Costs recovered in the Small Claims Track from an unreasonable Litigant in Person

Most (if not all) litigators will be familiar with the challenge of being on the other side of a claim brought by a litigant in person ("LiP").   The courts expect practitioners to be sensitive to their opponent's lack of legal expertise and familiarity with court rules, but judges have also been clear that they expect all parties – including LiPs – to follow the rules regardless of their legal representation¹.

Cases involving LiPs create particular issues in terms of costs, especially when the claim is brought in the Small Claims Track where costs are not generally recoverable.  There can be a tendency (not exclusive to LiPs, it must be said) to view the Small Claims Track as something of a 'free hit' – i.e., "if my claim fails, it is unlikely I will have to pay the opposing party's costs, so I have nothing to lose".  The recent decision of Reed v Boswell illustrates that this is not strictly true.  The judgment can be found here.

Reed v Boswell – a "chaotic and disorganised" claim

Ms Reed (herself an experienced criminal solicitor) sued Mr Boswell for just under £9,000 in damages.  The claim was loosely based on a reference that Mr Boswell was alleged to have given Ms Reed in respect of a tenant, apparently on the strength of which Ms Reed agreed to let her property out to that tenant.

The tenancy turned out to be "disastrous" and Ms Reed sought damages from Mr Boswell for a "false statement… which resulted in substantial financial damage".  This much is clear from the judgment of District Judge Lumb, but the court was only able to discern a cause of action out of these "scant" and "wholly insufficient" particulars at the trial itself.  The judge criticised the way Ms Reed's case had been pleaded from the outset.

Ms Reed's case placed considerable emphasis on the alleged – but wholly unproven – dishonesty of the Defendant.  She made, but failed to prove, several other serious allegations of fraud and dishonesty which made the case more complex and costly.  The Judge effectively dismissed her evidential case as "saying that her word should be preferred to that of the Defendant as she is a woman of impeccable character being a solicitor of many years standing who would not dream of lying". The claim was dismissed.

Unreasonable conduct and Costs in the Small Claims Track

Reed v Boswell is, then, a familiar case of inadequate pleading by a LiP which collapsed under the scrutiny of a trial.  The claim had been so chaotically pursued, and so resoundingly dismissed at trial, that Counsel for Mr Boswell then sought to recover costs even though the case had been in the Small Claims Track.  To make such an award, the court needed to be satisfied that Ms Reed's conduct had been "unreasonable"²: a very high threshold in Small Claims and particularly so where the paying party is unrepresented.

According to Counsel's note of the costs application³, the Judge found that Ms Reed had indeed acted unreasonably, and it is not hard to see why, given the tone of his judgment.  The Judge was concerned by Ms Reed's refusal to amend or withdraw her sprawling allegations of dishonesty, which increased Mr Boswell's costs significantly.  She was ordered to pay Mr Boswell £17,500 in costs (almost twice the value of her claim).

Conclusion

This is admittedly only a County Court decision, so it sets no binding precedent for future cases.  However, it is a welcome statement of principle and a warning to litigants in person – particularly those with some legal knowledge and experience – that the Small Claims Track does not absolve any litigant of their duties to the court.  We can do no better than quote the very first paragraph of District Judge Lumb's judgment:

This small claim is a cautionary tale for litigants in person who consider that they have been wronged by another person and, perhaps encouraged by a popular perception that the Small Claims Court is an easy way to seek redress, launch into court proceedings without specialist guidance or a proper understanding of what may be required to enable the court to determine the matter.

Defendants should not therefore be defeated when they see a small claim; carefully track and take issue with unreasonable behaviour and consider in each case whether an application for costs could be made.

For further information, please contact Daniel Charity or Rhian Howell from RPC's Lawyers' Liability and Regulatory Group.

View our previous blog on LiPs here.

¹e.g. Barton v Wright Hassall UKSC 206/0136 at [42]
²CPR 27.14(2)(g)
³https://www.3pb.co.uk/content/uploads/ABH-Cost-Order-on-Small-Claims-Mr-Boswell-by-3PB-Barristers.pdf