Until a claim has been fully evaluated it is difficult to provide an accurate cost estimate to bring the matter to a conclusion as there may be unforeseen events which may incur unexpected costs, for instance, unreasonable conduct of the opposing party.
The cost estimates below apply to a straightforward matter concerning an unpaid invoice which is not disputed and does not require enforcement action to be taken. Should the position alter then further cost estimates will be provided as the matter progresses.
Fess for debt recovery matters are typically charged on a ‘time-spent’ basis at the prevailing hourly rate. Hourly rates are reviewed every 6 months.
After clear instructions have been given and all relevant documentation has been received a letter of claim is sent to the opponent, or their legal representative, in accordance with the Pre-Action Protocol for Debt Claims which is contained in the Civil Procedure Rules 1998. Our estimated costs for carrying out this work will be up to 2 hours at the hourly rate of £300.00 plus VAT at 20%.
After completion of the letter of claim, if additional work is requested, for instance communicating with the debtor to try to settle the matter without the necessity of preparing and issuing court proceedings, then we will discuss any additional costs and agree the same before the work is carried out.
If the opponent fails to respond to the letter of claim or the debt is not paid in full then you may have the option of issuing court proceedings. A court issue fee is incurred, the amount depends on the value of the claim, which is as follows:
|Online Court fee
|Paper form Court fee
|Up to £300.00
|£300.01 – £500.00
|£500.01 – £1,000.00
|£1,000.01 – £1,500.00
|£1,500.01 – £3,000.00
|£3,000.01 – £5,000.00
|£5,001.00 – £10,000.00
|£10,001.00 – £100,000.00
|5% value of the claim
The above court fees are as stated from July 2018 and are subject to change. Fees can be reviewed on the Civil and Family Court Fees Form EX50.
To commence court proceedings, a claim form and particulars of claim must be prepared and sent to the court to be issued. The court will then serve the papers on the debtor. We estimate it will take up to 3 hours at the hourly rate of £300.00 plus VAT at 20% to prepare the claim form and the particulars of claim and issue them at the court.
In certain circumstances disbursements such as court fees and/or counsel’s fees and/or third party fees may be incurred, the details of which we will discuss with you prior to incurring any of these fees.
In the event the claim is undefended we will apply to the court for default judgment and demand payment from the debtor. We estimate that it will take up to 1 hour at the hourly rate of £300.00 plus VAT at 20% to apply for judgment and contact the defendant.
Should the debtor fail to pay within the timeframe imposed by the court then we will advise you of the appropriate next steps and likely costs.
Various methods of enforcement are available to a claimant with a judgment, which is most suitable is dependent on a number of factors including the size of the debt and the financial status of the debtor. All enforcement methods require court intervention and associated court fees. We will provide you with an estimate of costs in the event enforcement is required. Time spent enforcing a judgment varies widely and could be as little as 2 hours or as much as 10 hours.
If at any point during our instruction the debtor disputes the claim, then we will review and advise you on the merits of the defence/counterclaim and we will provide you with a revised cost estimate to continue acting.
Recoverability of costs
The general rule is that the losing party pays the winning party’s costs. Costs are normally subject to an assessment by the court and in our experience the winning party typically recovers up to 70% of their incurred legal costs, together with court fees.
The exception to this general rule is debt claims for less than £10,000. These claims will usually be allocated to the small claims court within which legal costs (save for court fees) are not recoverable except in extremely limited circumstances.