Several people have asked my opinion recently on using the small claims court as an alternative to pursuing a dispute through the deposit protection schemes. In the most part, this comes in response to adverse decisions from the schemes which appeared unjustified. One letting agent in particular felt that judgments from small claims action were more predictable than adjudication decisions, but when I asked some more about how they operate it turned out that the agent herself was traipsing off to court every time and spending at least half a day waiting for the case to be heard, and well over two hours in the hearing every time.
As we all know, deposit protection disputes are resolved on the basis of paper submissions, and don’t involve a hearing. If you opt for the small claims court, you are most likely to have the opportunity of having your claim heard in open court, where the judge can question the parties on their evidence. If your written submissions aren’t clear, you will have a better chance of getting your point across in court than in a deposit dispute, where the adjudicator only has your written statement to go on. If, on the other hand, your written claim is properly made out, you will get the result you deserve from a deposit protection adjudicator.
Courts are also expensive, whereas deposit disputes are free of charge. Your court fee may only be £100 or so for a low value case, but then there is your time in attending. That’s half a day, at least, where you are not making any money because you are sitting, chewing your nails in an airless court waiting area. Paying someone else to attend the hearing on your behalf is not always advisable, because you will almost certainly get the pupil barrister or the most junior person in the office, not that you would know it from their fees. If you choose to attend yourself to save money, be prepared to be confronted by the very well informed lawyer that your tenant has engaged on a no-win no-fee basis.
To avoid the expense of court, you may opt not to attend the hearing, and not to send anyone else in your place. This is perfectly proper, but it effectively means you are voluntarily accepting all the disadvantages of a deposit dispute by restricting your claim to written evidence, while the tenant enjoys all the advantages of a hearing in person. This imbalance will not help your chances of winning.
You should also consider the potential for for having to pay the other side’s costs, even in small claims. Even if you lose a deposit dispute, the other side cannot claim costs against you. If you lose in court, you usually find yourself with a bill for at least some of the other side’s legal fees. Talk about kicking a man when he’s down.
Then of course there’s the lengthy delays waiting for a court date, compared to deposit disputes, which usually are resolved within a matter of weeks; and the difficulty in enforcing county court judgments against slippery tenants. We’ve all heard of cases where landlords have won their court case, only to find the tenant persuades the judge to let them pay back the debt at just a few pounds a month, meaning it might be years until they’ve paid what you are owed. Even worse, sometimes they just disappear, leaving you with the stark choice of writing off the debt, or paying out more money to a debt collection firm.
All things considered, in the majority of cases, I would rather prep my evidence properly and take my chances with an adjudicator, than get involved in all that stress just over a deposit.
By way of a footnote, however, there are also cases that simply cannot be adequately resolved by the schemes, which might include claims for damages in excess of the deposit. The deposit protection schemes can only award you the deposit, whereas a court is not limited to a fixed amount.
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