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Making civil recovery work for retailers

21 April 2010

The Citizens Advice Bureau (CAB) has reported an increase in the number of civil cases against individuals accused of shoplifting or employee theft.

Retailers are pursuing individuals for substantial sums of money in relation to the cost of the stolen property, plus associated expenses such as the cost of the security staff involved in the incident.

CAB is campaigning to ensure that retailers seek recovery by transparent, fair and proportionate means only. Its Unreasonable Demands? report concludes that requests for payment and threats of court action could fall foul of the Office of Fair Trading's guidance on what amounts to unfair debt collection practices – ‘unfair’, ‘improper’ or ‘deceitful’.

There is also the potential for an action for harassment to consider here. Under the Protection from Harassment Act 1997, victims of a course of conduct which amounts to harassment can claim damages through the civil courts for any anxiety and any financial loss resulting from the harassment.

‘Conduct’ can include speech, one or two instances can potentially be sufficient to make out a ‘course of conduct’, and ‘harassment’ is widely defined to include causing a person alarm or distress.  Injunctions are also available as a remedy here to prohibit such conduct.

So when and how should retailers take action in the civil courts?

Civil court proceedings can be issued, even where there have been no criminal proceedings, but both the decision to proceed and the conduct of the proceedings require careful consideration.

As with any commercial dispute, retailers need to carry out a ‘cost/benefit’ analysis at the outset and to consider:

What are the costs implications of proceeding?

It is not usually possible to recover legal costs where the amount in dispute is less than £5,000, ie ‘small claims’, unless the court finds that a party has behaved unreasonably.

For claims worth more than £5,000 it may be possible to recover legal costs but there are many factors governing, and limiting, recovery. Costs will be carefully scrutinised and the court will ask both was it reasonable to incur those costs in principle, and are the amounts claimed reasonable? The irrecoverable costs could be disproportionate to the amount recovered.

Any decision to commence proceedings should take into account these considerations. If proceedings are commenced and there is a subsequent change of heart, the proceedings cannot simply be discontinued (withdrawn) unless the opposition's costs are paid. Otherwise, the claim will proceed to trial or a settlement agreement will need to be negotiated, which may not be an easy task where an individual with no legal representation is involved.

Remember also that the Civil Procedure Rules do permit litigants in person, individuals acting without legal representation, to recover legal costs – courts can order that the costs of a litigant in person are paid - up to two-thirds of the amount which would have been allowed if the litigant in person had been represented by a legal representative.

Other considerations

Particular care needs to be taken in the conduct of the proceedings when dealing with a person who does not have legal representation.

Do not:

The courts expect co-operation in any commercial dispute but will take special care to ensure that unrepresented individuals are placed on an equal footing.

Also consider alternative dispute resolution (ADR). It can be a useful dispute resolution tool and there can be adverse implications in relation to costs recovery if ADR is not explored.

Ultimately, there are many reasons for arriving at the decision to proceed with a civil recovery action in these circumstances – but proceed with caution.

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Get in touch

Helen Pickford

Associate
T: 03700 86 4189
I: +44 (0)121 625 4189
E: helen.pickford@shoosmiths.co.uk