Small Claims Court Interest Question

SmallClaimQuestion

Edited post: My original post was about a small claim, which amongst other current debts, included a claim on interest for a extremely late payment. I asked whether the small claims process allows for interest on debt that has now been repaid, asking whether this legislation means it can:

Subject to [F1rules of court], in proceedings (whenever instituted) before [F2the county court] for the recovery of a debt or damages there may be included in any sum for which judgment is given simple interest, at such rate as the court thinks fit or as may be prescribed, on all or any part of the debt or damages in respect of which judgment is given, or payment is made before judgment, for all or any part of the period between the date when the cause of action arose and—

(a)in the case of any sum paid before judgment, the date of the payment; and

(b)in the case of the sum for which judgment is given, the date of the judgment.

DoaM

Interest becomes payable on any debt from the date it is incurred. So you can (IMHO, IANAL etc.) claim for the total interest including the time prior to the deposit being returned by DPS (or similar).

As to whether you actually have a claim ... what can you physically evidence? Do you have a signed agreement from your former house-mate, or other evidence, which proves that a debt existed/exists?

DoaM

How much does the interest amount to? A debt of £1,000 owed for 1 year will accrue interest of (about) £85, assuming 0.5% base rate. (Interest accrues at BoE base rate plus 8% per annum).

Les79

I may be way off the mark, but personally I'd be inclined to blag this person a bit...


"I'll waive the interest payment and stop court action if you pay the full balance, or at least half, by XX".


Why?


Charging 8% interest, whilst you may be 100% in the right, tends to get people's backs up. Said person may well dispute it in court and potentially even lose (not a guarantee, even with the evidence you have). If they lose, they'll have a charge against them BUT here's the rub; the money, plus interest, won't magically appear into your account You MAY have to enforce the debt, which would involve contracting the debt collectors. Now, if they show up and find this guy living in his parent's basement with no assets to his name, you're screwed! That being said, you MAY get the payments on a payment plan per month. Totally different story if said person has assets though

pramsay13

I'm inclined to agree with Les.
If your housemate is agreeing to repay the full amount and you are turning it down as you will only accept payment plus 8% interest that will not look good for you if it goes to court.
He could argue that you agreed to loan him the money for 2 years or whatever and now that he is trying to repay it after the 2 years you have changed your mind and want extra. Do you have evidence to refute this?

Les79

I'd recommend speaking to a solicitor. There's a few things which I'm a bit iffy about.


One example is that you made a loan payable within 1 month but didn't enforce it until 3 years later, letting other debts slide in the meantime.


A very "wishy washy" approach to this you see. Many people, more so LANDLORDS, are very "cut-throat" and would have ya in a flash.

Les79

What is the landlord bit in reference to?

thanks

It wasn't in reference to your situation, but more in regards to my general belief that a landlord (in general) would be much more cut-throat in enforcing an unpaid debt.




There's a lot of stuff to your case and you'd probably benefit from going to a solicitor over this for any advice. Either that or just go it alone and see how it pans out.

CarlMBrighton

it depends. i know CAB have advised me in the past to not accept interest in similar circumstances, and it's a similar case from my work in debt management. it seems that adding debt when there is no agreement to do so, when the debtor is claiming long term financial problems and has a history of bad health, might not come across very well. If he really is having financial and health problems then it's going to be hard to not come across as being a bit petty

do you know if he really verifiably has debt, like does he have a debt management plan (DMP) etc? If his financial status is as claimed then the fella is prob quite stressed and might legit be unable to pay but agreed thinking he would try to work it out

have u thought about offering him to pay in installments? try to see what his reaction is to that - I think, unless you do that then in my experience he is probably on solid footing, as he is apparently agreeing to the debt, attempting to pay and the court might view it as strong arming someone in a bad situation. that way you could start to get some cash back, probably get him to agree to the interest, whereas if his situation is as you have described, the court will view him as 'at risk', and will likely accept him offering to pay little or nothing monthly installments.

in this case, unless u think he is really being a chancer and has lots of money, or you really think and are sure there is real proof of that, it seems like generating extra debt for him, and taking him to court without exhausting a few different options might be seen as harsh, and is probably not worth doing unless you really need the money. if he has told you stuff about his finances n health that end up being true, then you won't be seen very favourably either adding interest or taking him to court, which really shouldn't happen without arbitration / dispute resolution in a case like this

CarlMBrighton

i should note if I was in your situation, it would depend on the amount - if the amount owed is thousands of ££££ then you have to really and just let the court deal with it and the chips fall where they may. if it's a few hundred pounds or lower then its probably not worth it, especially if you're fiscally solvent n he is as described, as it will be a lot of time n effort n stress to get a few crumbs. it seems like it would be a long time before you would get money via court enforcement from someone in that situation

DoaM

Is he still in Germany? If yes, how are you going to serve court papers on him? And if you somehow manage that, how are you going to enforce the judgment?

Les79

SmallClaimQuestion wrote: »

When you say it will look bad on me in court, what does that mean? Would they rule against me entirely? Not award the interest? Not award the court costs? As long as it isn't the first one, I would be ok with that. It may sound petty but I want him to get a CCJ, it would be the consequence of how he has treated me.

He is back from Germany.

I don't think it would be bad on you per se, as you feel that you are entitled to the interest.


A judge would presumably make a determination as to what you are entitled to. So you could get an award for everything (inclusive of interest) or just the money owed.


You mention something about this "loan" being for the initial deposit, and you mention getting it back less the amount which the landlord took. Wouldn't that make you entitled to just HALF of the portion of the deposit amount which was deducted? Maybe the interest on the initial 1k loan between the time it was in arrears and the time you got the deposit back?


Ahh, I have no idea mind you. It would be wise of you to seek legal advice as previously suggested. Not least because you are going from the "principle" angle here, which is a potential recipe for disaster (it could cloud your judgement and cause you to overlook some technicality which means you have no/weak case).


The enforcement of the CCJ is going to be a right !!!!! too.... More so if said person goes back to Germany, and more so if they don't actually OWN those "expensive" assets.


I'd be giving some thought about contacting his parents directly to advise that court action is going ahead. They may well pay up to prevent it, however I don't know if this is a wise move or not and would 100% recommend seeking professional advice before you undertake any of my advice.