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Bad News: Suing for Small Debts

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By NEELA RAMSUNDAR

TWO massive changes were quietly made to the laws of Trinidad and Tobago within the last few years which have had profound implications on people who need to sue to recover small debts. What are these changes I’m talking about?

Access to the High Court is Reduced

The first change was to deny access to the High Court of Justice to those persons who needed to sue for unpaid debts over $15,000 but not exceeding $50,000. From January 27, 2015 any lawsuits for unpaid debts of $50,000 or under had to be filed at the Petty Civil Court Division of the Magistrates Court. (Magistrate’s Courts are the lowest courts in the court structure.) Previously, the limit was $15,000.

Wat’s wrong with that you might ask?

The Petty Civil court system of this country was in need of a complete overhaul prior to this change. Obtaining justice via the Petty Civil Courts was frequently a tediously long process taking months or years, partly due to the requirement to file paperwork at a level expected within the High Court system and partly due to infrastructural and human resource challenges.

Our Petty Civil courts are not like the Judge Judy style court you see on TV. A matter being heard and determined on the first day of hearing is almost unheard of.

A major flaw in the Petty Civil system is a rule which effectively restrains magistrates from awarding a successful litigant their legal costs in an amount over $500 for a solicitor (a lawyer who gives instructions to counsel) and $500 for counsel (a lawyer who specialises in appearing in court). (A High Court judge, however, is not so constrained and there are better systems at the High Court level for recovering the legal costs that you pay your lawyer.)

Let’s use an example: if you sued someone for $20,000 in the Petty Civil Court using a single lawyer and won, the most you can be compensated for attorney’s fees is $500, even if you actually paid $3,500. It doesn’t matter if the matter took one, two, three or ten or more court hearings for the matter to go to trial and get judgment. $500 is the maximum you can be awarded for lawyer’s fees.

This law was passed circa 1980, and hasn’t been changed since. No attorney can survive on that fee for the amount of work required. This means, even if you are successful, you are going to have to fork out some of your hard-earned money to pay your lawyer, and will not be able to recover it.

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The Statutory Rate of Interest is Reduced

Shortly after the first change, the next blow came on October 11, 2016.

By law, every person who wins a lawsuit and is owed a judgment debt (eg money or legal costs) is automatically entitled to something called statutory interest. Statutory interest accrues from the date the judgment was entered up to the date the money is paid.

The statutory interest rate was 12% per annum. If a Defendant owed you a judgment debt of $100,000 and the defendant took a year to pay you, you would have been entitled to an additional sum of $12,000 as statutory interest.

On October 11, 2016 the statutory rate of interest was quietly reduced to 5% per annum. Using the same example, on a debt of $100,000 which was only paid a year later, the statutory interest you would be entitled to claim dropped from $12,000 to $5,000.

That’s the bad news about suing for small debts.

But remember, laws are not cast in stone, and can be changed, if it is the will of the people.

© Neela Ramsundar, LL.B (HONS), L.E.C is a Civil Litigation Attorney at Law & Certified Mediator

Disclaimer: The contents of this article are for general informative purposes only. It does not provide legal advice and does not create an attorney – client relationship. For legal advice, please contact an Attorney-at-Law of your choosing directly.

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