Small Claims Court open to businesses (a little)

Dermot Ahern (FF/LH; Minister for Justice, Equality & Law Reform) has announced the introduction of new District Court Rules to amend the small claims procedure of the District Court, commonly referred to as the Small Claims Court (SCC). They will take effect from 11 January 2010.

I have written about this before in the context of Fine Gael’s proposals to change the SCC and to accomodate business claims. The new rules are less ambitious than those proposals and allow businesses to use the SCC in respect of goods or services not exceeding €2,000. In effect, the new rules open the SCC to business-to-business claims but maintain the existing limitations on the SCC; the most noteworthy being that a claim cannot be for an unpaid debt.

FG wanted the SCC to allow debt claims by businesses, whether against other businesses or consumers and, while the proposals may have been popular, they did raise balance-of-power concerns. For example, an unrepresented individual could be faced by a large business with daily, in-house experience of such claims. Certainly, FG’s broadening of the SCC would represent a significant function-creep, introduced as a band-aid measure during an economic downturn rather than as part of a programme of civil litigation reform in the District Court.

ISME have called for the jurisdiction of the SCC to be raised for businesses to the limit of the District Court’s jurisdiction and the implication appears to be that solicitors’ fees are the issue for businesses. Fees in the District Court are quite low and many claimants are quite happy to engage a solicitor to take or defend a claim. (As a sidenote, the implicit suggestion by ISME that solicitors’ fees are the problem in this area is interesting given that the vast majority of solicitors’ firms in Ireland are SMEs and are under tremendous pressure, like most other SMEs.)

Yesterday I sat in on a common example of a consumer complaint: a warranty claim for a defective second-hand car. The amount sought was within the SCC’s jurisdiction but three witnesses, including one expert, were questioned and cross-examined. Most parties to a dispute are happy to outsource the management of such a claim to another party (i.e. a solicitor). The SCC is more routinely used used for complaints of a value far smaller than the jurisdiction of the SCC.

Minister Ahern’s amendment is far more modest than the suggestions of FG or ISME and do not raise the concerns mentioned in relation to FG’s proposal. It is certainly a useful mechanism for businesses with small claims who are prepared to deal with them on their own. However, it is not likely to prove particularly useful to businesses in the current context, where most B2B claims under €2,000 relate to debts.

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3 thoughts on “Small Claims Court open to businesses (a little)

  1. Hi Rossa,

    In Ontario, we have just raised the monetary jurisdiction of Small Claims Court to $25,000. This will likely make it the busiest level of court in the province.

    Colm

  2. That’s interesting and would eat substantially into the jurisdiction of the Circuit Court in Ireland.

    Is there any evidence or statistics as to use of and satisfaction with the Canadian Small Claims Court?

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