An Uphill Climb

I received a call the other day from an accountant asking if I could get his client a quick result. I said it depends on merit and viability. For example for one of my biggest clients I collected two outstanding invoices of £24,000 in 5 days because the evidence was undisputable and the debtors had very deep pockets. The accountant asked ‘would it matter if my clients’ debtor doesn’t have deep pockets’. I asked how much is your client owed. He replied £10,000. I said. ‘If the debtor isn’t worth £10,000 then I’m not going to kid you, chances of recovery are slim, don’t hold your breath.’
Conversely if the debtor is worth more than £10,000 but disputes the debt and is prepared to do so through the courts, don’t hold your breath, it will be an uphill climb.
An Easy Win?
Recently I helped a client recover £6,000 at Hertford County Court (the Court). The claim concerned a bounced cheque. An easy win you might think, however the debtor’s solicitor raised a defence and the client had to wait 17 months from the date the claim was issued for the court to award a CCJ in their favour.
Choice of track to avoid costs
Why so long? Although the claim was above the small claims limit the client did not wish to be exposed to the Defendant’s costs if they lost. As a result the client requested that the claim be allocated to the Small Claims track, and it took 2 case management conferences for the Court to do so.
Matters were dragged out further when the Court adjourned the hearing because the client had previously refused mediation at the Defendant’s request. When the client and Defendant returned to the hearing the following year the court awarded the client a CCJ for £6,000.
The Defendant’s defence was based on an allegation that the director of the client had altered the cheque without their consent. However the court ruled that if the addressee on the cheque does not exist, it is payable to the bearer.
There are four lessons from this case: –
(i)                 If a claim is over £5,000 to avoid exposure to the winning party’s costs, a request that the claim is allocated to the small claims track can be made.
(ii)               The court will consider allocation to the small claims track for claims above £5,000 at a Case Management Conference. The more straightforward the claim the more likely it will be allocated to the small claims track.
(iii)             The court may adjourn a hearing if during the course of proceedings the Claimant has not entertained mediation at the Defendant’s request and vice-versa.
(iv)              A party seeking to defend a bounced cheque cannot rely on mistakes made on it because in any event a cheque is payable to the bearer.
Had the Court allocated the claim to the fast track the client would have achieved the same result together with costs. However if costs are assessed usually the court will order the losing party pay a percentage of the other side’s costs therefore leaving a shortfall for the other side to pay their solicitor. Furthermore the losing party may struggle to pay the costs of the other side. As a result it can be appreciated why having the claim allocated to the small claims track was a smart move.