Whilst the mathematical difference between claims under and over £10k may only be a couple of hundred pounds, in litigation terms, it could mean a difference of £20k or more.
This is all down to how the court allocates the case. If your customers claim for any amount up to £10k, the court will almost certainly allocate the matter to the Small Claims Track. In the small claims track, unless one of the parties has behaved particularly unreasonably, the losing party won’t have to pay the winning party’s legal costs (just the court fees).
However, a similar case with a slightly higher value of £10k plus will find its way into the court’s Fast Track. More complicated cases and those with a value over £25k will go into the court’s Multi-Track. Both fast track and multi-track claims generally lead to the loser paying the winner’s legal costs. In some recent fast track cases, we have seen costs of between £20k and £30k. These figures can be argued down but ultimately, once the value of a case goes over £10k, if you are on the losing side, the risk escalates regarding how much your final bill may be. If a case goes into the multi-track, the costs can be eye-watering.
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Parties often do not realise the potential cost consequences of being on the losing side. Given this risk, if at all possible, it is worth thinking about bringing the value of a claim down. As a recent example, there was a dispute over an £80k motorhome purchased by one of our clients. A refund was agreed but the parties could not reach an agreement on the cost of some ancillary matters. So, instead of issuing a refund for the entire £80k, we negotiated a partial settlement, leaving less than £10k to argue over. As the court claim was now less than £10k, it went into the small claims track and reduced the cost risk from a possible £30k to nothing.
Litigation isn’t always just about having a strong argument, there are many factors that can help you win a case and reduce your risk. Our legal team is well versed in assisting clients through the court process, so if you are in the motor trade, you know where to come.