County court judgments against businesses on the rise

According to the Registry Trust the number of High Court Judgments (“HCJ”) against businesses is at the lowest level on record compared to County Court Judgments (“CCJ”) that are rising significantly.

New statistics released by the Registry Trust indicate a decrease of 13% in HCJs awarded in the first three months of 2017 compared to the same period last year.

Meanwhile, there has been a 36% rise in CCJs with nearly 30,000 businesses receiving orders.

The total value of CCJs against companies rose by 4% to £81m, however the average value of a business judgment fell by 24% to £2,712. Moreover, the number of judgments registered against companies increased by 83%.

The increase in CCJs figures appears to contradict the theory that court fees are discouraging small and medium size business from commencing legal proceedings.

Malcolm Hurlston, chair of the Registry Trust, said the reversal of the trend ’may well be a cause for alarm’.

’Judgments against consumers have been rising for technical reasons. There is no equivalent reason for judgments against companies to have jumped to this extent. Closer examination is needed to unveil the truth behind the statistics,’ he explained.

In the High Court, the value of judgments flourished by more than 400% to £96.6m. The trust explained this was as a result of two unusually large judgments: one worth £66.6m against Malabu Oil & Gas; and the other worth £14.8m against Anaconda Group.

The Registry Trust is a non-profit company set up in 1985 which collects, verifies and publishes judgment information from jurisdictions across the British Isles and Ireland.

It may however be that small businesses are willing to accept paying a proportionally larger court fee for a smaller claim safe in the knowledge that it is very unlikely if they lose they will be ordered to pay the other sides costs. This reduces the risk profile of litigating in the small claims track in the County Court.

When the value of claims are higher not only are court fees higher (although not necessarily proportionately so) there is also the risk of having to pay not only your own legal costs but those of the other side if you are unsuccessful. This significantly changes the risk profile of litigation. In our experience it is often the potential costs consequences of losing a larger case that dissuades small and medium sized businesses from entering into higher value litigation.