Small claims court costs are very different from other litigation in the courts. The general rule in civil claims, is that the successful party can expect the court to order the unsuccessful party to pay a contribution towards the successful party’s costs. Costs are at the discretion of the Judge but the risk of having to pay costs can be a significant one.
However, recoverable small claims court costs are usually restricted to court fees paid and expenses. The rule is set out at 27.14 here.
If a party decides to spend thousands on solicitors and barristers in a small claim, it is unlikely to be able to recover them from the other side even if the claim is successful.
“Understanding the court cost rules is very important, especially in higher value claims, where the decision made about the costs can be as important as the decision as to who wins the case. With small claims, the costs risk is largely eliminated.”
The benefit of small claims is that the parties can go to court to resolve a dispute without the worry of paying the other side’s legal costs, regardless of the outcome.
The court might decide to order costs in a small claim if it considers there has been unreasonable behaviour. Refusing to accept an offer of settlement, on its own as a reason, is not to be considered unreasonable behaviour.
There is however, another potential and significant exception to this general rule.
What If The Contract Says The Debtor Must Pay All Legal Costs – Will This Include Small Claims Court Costs?
What if the contract you rely upon, states that the other side is responsible for your legal costs resulting from any breach of contract? In principle the term can be valid and enforceable so you can ask the court to order the other side to pay your legal costs on top of the judgment if you win at trial.
However, the court has a wide discretion when deciding what order to make about costs. If awarded, recoverable small claims court costs pursuant to a term of a contract, are likely to be kept to a small amount in an effort to ensure they are proportionate and reasonable.
You are more likely to persuade a Judge to enforce a contractual term on costs against another business, rather than an individual or consumer. Consumers have the added protection of consumer legislation dealing with unfair contract terms.
In short, to have a chance of recovering small claims costs over and above court fees and expenses, you should include a provision in your terms and conditions and ensure that you state you are seeking legal costs in the claim form. However, even if there is a provision in your terms and conditions a Judge may decide not to award costs. So if you go to the cost of instructing a solicitor or barrister, you may not be able to recover the cost.