Step 4: Costs
What are Legal Costs?
In the context of a legal dispute the terms "costs" refers to the legal fees which a party incurs and the expenses associated with the claim, sometimes known as "disbursements".
Winner Takes All
Unlike many other countries such as the United States our legal system operates on a "Loser Pays All" basis. This means that if a civil claim is successful then the loser will probably have to meet most, if not all, of the winners costs. However, people often talk about the "No Costs Rule" in relation to the Small Claims Court because one of the chief defining characteristics of the Small Claims Track is that the Loser Pays All principle doesn't apply. Again this is not entirely true. Legal costs can be recovered in small claims but they are by comparison extremely limited.
What Costs are Recoverable?
The main benefit of this "No Costs" (or more accurately "limited costs") rule is that it allows people to pursue or defend a claim safe in the knowledge that if they lose they will not then have to face a massive and disproportionate legal bill.
The costs which are recoverable in the Small Claims Court fall into 6 main categories:-
1. Court fees.
2. Fixed legal fees (where a claim is issued by a solicitor).
3. Travelling expenses.
4. Loss of earnings.
5. Experts fees.
6. Costs of enforcing a judgement.
The amount claimable under each of these categories is restricted. Currently, for example, the fixed costs where a solicitor issues the claim start at £50 for claims of £500 or less, rising to a maximum of £80. The most that can be claimed for the fees of an expert is £200.
Is There Any Discretion on Costs?
Ultimately the award of costs in a Small Claim is at the discretion of the District Judge who hears the case. We suggest that you calculate the costs which you wish to claim in advance of the hearing so that you can then present them to the Judge on the day.
One final word of warning. The Judge is empowered to award costs on the usual County Court basis where it is felt that those costs have been incurred as a result of unreasonable conduct by the other party. It is therefore important to remember that in Small Claims proceedings your conduct will be scrutinised by the Court. No matter how strongly you feel about the issues you must always try to remain as objective as possible and present your case in a reasonable fashion. Do not tempted to exaggerate or inflate your claim and never pursue an allegation that has no reasonable prospects of success.
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