Kieran Coleman on the Decision to transfer a case from the Stage 3 Low Value Road Traffic Accident Procedures to a Part 7 claim

20 May, 2016

Phillips v Willis [2016] EWCA Civ 401

The decision to transfer a case from the Stage 3 Low Value Road Traffic Accident Procedures to a Part 7 claim was irrational in light of the amount of money in issue, the consequential costs that would be incurred by the parties and the limited oral evidence a judge would require to determine the point.

The Facts:

The claimant sought damages arising from a road traffic accident occurring on 28 June 2013. The claimant suffered personal injuries and his vehicle was damaged beyond repair, so he obtained a hire car. The defendant admitted liability but the parties were unable to reach a settlement under the Pre-Action Protocols. The issue between the parties was the extent of hire costs which the claimant sought at £3,486.

At the stage 3 hearing the District Judge informed the parties that since the only issue between them was hire charges the action would be transferred to Part 7 on the small claims track; he ordered a new hearing date and made directions (which incidentally, though familiar to practitioners, were somewhat critically described by the Court of Appeal as elaborate).

The Law:

The claim fell under the pre 31 July 2013 portal regime, though for the purposes of the issues in the case this made little difference. Paragraph 7.2 of Practice Direction 8B states:

"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 a track and give directions."

It should also be noted that CPR 8.1(3) states:

"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."

The Appeal:

The issue for the Court of Appeal was whether the District Judge had power to order the claim to proceed under Part 7. In particular the Court of Appeal noted it was likely that the only issue the defendant would have raised at the first instance hearing would have been a failure to mitigate regarding the hire rate (both with regard to choice of provider and choice of a weekly or daily rate). At the appeal hearing the defendant conceded that the only issue requiring oral evidence would be whether the claimant needed to hire the vehicle on a daily or weekly basis.

The court noted that the money in issue on this point amounted to £462 and that the directions of the District Judge would require both parties to incur disproportionate and unrecoverable costs (due to allocation to the small claims track).

At paragraph 31, Lord Justice Jackson found the District Judge’s decision that further evidence was needed to resolve the outstanding issue to be irrational. Whilst he decided he did not need to conclude under what circumstances paragraph 7.2 of the practice direction applied, he did highlight that there may be some cases in which a transfer to Part 7 would be appropriate if for example there were high value hire charges where complex issues of law or fact would render stage 3 inappropriate.

The court also noted that rule 8.1(3) could not be used to subvert the protocol process and that the use of that power by the District Judge would have been impermissible.

Conclusion:

Where the sums in issue are small, the costs of transfer to Part 7 disproportionate to those sums and the further evidence required by a party limited, a transfer from the stage 3 procedure to Part 7 will be impermissible.

Further that where it applies, paragraph 7.2 cannot be circumvented by the wider discretion of rule 8.1(3).

 

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