Get It In Writing – Defendant Entitled to Contractual Costs in Small Claims Case

In Robert Shaw v Nine Regions Limited [2009] EWHC 3553 (QB), the High Court was asked to consider a Recorder’s order that there should be no order as to costs in respect of a small claim.

The defendant submitted that it had a contractual right to its costs, set out in a loan agreement between the parties. The claimant resisted the application for costs on the basis that this was a small claim and the small claim rules should apply in any event. (Under CPR 27.14, only limited costs are recoverable in claims allocated to the small claims track.) The claimant also contended that the contractual term was void and unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (Regulations).

Roderick Evans J held that, although regulation 5 of the Regulations appeared to apply to the contractual term in question in that it was not individually negotiated, the term was entirely reasonable and it caused no significant imbalance in the parties’ rights and obligations to the detriment of the consumer. Further, (it did not exclude or hinder the claimant’s right to take legal action or exercise any other legal remedyparagraph 1(q), Schedule 2, Regulations). The judge, therefore, awarded the defendant its costs both in the High Court and in the county court below.

It is an interesting case as it is unusual for such costs to be awarded in a small claims case. This decision – which has implications for commercial contracts and is especially noteworthy for our debt recovery clients – helpfully clarifies that it may be possible to obtain costs in a small claims case where the parties make appropriate contractual provision to recover those costs.

Despite the decision in the above case, whenever and wherever possible it is in everyone’s interest to attempt to settle disputes at the pre-litigation stage. However, when this is no longer avoidable, we at Gregory Abrams Davisdon LLP have a determined and experienced team who will go to great lengths to pursue the matter with your best interests in mind.

Should you have any Debt Recovery or other Litigation matters, our Dispute Resolution and Debt Recovery teams are lead by solicitors Martin Shellien and Ciaran Montague. Both are experienced and respected litigation lawyers.