Why a defended claim under £10,000 is referred automatically to mediation, what the appointment involves, and what happens if it settles or it does not.
Once a debtor files a defence to a County Court claim for an unpaid invoice under £10,000, the case no longer runs straight to a hearing. It is referred automatically to mediation first, and that referral is not something either side opts into.
Practice Direction 51ZE introduced automatic referral to the Small Claims Mediation Service from 22 May 2024, for claims suitable for the small claims track — in practice, a specified sum of money up to £10,000. From 5 November 2024 it was extended to cover claims started on Online Civil Money Claims as well as those issued on paper or through Money Claim Online, so the route used to issue the claim makes no difference. Road traffic accident and personal injury claims are excluded; an unpaid business invoice is not.
The pilot was already extended once before this, and currently runs to 6 April 2027. Treat it as the normal procedure on a defended small claim for as long as your case is live.
Once a defence is filed, the court sends both sides form N180, the small claims track directions questionnaire. When all parties have filed it, the claim is referred to the Mediation Service. Filing the form is what triggers the referral; there is no separate box to tick agreeing to mediate.
The claim is then stayed for 28 days while HM Courts and Tribunals Service arranges the appointment. That pause sits inside the ordinary timetable for a defended claim described in taking a customer to court, so build it into how long you expect a defended claim to take before it reaches a hearing.
A mediator employed by HM Courts and Tribunals Service telephones each side separately, usually for up to 60 minutes in total. It costs nothing. Nobody is required to settle, and if you do not reach an agreement the case simply goes back into the ordinary timetable towards a hearing. What either side says in the appointment cannot be repeated to the judge if the case does go to a hearing afterwards.
Illustrative. A debtor who disputes the whole invoice but, at mediation, accepts most of it might settle at, say, £5,800 over four monthly instalments of £1,450 — less than the full claim, but without the cost or delay of a contested hearing on a case where recoverable costs are limited either way.
A settlement reached at mediation stays the claim, with permission to go back to the court without starting again. If the debtor pays as agreed, that is the end of it. If an instalment is missed, the claimant can apply for judgment for whatever balance of the settlement remains unpaid — in the example above, judgment for the £2,900 left once two instalments are missed. Where the settlement breaks down badly enough, the other option is to apply to restore the claim for the full amount originally claimed.
The claim goes back into the ordinary small claims track timetable: allocation, directions, and a hearing if nothing resolves it before then. Non-attendance at the mediation appointment is something the court can and does take into account when it later decides who pays the other side's costs, even on the small claims track where cost recovery is otherwise very limited. Turning up with nothing to say still counts as attending; refusing to engage with the appointment at all is the thing that invites a sanction.
No. Since the pilot under Practice Direction 51ZE took effect, referral to the Small Claims Mediation Service happens once both sides have filed their directions questionnaire, and there is no opt-out built into the process. Attending and declining to settle is one thing; ignoring the appointment altogether is another. The second risks the court holding it against that party on costs later, even though cost recovery on the small claims track is otherwise very limited. It stands alongside filing a defence or a directions questionnaire as a fixed step in a defended claim under £10,000, one neither side gets to wave away.
It applies to a defended money claim for a specified sum that would normally go to the small claims track — the £10,000 ceiling — issued on paper, through Money Claim Online, or through Online Civil Money Claims. The main carve-outs are road traffic accident claims and personal injury claims, neither of which describes a commercial debt. An undefended claim never reaches this stage at all, because there is no directions questionnaire to trigger it — judgment in default is requested instead, as described in taking a customer to court.
A mediator employed by HM Courts and Tribunals Service calls each side separately by phone, for an appointment of up to 60 minutes in total. It is free. Nobody is required to reach an agreement, and the mediator does not decide the case or report an opinion on who is right to the judge. If the parties do settle, the mediator writes down the terms there and then. If they do not, the case simply continues towards a hearing as if the appointment had not happened, aside from the time it has taken.
Yes. The claim is stayed on the terms agreed, and either side can apply back to the court to enforce it without starting a new claim. If the debtor pays everything agreed, the matter ends there. If an instalment is missed, the claimant can apply for judgment for the unpaid balance of the settlement, which is usually quicker than restoring the original claim for the full amount — though that option exists too, where the breakdown is serious enough to justify it. Get the instalment dates and amounts written down at the appointment, not agreed loosely and tidied up afterwards.
The claim goes back into the ordinary timetable for a defended small claim: allocation, directions, and a hearing if nothing resolves it before then, exactly as described in taking a customer to court. Nothing said during the appointment can be referred to at a later hearing, so neither side can use an offer made in mediation as evidence against the other afterwards. The appointment and its stay add time on top of the rest of the claim's timetable. Build that into your expectations; it is not a delay you can skip.
Whoever can agree a figure and an instalment plan on the spot, without having to come back to someone else first. For most businesses chasing an unpaid invoice that is the owner, the finance lead, or whoever issued the letter before action and knows the account. It does not need to be a solicitor: mediation is not a hearing, and Buzz Legal's role on a claim is advising on the figure and the terms beforehand, not attending the call in your place. Arrive with your floor figure and your longest acceptable instalment plan already decided, not worked out live on the phone.
Weigh it against what a hearing would recover in practice. On the small claims track, the winner's recoverable costs are tightly limited even after a full hearing, so a contested trial over a small balance can cost more in time than a prompt, lower settlement returns. A cash settlement paid in full now is usually worth more than a larger judgment against a debtor who struggles to pay it — see checking whether a customer can pay and writing off a bad debt for what a judgment against an insolvent debtor is worth in reality. The debtor's ability to pay decides it.
We email you the letter before action checklist, the interest and compensation rules, and the cost of each recovery stage.
Tell us what you are owed and who owes it. We reply with the total once interest and compensation are added, the first step we recommend, and its fixed fee.
