Credit Hire Charges Remain In Protocol – Stage 3 Procedure Appropriate – Not Appropriate To Reallocate To Part 7

colin_richmondBy Colin Richmond


Sean Phillips v Carol Willis [2016] EWCA Civ 401

In Phillips v Willis the Court of Appeal held that it was wrong in law and “irrational” for a claim proceeding via the low-value RTA Protocol to be reallocated to the small claims track simply because only hire charges remained in dispute. The claim should properly have been dealt with at a Stage 3 hearing.

Facts of the Case

The claimant was injured in a liability-admitted RTA. General damages were agreed, as were all of the special damages, save for car hire charges. The amount in dispute was £462.

Originally, the claim was listed for a Stage 3 hearing as per CPR 8. However, at that hearing, the District Judge transferred the claim to the small claims track on the basis that the hire was the only issue outstanding.

On appeal, the Circuit Judge upheld the District Judge’s decision.

The Court of Appeal

The Order of the District Judge, which he had made of his own motion, was set aside.

  1. The amount of money which turned on this particular issue was just £462, as Lord Justice Floyd pointed out during argument. Neither party at the hearing on 9 April 2014 sought an adjournment in order to obtain further evidence for the purpose of resolving that question. It is hardly surprising that neither party sought an adjournment. That would be a grossly disproportionate step to take, and unlikely, one would have thought, to give rise to a successful application. The district judge, however, caused the parties to incur substantial extra costs as a result of the order which he made of his own motion.
  1. The costs which the district judge caused the parties to incur were totally disproportionate to the sum at stake. First, the parties would have to pay a further court fee of £335 as a result of the district judge’s order. Secondly, the parties would incur the costs of complying with the district judge’s elaborate directions. Those directions read as follows:

“1. The parties must file at the court and serve on the other party not later than 14 days before the hearing the following:

(a) copies of all documents upon which they wish to rely;

(b) statements of all witnesses (this includes both the claimant and the defendant) upon whose evidence you wish to rely.

The statements shall be typed, dated and signed by the witness and stating that he/she believes that the facts stated in the witness statement are true.

  1. All original documents must be brought to the hearing.
  2. Parties should note that if they do not file and serve documents and statements as set out above then the court may decide not to admit the evidence of the party in default.
  3. If the claimant wishes to raise the issue of impecuniosity, then the claimant’s witness statement must include the following evidence:

(a) wage slips for the period of three months pre-accident and covering the period of hire;

(b) copy bank statements and savings books for a period of three months pre-accident and covering the period of hire;

(c) copy credit card statements for a period of three months pre-accident and covering the period of hire.

  1. Should the claimant fail to comply with paragraph 4 of these directions, the claimant shall be debarred from raising impecuniosity at the final hearing.
  2. Each party is permitted to rely on a short survey of spot hire rates in the claimant’s locality, as recommended by the Court of Appeal in Burdis v Livsey [2003] QB 36. These surveys are to be exchanged no later than 14 days before the hearing.
  3. The claimant shall attend the final hearing to give oral evidence unless the defendant has agreed in writing to dispense with such attendance.”
  1. I dread to think what doing all that would have cost, but that was not the end of the matter. Both parties would need to instruct representatives to attend the further hearing. They would also have to write off the costs of the 9 April hearing. At the end of all that, the winning party would recover virtually no costs, because the case was now proceeding on the small claims track.
  1. In my view, the district judge’s decision taken on 9 April 2014 that further evidence was necessary to resolve the outstanding dispute between the parties was irrational. The district judge was not entitled to reach that conclusion.

Why The Claim Should Have Remained Within The Protocol

Among other things, the mere fact that there is no longer a dispute over the personal injury aspect of the claim does not mean that it should automatically exit the RTA process.

  1. I turn now to paragraph 7.2(2) of PD 8B. Mr Turner points out in paragraph 38 of his skeleton argument that by the time this case reached Stage 3, the personal injury element of the claimant’s claim had been settled. That personal injury element was the “gateway” which, back in July 2013, had enabled the claimant to enter the RTA process.
  1. That observation is perfectly correct. It is also irrelevant. Once a case is within the RTA protocol, it does not automatically exit when the personal injury claim is settled. On the contrary, the RTA process is carefully designed to whittle down the disputes between the parties as the case passes through the various stages. It is to be expected that the sum in issue between the parties will be much smaller when the case reaches Stage 3 then it was back in Stage 1. The mere fact that the personal injury claim has been resolved is not specified as being a reason to exit from the RTA process.
  1. I therefore come to the conclusion that this case did not fall within the ambit of paragraph 7.2 of PD 8B. The district judge had no power under that paragraph to direct that the case should proceed under Part 7.
  1. There has been some debate as to the circumstances in which paragraph 7.2 of PD 8B might apply. We do not need to decide that question today. I should, however, point out that there can be cases where, as a consequence of paragraphs 4.6, 6.4(1), 7.43 and 7.44 of the protocol, claims are proceeding under the protocol which involve very high car hire charges. Such cases might involve complex issues of law or fact which are not suitable for resolution at a Stage 3 hearing. I need not speculate what orders the court might make in those cases. Suffice it to say that the case before us is not such a case.
  1. Mr Turner has drawn our attention to CPR 8.1(3). This provides:

“The court may at any stage order the claim to continue as if the claimant had not used the Part 8 procedure and, if it does so, the court may give any directions it considers appropriate.”

  1. Mr Turner submits that rule 8.1(3) enables the court to transfer a protocol case to Part 7 even if paragraph 7.2 of the practice direction does not apply. I am bound to accept that the language of rule 8.1(3) is wider than the language of paragraph 7.2 of the practice direction. On the other hand, CPR 8.1(3) cannot be used to subvert the protocol process.
  1. In the present case, I do not think that the district judge was relying upon rule 8.1(3). Like the circuit judge, I believe that the district judge was relying upon paragraph 7.2 of the practice direction. If I am wrong, however, then in my view it would have been an impermissible exercise of the power under CPR rule 8.1(3) to transfer the present case out of Part 8 and into Part 7 of the CPR.
  1. Let me now draw the threads together. For the reasons set out above, in my view the district judge did not have the power to make the order which he made in April 2014. If my Lord and my Lady agree, this appeal is allowed and the district judge’s order is set aside.

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