Jackson reiterates that proportionality and costs are just as relevant to the MOJ Portal and Small Claims Track
A credit hire claim brought in the Portal, should have been resolved by way of a Stage 3 hearing and not transferred to the Small Claims Track the Court of Appeal have ruled in an appeal before them in Phillips v Willis (2016). The District Judge’s decision to transfer the claim was “illogical” when the defendant had not presented any evidence to challenge the claimant’s hire rate and the sum at stake was only £462.
DWF Head of Motor Claims, Nigel Teasdale takes a look at the judgment, which may affect how insurers deal with credit hire and additional claims, such as claims for rehab, in the Portal and serves as a reminder of the need to serve any evidence in respect of a claim at Stage 2 of the Portal process, or face being prevented from producing any evidence at a later stage.
The claimant, represented by Winns, had brought a claim through the Portal that arose out of a road traffic accident. As part of that claim, the claimant sought to recover the cost of hiring an alternative vehicle from On-Hire in the sum of £3,486. Whilst the parties were able to agree the claim for personal injury, they could not agree the claim for hire. The defendant made a counter offer in the sum of £2,334 and the claimant served evidence at Stage 2 of the Portal process in the shape of a “rates report” from an On-Hire employee but the defendant did not serve any specific evidence in response.
The claimant then issued proceedings under Part 8 of the CPR to request a Stage 3 Hearing and the parties duly appeared before District Judge Howard in Gateshead County Court. Although both parties attended the hearing with the intention of resolving the dispute that day, the District Judge indicated that, as the only issue between the parties was the amount of hire charges that should be recovered, the case needed to be transferred to the Small Claims Track under Part 7 of the CPR and he went on to make an order to that effect and also gave directions in respect of the exchange of any further evidence relating to the credit hire argument.
The claimant appealed that decision, which was heard before HHJ Freedman, who concluded that the District Judge had made a case management decision that he was entitled to make under Practice Direction 8B paragraph 7.2, which states that:
“Where the court considers that
(1) further evidence must be provided by any party; and
(2) the claim is not suitable to continue under the Stage 3 procedure,
the court will order that the claim will continue under Part 7, allocate the claim to track and give directions”
The claimant appealed to the Court of Appeal.
The arguments before the Court of Appeal
In arguing the appeal, the claimant contended that:
no further evidence was needed for the court to determine the case; and
consequently there was no need for the District Judge to vacate the hearing and transfer to the SCT; and
neither of the two criteria set out in PD 7.2 (above) were met
The evidence before the court at the time of the Stage 3 hearing included a statement from an On Hire employee, essentially comprising a rates report of comparative hire figures. That statement was served at Stage 2 of the Portal process. The defendant did not serve any evidence in response to that evidence, as they were free to do. Defence counsel indicated at the Stage 3 hearing that he intended to argue the case on the basis of the claimant’s rates evidence, that impecuniosity was not taken as a point and that there was no dispute over the hire period of 32 days.
The Court of Appeal anticipated that the defendant would have argued at the Stage 3 hearing that the claimant should have hired a vehicle from one of the providers mentioned in the rates report and at a weekly rate, rather than at a daily rate and that he had failed to mitigate his losses. During the course of the appeal, counsel for the defendant submitted that there was a need for the District Judge to vacate the Stage 3, so as to allow the claimant to attend court and give oral evidence.
In identifying that the parties were only £462 apart, the Court of Appeal stated that it was unsurprising that the parties had not sought an adjournment of the Stage 3 hearing as that to do so would have been “a grossly disproportionate step to take”. However, the Judge of his own volition moved the matter to the Small Claims Track to hear the arguments and gave directions which were fairly standard directions in credit hire cases heard in the SCT.
It was held by Jackson LJ, Floyd LJ and Macur LJ, with Lord Justice Jackson delivering the lead judgment that:
By moving the matter to the small claims track, the parties would be forced to incur substantial extra costs, totally disproportionate to the sum at stake, including a further court fee in the sum of £335, along with the costs of complying with seven “elaborate” directions that the District Judge also gave.
The District Judge’s conclusion that further evidence was necessary to resolve the dispute was “irrational” and not a conclusion that he was entitled to reach.
Just because the personal injury claim had been resolved, that was no reason for the case to exit the RTA Portal process.
There could be cases involving very high car hire charges and/or complex issues of law or fact which are not suitable for resolution at Stage 3.
This case did not fall within the ambit of paragraph 7.2 of the Practice Direction and the District Judge had no power under that paragraph to direct the case to proceed under Part 7 of the CPR.
The Court of Appeal accepted that CPR r.8.1 provides for the court to order a claim to continue as if the claimant had not used the Part 8 procedure, but that that rule should not be used to “subvert the protocol process”. The Court did not believe that the District Judge in this case was relying upon that rule to transfer this case and that it would have been “an impermissible exercise of the power” under that rule to transfer this case out of Part 8 and into Part 7.
For further information please contact Nigel Teasdale, Partner, on +44 (0)1772 554264
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.