Debt Advice Handbook (13th edition)Chapter 11: Action in the county court: money claims 1. Starting a money claim
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1. Starting a money claim
Court proceedings start when the county court issues a ‘claim form’ at the request of the creditor (known as the ’claimant’).
A claim form cannot be issued in the High Court unless the creditor expects to recover more than £100,000 and can justify the matter being dealt with by a High Court judge.1CPR PD 7A, para 2 This is rarely possible in ordinary debt cases, and so there should be no reason for creditors to issue proceedings in the High Court. However, some creditors may be able to issue a claim in the county court, obtain a county court judgment and transfer the case to the High Court for enforcement (see here).
 
1     CPR PD 7A, para 2 »
Debts regulated by the Consumer Credit Act 1974
The High Court cannot deal with claims related to secured or unsecured agreements regulated by the Consumer Credit Act 1974 (see here), or actions linked to such agreements, regardless of the amount of the claim. If you encounter such cases being dealt with in the High Court, get specialist advice.
Default notice
**Alert: With effect from 2 June 2021, default notices must comply with the Consumer Credit (Enforcement, Default and Termination Notices) (Coronavirus) (Amendment) Regs 2020. These regulations amend and replace the Consumer Credit (Enforcement, Default and Termination Notices) Regs 1983, which prescribe the form of the notice required to be given by a creditor before taking certain action to enforce or terminate an agreement. The 1983 Regs are updated by:
    •banning the use of block capitals (often regarded as intimidating) as an aid to prominence;
    •removing technical legal language;
    •altering the wording and ordering of notices to improve clients’ understanding; and
    •signposting clients to up-to-date sources of support and advice.
There was a six-month transitional period to enable creditors to implement the changes and this period has now expired.**
A ’default notice’ must be issued by a creditor for all debts regulated by the Consumer Credit Act 1974 before court action can start for early payment of money due under an agreement. A default notice is usually required in debt cases where arrears are claimed along with the money which would become due if the agreement ran its course. It is not required if the time allotted to an agreement is already over but an outstanding balance remains, or if only arrears are claimed.
The default notice must contain details of:
    •the type of agreement, including the name and address of the creditor and client;
    •the terms of the agreement which have been broken;
    •for fixed-sum credit, the early settlement figure;
    •the action needed by the client – eg, to pay arrears in full by a certain date;
    •the action the creditor intends to take if the client is unable to comply with the default notice – eg, refer to debt collection or start court action.
A default notice served on or after 1 October 2008 must contain the following further information.
    •If the notice relates to a hire purchase or conditional sale agreement, information on the client’s right to terminate the agreement, including the amount of her/his liability if s/he exercises this right (see here).
    •Where applicable, a statement that the client may have to pay contractual interest in the event of the creditor obtaining a judgment (see here).
    •A copy of the current Financial Conduct Authority information sheet on default.
The client must be given at least 14 days to carry out the required action. If the default notice requests payment, it must contain a statement about time orders and about seeking advice from a local Citizens Advice office, solicitor or trading standards department.
If a default notice is not complied with, a creditor can:
    •terminate the agreement; and
    •demand earlier payment of money due under an agreement.
If a default notice is not completed correctly (eg, it does not give the client sufficient time to respond or the arrears figure is incorrectly stated), it is invalid and the creditor must issue a fresh notice before taking action.1Brandon v American Express [2011] EWCA Civ 1187 (Adviser 149 abstracts)
Creditors do not always automatically initiate court action if a default notice is not complied with and so, even if the time limit has expired, it is always worth trying to negotiate with a creditor in order to prevent court action. Clients often claim not to have received default notices and so bear in mind that a default notice is treated as served for this purpose if it is sent by post to the client’s last known address.2s176(2) and (3) CCA 1974; Lombard North Central v Power-Hines [1995] CCLR 24
 
1     Brandon v American Express [2011] EWCA Civ 1187 (Adviser 149 abstracts) »
2     s176(2) and (3) CCA 1974; Lombard North Central v Power-Hines [1995] CCLR 24 »
Which court deals with the claim
Claims to recover a sum of money are started by creditors in the County Court Money Claims Centre in Salford, but the claim is issued in the name of the County Court Business Centre in Northampton. Such claims are known as ’money claims’. Large creditors that issue county court claims in bulk and prepare claims on computer can start their claims in the County Court Business Centre which charges a lower court fee. The County Court Money Claims Centre and the County Court Business Centre deal with the matter either by post or electronically unless it is transferred to another court.
Automatic transfers
The case is automatically sent (transferred) to the client’s ’home court’ (ie, the county court hearing centre that serves the address where the client lives) if:1r2.3(1) CPR
    •the client defends the action (see here); or
    •there is a request for a redetermination of a decision by the court (see here); or
    •the district judge decides that a request for an instalment order should be dealt with at a hearing; or
    •there is an application to set aside a default judgment (see here); or
    •the creditor applies to increase the amount payable under a judgment (see here); or
    •there is a request for a reconsideration of a decision by the court relating to a client’s application to vary the amount payable under a judgment (see here); or
    •the creditor applies for an information order (see here), a third-party debt order (see here) or an attachment of earnings order (see here). A request for a warrant of control (see here) is made to the Money Claims Centre or the Business Centre, unless the case has already been sent to another county court hearing centre.
In Money Claims Centre cases, if the client’s defence is that s/he paid the debt before the claim was issued, this is checked with the creditor before the case is transferred. This also happens if the client admits part of the debt but disputes the balance. In Business Centre cases, all defences are checked with the creditor before the case is transferred.
Automatic transfers are only available if the defendant is an individual.
If automatic transfer does not apply, the court has the discretion to transfer a case if:
    •it would be more convenient or fair for a hearing to be held in another court; and/or
    •the facilities available at the court where the case is currently being dealt with are inadequate because a party or witness has a disability.
 
1     r2.3(1) CPR »
The claim form
The claim form (Form N1) must contain a concise statement of the nature of the claim and a ’statement of value’. This states the amount the creditor is claiming and whether s/he expects to recover:
    •not more than £10,000; or
    •more than £10,000, but not more than £100,000; or
    •more than £100,000.
The amount claimed includes the court fee paid by the creditor to issue the proceedings and, if a solicitor has been instructed, an amount for the solicitor’s costs. The court fee and solicitor’s costs vary with the amount claimed. The claim form must state the amount of any interest claimed.
Details of the court of issue (usually, the County Court Business Centre) and the unique reference number allocated to the case appear in the top right corner of the claim form.
The claim form must be served on the client within four months of issue. This is usually done by the court by first-class post. The claim form is usually deemed to have been received on the second business day after it was posted – ie, if posted on Monday, it is deemed to have been received on Wednesday (Saturdays, Sundays, Bank Holidays, Christmas Day and Good Friday are not counted).1r6.14 CPR; Anderton v Clwyd County Council (Adviser 93 abstracts) In Business Centre cases, the claim form is deemed to have been served five days after issue.
See here if the client states that s/he did not receive the claim form before judgment was entered or any enforcement action taken by the creditor.
 
1     r6.14 CPR; Anderton v Clwyd County Council (Adviser 93 abstracts) »
The particulars of claim
The claim form must be accompanied by the ‘particulars of claim’, or these must be sent to (‘served on’) the client by the creditor within 14 days of the claim form being served. The particulars of claim must include a concise statement of the facts relied on by the creditor (including the details of any contract) and must be verified by a ‘statement of truth’ – ie, that the creditor believes the stated facts are true. A copy of any written agreement should (but not must) be attached (this is not required if the claim form and particulars of claim are issued by the Business Centre).1CPR PD 7C, para 1.4, and PD 16, para 7.3
If the claim form includes the particulars of claim, it must be accompanied by:
    •a response pack, including an acknowledgement of service (Form N9);
    •a form for admitting the claim (Form N9A);
    •a form of defence and counterclaim to be used if the client disputes the claim (Form N9B);
    •notes for the client on replying to the claim form (Form N1C).
If the particulars of claim are served separately from the claim form, the forms must be served with the particulars of claim. This may be important as the client’s time for responding to the claim runs from the deemed date of service of the particulars of claim.2In Diriye v Bojaj [2020] EWCA Civ 1400 the Court of Appeal held that a ‘Signed For 1st Class’ delivery was subject to the deemed service provisions regardless of the date on which it was actually signed for and delivered (in this case, three days after the deemed date of service)
 
1     CPR PD 7C, para 1.4, and PD 16, para 7.3 »
2     In Diriye v Bojaj [2020] EWCA Civ 1400 the Court of Appeal held that a ‘Signed For 1st Class’ delivery was subject to the deemed service provisions regardless of the date on which it was actually signed for and delivered (in this case, three days after the deemed date of service) »
Responding to the claim form
The client must respond to the claim form/particulars of claim within 14 days of service (ie, the response must be received on or before the 14th day after the date s/he is deemed to have received the claim form/particulars of claim, regardless of when s/he actually received it), or within 19 days of issue if issued by the Business Centre. Note: all days count when calculating the 14- and 19-day period, not just ‘business days’.
The client can:
    •send (‘file’) a defence or counterclaim to the court (see here); or
    •file an acknowledgement of service at the court within the 14- or 19-day period if s/he is unable to file a defence in time or wishes to dispute the court’s jurisdiction – eg, if a creditor has issued proceedings for an amount due under a regulated consumer credit agreement in the High Court rather than, as required, in the county court. Once an acknowledgement of service has been filed, the client must file the defence within 28 days of the date of service of the claim form/particulars of claim; or
    •send (‘serve’) an admission to the creditor, admitting the whole of the claim (see here); or
    •still send the admission to the creditor outside the 14- or 19-day period, provided the creditor has not requested a default judgment (see here); or
    •file an admission and defence at the court, admitting part of the claim but disputing the balance or making a counterclaim (see here).
Filing and serving documents
Documents are normally served by post. However, parties can file documents at court by fax.1r5.5 CPR; CPR PD 5A, para 5.3 A document is not treated as filed until it is delivered by the court office’s fax machine, so it is good practice to telephone the court and check it has been received. A fax delivered after 4pm is treated as filed the following day. Fax should not be used for routine or non-urgent documents nor, unless it is unavoidable, to deliver documents which attract a fee and those relating to a hearing that is less than two hours ahead.2CPR PD 5A
If a court or court office has published an email address for filing documents on the HM Courts and Tribunals Service website, the parties can send a document listed on the website to the court by email. This is not possible if a fee is payable for the particular step in the proceedings. Documents that can be filed by email include the acknowledgement of service, partial admission, defence and the directions questionnaire.3CPR PD 5B. For further information, see justice.gov.uk/courts/procedure-rules
If a claim has been issued electronically, a client can file an acknowledgement of service, part admission and defence electronically online. The claim form contains a password to enable her/him to access the case. A document is not filed until the transmission is received by the court. The time of receipt is recorded electronically. If a transmission is received after 4pm, the document is treated as filed on the next day the court office is open.
All parties to a claim can be served with documents, including the claim form, electronically if they have given their prior written consent to accept electronic service and a fax number or email address to which they should be sent. A fax number or email address included on a letterhead, claim form or statement of case is sufficient.4rr6.3(d) and 6.20(1)(d) CPR and CPR PD 6A, para 4
 
1     r5.5 CPR; CPR PD 5A, para 5.3 »
2     CPR PD 5A »
3     CPR PD 5B. For further information, see justice.gov.uk/courts/procedure-rules »
4     rr6.3(d) and 6.20(1)(d) CPR and CPR PD 6A, para 4 »