the parents have legal responsibility for the acts or debts of the child. If they do, they should also be named as defendants.

Related Products:

• Making a Money Claim Online – An Essential Guide

 

In the small claims court, presentation can make a huge difference to you winning your small claims case. But, don’t worry about acting like a professional lawyer. The small claims court is for amateurs and the court won’t be expecting a professional performance.

But, even if you’re an amateur, here are some presenting tips which will help to improve your chances of winning at the small claims court.

1. Practise your presentation

It’s a good idea to practise your small claims court presentation at home before family or friends. If they clearly understand your points, it’s likely the judge at the small claims court will too.

2. Visit a small claims hearing

Attend a small claims hearing. These are open to the public. Keep in mind that a preliminary small claims hearing and mediation are far less formal and are held in the judge’s chambers. You will largely respond to the judge’s questions, rather than present a court case and cross-examine. When you’re familiar with the judge’s practices, you may change your planned presentation.

3. Act properly

Show up at the small claims court punctually and dress appropriately. Always talk directly to the judge and not to your adversary. Address the District Judge as ‘Sir’ and an open court judge as ‘Your Honour’. Most importantly, address your adversary with courtesy. A judge cannot rule in your favour simply because you are well-mannered, but your good demeanour can only reflect well on you. Don’t interrupt the judge or your adversary; at the small claims court the judge will always let you answer when they have finished.

4. Be prepared

Write out what you’re going to say at the small claims court in the form of a speech and then stick to it. Read it to a friend and ask if it’s clear what you’re trying to say. Also, ask if they have any questions and then answer those questions.

5. Don’t be too legalistic

Present the facts of why you’re making a small claim and don’t argue the law. You’re not a lawyer and the court doesn’t expect a legal discourse. The judge will apply the law to the facts of your case. Don’t paint a one-sided picture. District Judges are very experienced at seeing both sides and will be more impressed by a party who presents a fair case. If you have a bad point, don’t ignore it, but explain it in the most favourable way you can.

6. Use witnesses properly

If any of the facts of the small claims case are in doubt, you must prove that what you say is the correct version. Do this either by referring to documents or by another person’s testimony. In the case of the latter, generally you must call that person to give evidence to the small claims court. Always have a signed statement of what that person intends to say. Send it to the other side and ask them to agree that you need not call the witness.

7. Detail your case

Note all the major points you want to make at the small claims court. You will be less likely to forget an item. You will also have dates, amounts, and other important points right at your fingertips. Remember, if you’re making a small claim, it’s you who has to prove your case to start with. If you don’t do this, the defendant will have little work to do in defence. Make it as difficult as you can for the defendant by being fully prepared.

8. Keep your documents in order

Assemble your documents in date order and cross-index for order of presentation. Sometimes it helps to put them into a ring binder file. Also, make copies for the judge and your adversary so they can view the details of your small claim. If you have statements from witnesses, ensure that they are signed and dated. If there are more than just a few pages, number them in order so that it’s easier for the judge to follow. It also makes it much quicker for you to answer any questions that may be asked. When your adversary is talking, make notes of those points that you will need to refer to and wait until they have finished before replying to them.

Related Links:

• Making a Money Claim Online – An Essential Guide

 

More employment contracts would be available to new staff if the government lowered the amount of National Insurance paid by small firms, research has revealed.

Findings from the Federation of Small Businesses (FSB) show that this is one of many factors stifling the recruitment of staff to the country’s companies.

Of the 1,700 respondents, 37 per cent said that an insufficient amount of work and uncertainty over employment contracts prevented them from hiring, while 33 per cent are deterred by the state of the economy.

National chairman of the FSB John Walker commented: “It is not only imperative that the government creates an environment for job creation, but that the banks lend to small firms and businesses are paid on time.”

He noted that this would give businesses the confidence they need to continue with operations and take on more staff at a time when employment is still low.

• Employment News from Lawpack: employment contracts and employment law advice for your business and its staff.

 

Companies may be encouraged to seek business advice as new, simpler accounting rules come into force to improve their operations.

It is estimated that 1.5 million small British firms will benefit from the plans, which could save them considerable amounts of money in reduced administrative costs.

“This is a significant step in reducing red tape and a clear signal that we will take action to stop our smallest companies being held back by excessive regulation,” commented business minister Edward Davey.

He emphasised that there is the potential for further changes to be made within the European Union to help lower the impact of legislation on small businesses.

Recent research from NatWest and Smarta.com revealed that 61 per cent of start-up businesses find cashflow to be a major problem during the first 12 months of operation.

Furthermore, 40 per cent admitted to over-estimating the amount of sales they would achieve.

Running a Business News from Lawpack: legal forms for your business, employment contracts and business advice on setting-up and running a business.

The need for business advice may become even greater if insolvency regulation is subject to further changes, one group has discovered.

Insolvency trade body R3 found that many companies are questioning plans to give unsecured creditors more of a say.

“The degree of increased regulation proposed is disproportionate and counter to government policy to reduce red tape,” noted R3 president Frances Coulson.

She emphasised that the changes are likely to lead to reduced returns for creditors, while “undermining what is good and sensible in the current system”.

These comments follow findings from NatWest and Smarta.com, which revealed that nearly a third of start-up businesses do not feel they have the right tools at their disposal in order to be successful.

Furthermore, 61 per cent that cashflow posed major problems, while 40 per cent said they had over-estimated potential sales during their first year of trading.

• Money and Tax News from Lawpack: tax saving tips and business loan agreements

 

Perhaps you want to buy a business or make an investment. Maybe you’re already in business and another business wants you to supply them with stock. In these types of situations your money could be at risk and you’ll want to make a few checks.

The most recent annual accounts can tell you a lot about the financial health of a business. The Profit and Loss Account will show you the sales and profit while the balance sheet shows what the business owns and what it owes. Often the accounts will show you all you need to know, but can you really take the figures at their face value?

Thankfully, the answer, in many cases, will be yes, but what if the people running the other business have been a little creative and presented the figures in the way they want you to see them? What if the creative accountant has been at work?

Creative accounting involves the manipulation of figures or arrangement of affairs at the period end to make the accounts look better than would otherwise be the case. Some of the techniques may be perfectly legal but, unless you understand them, you could be misled.

Here are some examples of creative accounting techniques.

• If sales are invoiced to customers before the end of the period but they are not actually despatched until after the end of the period, there is a boost to sales and profit in the first period.
• If the business provides maintenance contracts (e.g. to service central heating systems), the amount payable on the contract will normally be charged to the customer before the work is carried out. If the amount charged to customers is included in the accounts for period one but the cost of carrying out the work is included in the accounts for period two, the accounts for period one will show a profit as there is income without associated costs, whereas the accounts for period two will show a loss as there are costs without the associated income. You will get a very distorted view if you only see the accounts for period one.
• Although property may be included in the balance sheet at the amount that the business actually paid for the property, it’s perfectly legitimate to revalue that property so that the amount included in the balance sheet is the value to the business at the balance sheet date. An over-optimistic revaluation can make the business appear to be in a healthier state than is really the case.
• If the business has made a loan to another person, the amount of the loan will appear in the balance sheet as an amount owing to the business. The bank balance will also have been reduced by the amount of the loan. If the loan was to someone connected with the business and there is some doubt that it will ever be repaid, there could be some attempt to hide the transaction from a reader of the accounts. A temporary arrangement could be set up so that the loan is repaid just before the end of the period and a new loan for the same amount is made just after the end of the period.

If you are relying on someone else’s accounts, an understanding of creative accounting could save you from making an unwise investment or warn you against trading with an unreliable business.

You can find out more about creative accounting in our book How to Understand Accounts where you’ll see explanations and examples of the creative accounting terms ‘off balance sheet financing’, ‘window dressing’ and ‘revenue recognition’.

Written by a chartered accountant, How to Understand Accounts explains accounts in detail in a clear, straightforward way so you don’t have to be an accountant to understand.

When you’re thinking about making a small claim, remember that you need to pay a small claims court fee before you start. So, it’s important that you’re confident that you can recover this cost before you think about starting a small claim.

For non-monetary small claims the small claims court fee is £175, but for money claims the exact figure will depend on the amount that you are claiming.

The small claims court fees differ, depending on whether you are making the claim through the county court or online through the Money Claim Online website.

At the date of writing this article – 1 May 2012 – the small claims court fees are as follows:

Court issued small claim fees

Money claims for only £5,000 or less can be heard in the ‘small claims track’ of the county court.

• Up to £300 claimed – £35
• £300.01 – £500 claimed – £50
• £500.01 – £1,000 claimed – £70
• £1,000.01 – £1,500 claimed – £80
• £1,500.01 – £3,000 claimed – £95
• £3,000.01 –  £5,000 claimed – £120

Money Claim Online (MCOL) fees

Some court claims can be made online using the Ministry of Justice’s secure website Money Claim Online (MCOL).

You can only use Money Claim Online if your claim is for a fixed amount of less than £100,000.

• Up to £300 claimed – £25
• £300.01 – £500 claimed – £35
• £500.01 – £1,000 claimed – £60
• £1,000.01 – £1,500 claimed – £70
• £1,500.01 – £3,000 claimed – £80
• £3,000.01 –  £5,000 claimed – £100
• £5,000.01 – £15,000 claimed – £210
• £15,000.01 – £50,000 claimed – £340
• £50,000.01 – £100,000 claimed – £595

Keeping up to date

Since the small claims court fees do change, it’s best to have the staff at the small claims court advise you what your fee will be when you issue the small claim.

Alternatively, you can find out the latest fees, published on the Ministry of Justice’s website, outlined in Form EX50.

The defendant will be ordered to pay the small claims court fee if you win your small claim, but remember that you still have to recover the money from the defendant.

What if you cannot afford the small claims court fees?

If you cannot afford to pay the small claims court fees, you may be entitled to a remission (reduction) of the small claims court fees payable or you may be exempted from having to pay the small claims court fees at all.

You will need to read Form EX160A to see if you qualify.

Other information

• Form EX50: Civil and Family Court Fees
• Form EX160A: Court fees – Do I have to pay them?

 

Undercover reporters have allegedly found that NatWest staff members are urging customers to reclaim bank charges – at the same time as the bank’s lawyers are fighting tooth and nail to defend them.

The Times has revealed that financial guidance staff at the bank’s MoneySense unit told its secret investigators to write to their respective financial institutions to reclaim the penalties.

Reporters visited four different branches and only one did not recommend doing so.

A NatWest spokesperson has refuted all the allegations.

Royal Bank of Scotland (RBS) is the parent of NatWest, which itself is now majority-owned by the taxpayer after the recent bail-outs.

According to the newspaper, it is one of six high street banks that is battling the Office of Fair Trading (OFT) in the Court of Appeal to put the brakes on an investigation into the penalties.

Phil Jones, personal finance campaign at Which?, told The Times: “It is hypocritical and bizarre that while RBS is levying these unfair charges on customers its own advisers are encouraging customers of other banks to reclaim them.

“RBS should throw in the towel on the current court case along with the other high street banks and refund all the customers who have been hit by these unfair charges in the past.”

It was also reported that one staff member at the bank told an undercover journalist that she had applied for refunds herself and that template letters are available online.

Consumers who wish to get their money back can use the Small Claim Court’s Money Claim Online service – which has been in operation since 2002.

Net Lawman reports that one of the main reasons for the recent surge in the use of Money Claim Online is that “thousands of people have started suing their banks for levying unfair overdraft charges”.

“The Consumer Action Group, which has been behind this campaign, claims that 45,000 people have registered with its own website this year and that it knows of at least 750 claims which have been lodged with the county courts,” it adds.

The website states that the online process is simple and straightforward – taking around 15 minutes – and aggrieved consumers can sue for any amount below £100,000.

All that is needed is an email address in England or Wales, while the defendant must also live on these shores.

Following registration and submission of the money claim a small fee is required and at this stage no evidence is needed; consumers will just be required to state it in concise detail and be accurate.

“You must tell the truth; otherwise you could be prosecuted for contempt of court,” the site advises.

The Times reports that some banks have charged customers almost £40 for being overdrawn by a few pence and they make billion of pounds a year from this practice.

However, thanks to the Small Claim Court’s Money Claim Online service, if you wish to make a small claim it is now quick and easy to do so.

Written by Christopher Evans

• Money and Tax News from Lawpack: tax saving tips, business loan agreements and expert small claims legal advice