Who Pays Court Costs and Fees?

The usual rule in most cases is that the losing party will pay the other side’s costs of bringing the claim to court. The situation in small claims cases is modified and the costs that a losing party will pay have been deliberately restricted to limit the financial risk to the parties.

All amounts stated below are accurate as at May 2008.

“No Costs” in the Small Claims Court

It is often said that there is a “no costs” rule in the small claims court. However, this does not mean that a victorious party cannot recover any costs incurred in a small claims case. Part 27 of the Civil Procedure Rules sets out the maximum costs which a judge can order a party to pay. Whether or not the judge will order a party to pay costs is ultimately a matter for him.

The costs awarded may depend on a number of factors including the relative financial status of the parties and their behaviour before and during court proceedings. If any costs awarded by the judge do not cover the expenses actually incurred, the party will have to pay them out of their own pocket.

Legal Costs and Fees

The victorious party can recover the following legal costs and fees:

• The costs of issuing the claim and any court fees which have been paid, such as the allocation questionnaire fee.
• If the case includes a claim for an injunction or specific performance - an amount for legal advice and assistance to a maximum of £260.
• If a small claims case proceeds to an appeal, the appeal court may summarily assess the costs of the appeal – the costs of an appeal are not subject to the usual small claims limitations.
• Any order for costs made before the claim was allocated to the small claims court.

Witness Costs

The following expenses incurred by a party or witness may be recovered:

• Travel expenses of witnesses or the party, including the costs of overnight accommodation if needed. No limit is placed on these costs.
• An amount for loss of earnings incurred by a witness or party due to attending the hearing, limited to £50 per day per person.

Expert Costs

If the court has given permission in advance for a party to use expert evidence a maximum of £200 per expert may be recovered from the losing party to cover the expert’s fees.

Unreasonable Costs

The rules on small claims costs give the judge a power to make a punitive costs order if he thinks that a party has behaved unreasonably. If the judge is minded to make such an order he may take into account all the costs that a party has incurred in either bringing or defending the claim before deciding how much the other side should pay in respect of these.

Exceptions to the Small Claims Costs Rules

Where the parties consented to a claim being allocated to the small claims track, although its financial value exceeded £5000, the rules on costs are different. The judge will be able to make the same order for costs as if the claim had been dealt with on the fast track (broadly speaking this covers claims with a financial value of between £5000 and £15,000). While these costs are still limited they are substantially more than could be awarded on the small claims track.

If a possession claim has been allocated to the small claims track after the consent of the parties, the judge may again award costs as if the claim was on the fast track.

How Costs are Paid

If the claimant wins the case, any costs that the defendant is ordered to pay are likely to be added to the total judgment debt to be paid at the same rate. If the defendant wins, the court will decide when and at what rate the claimant should pay costs.