Should I sue Royal Mail?

I am a Londoner and I suddenly had to move into a temporary accomodation in Nov. My Passport was with Home Office so instead of informing them and all the other companies about the change of addess I set up redirection for 3months by paying about 15 Pounds.
Although I repeatedly called em up to forewarn em about my Passport the Royal Mail went on to loose my Passport and many other important letters as well as my bank statements. They did admit that they have lost it and sent me a booklet of 12 fist class stamps as compensation, which I sent back. Then after they didn't get back to me I sent em another letter in May.In June they sent me back a cheque of about 15Pounds which I am not going to accept. I am very angry with their behaviour towards me and lack of apathy on their part. Has neone had similar experiences?How much can I expect to be paid as a new Passport alone cost me 95Pounds not to mention calling their 0870 nos.? Would going to a Small claims court be prudent? Help Me Plz.

You should refrain from asking Americans whether or not you should sue, considering our litigious nature.

I would take it to the small claims court personally. But maybe it would be worth going to see the citizens advice bureau first? They would be able to tell you what you are entitled to,if anything. I would think you are entitled to a refund for your passport,and if you have itemised billing on your phone bill, a reimbursement for that too. And also,maybe the loss of earnings whilst chasing this up? Go for everything you can,just make sure you have evidence backing your case and they dont have a leg to stand on. Good luck!