Costs in the Small Claims Court – what is recoverable?

The recent decision in Bellamy and Parmenter v A C Electrical Limited has again highlighted the limited costs available in the Small Claims Court and the wide discretion of the Court in respect of the recovery of costs.

In Bellamy Her Honour Deemster Roberts highlighted that there is no mandatory “no costs” rule in the Small Claims Court under the Rules of the High Court of Justice 2009 (the Rules), but that Rule 11.21 does contain certain restrictions. In this regard, Rule 11.21 states that the Court in a small claims case may not make a costs order to pay the other part’s costs, save for the following:

  1. The fixed court costs for issuing the claim itself;
  2. In regards to an injunction or specific performance claim, the costs associated with legal advice and assistance;
  3. In personal injury cases, costs associated with legal advice;
  4. Court fees;
  5. Reasonably incurred travel expenses of any of the parties or any witness;
  6. A maximum of £50 per day for loss of earnings in attending the hearing;
  7. Fees for an expert; and/or
  8. Where a party has behaved unreasonably, such further costs as the Court deems appropriate.

In Bellamy both sides were seeking reimbursement of legal costs due to allegations that the other party had acted “unreasonably”. In this regard, Deemster Roberts highlighted that unreasonable behaviour is not defined within the Rules, but that the previous case of RPS Consultants Ltd v Hexagon Enterprises Ltd set out a non-exhaustive list with what may constitute “unreasonable behaviour” including:

  1. Speculative and an unsupportable case;
  2. An untruthful defence;
  3. Rejection of a settlement offer which is manifestly to the advantage of the offeree; and/or
  4. Failing to give an appropriate defence.

Having carefully considered the evidence Deemster Roberts held that whilst there was some substance to criticisms raised by the parties these were nevertheless insufficient for either party to prove that the other had acted unreasonably. In particular, Deemster Roberts commented that various offers which were made were not of such significance that they should form part of unreasonable behaviour by either party and exercised her discretion in making no order as to costs for either party.

The decision in Bellamy is helpful in illustrating the limited costs which are recoverable in the Small Claims Court and the relatively high barrier which must be met in trying to obtain a costs order by alleging unreasonable costs by the other party. This approach encourages parties in litigation in the Small Claims Court to focus efforts on trying to negotiate and settle cases, since if protracted and expensive litigation is pursued then ordinarily costs are likely to be largely unrecoverable.

DQ’s Dispute Resolution team are routinely instructed to assist in small claims matters and are able to provide cost effective advice. If you require any further information or assistance in this area please do not hesitate to contact Alexander Armstrong (Associate, Dispute Resolution), Jessica McManus (Associate, Dispute Resolution), and/or Jessica Cocker (Trainee Advocate, Dispute Resolution).