Master Club from Master Collections

The award winning credit management solution

Reducing the risk of litigation

Earlier this year Master Collections helped a Master Club member (the Member) recover £6,000 at Hertford County Court (the Court). The claim concerned a bounced cheque. An easy win you might think, however the debtor's solicitor raised a defence and the Member had to wait 17 months from the date the claim was issued for the Court to award a CCJ in their favour.

Why so long? Although the claim was above the small claims limit the Member did not wish to be exposed to the Defendant's costs if they lost. As a result the Member requested that the claim be allocated to the Small Claims track, and it took 2 case management conferences for the Court to do so.

Matters were dragged out further when the Court adjourned the hearing because the Member had previously refused mediation at the Defendant's request. When the Member and Defendant returned to the hearing the following year the Court awarded the Member a CCJ for £6,000.

The Defendant's defence was based on an allegation that the director of the Member had altered the cheque without their consent. However the Court ruled that if the addressee on the cheque does not exist, it is payable to the bearer.

There are four lessons from this case:

• If a claim is over £5,000 to avoid exposure to the winning party's costs, a request that the claim is allocated to the small claims track can be made.
• The Court will consider allocation to the small claims track for claims above £5,000 at a Case Management Conference. The more straightforward the claim the more likely it will be allocated to the small claims track.
• The Court will adjourn a hearing if during the course of proceedings the Claimant has not entertained mediation at the Defendant's request and vice-versa.
• A party seeking to defend a bounced cheque cannot rely on mistakes made on it because in any event a cheque is payable to the bearer.

Had the Court allocated the claim to the fast track the Member would have achieved the same result together with costs. However if costs are assessed usually the Court will award 75%. Furthermore the loosing party may struggle to pay the costs of the other side. Based on membership benefits together with problems associated with claiming costs it can be appreciated why having the claim allocated to the small claims track was a smart move.

If you wish to discuss this case further and/or learn how you can benefit from Master Club call Master Collections Legal Manager Carlo Pegna on 01920 871547.