Businesses set to suffer as small claims limit increases to £10,000

As a result of the Jackson Reforms to Civil Litigation which came into force at the start of April this year, the small claims limit has doubled, now standing at £10,000 for all claims excluding personal injury compensation. The upshot of these changes will no doubt be an increase in the number of cases pursued using the small claims process.

Whereas the fast and multi-tract claims procedures tend to result in the losing party paying the winners costs as well as their own, the small claims procedure tends to lead to each party paying the majority of their own legal costs. The aim of the reforms is to encourage litigants in person and businesses with financial disputes to make use of the small claims procedure and mediation.

The government has allocated more resources to the small claims track and litigants in person recently, the procedure and legal arguments used are not markedly different to those for higher value claims. However, because the losing party will not need to pay the other side’s costs, businesses could now find themselves out of pocket even if they win the case. As a result, many businesses are unlikely to make claims, meaning that they may end up being forced to waive up to £10,000.

Many are concerned that the increased limit could make the non-payment of debts under 10,000 by debtors more probable because they know that, either way, they added expense will be limited.

It is therefore crucial that creditors who are owed up to £10,000 instruct a specialist solicitor prior to court action who can help them recover debt through other avenues.

Bonallack & Bishop – here to help with your business

Our solicitor have years of experience helping businesses in financial disputes and they would be happy to help you with your business today.