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Credit hire claims and track allocation

View profile for Steven Jones
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It almost seems like a lifetime ago that the small claims limit rose from £5,000 to £10,000 in non-personal injury claims as part of the Jackson reforms, with this coming into effect on 1st April 2013.

This change meant that legal practitioners and litigants in person would find that any credit hire claims below the £10,000 threshold would now be allocated to the “small claims track”.

The small claims track was designed to streamline low value civil claims, providing a basic and brief structure to court directions and allowing a fairly inexpensive route for a litigant in person to take should they wish to pursue court proceedings.

On 1st April 2016, an amendment to the Civil Procedure Rules (26.7(3)), meant that discretion was given to the court at allocation allowing them to place the matter into whichever ‘track’ they felt appropriate, regarding of the value of the claim. 

Over the years that followed, I saw that a trend began to set in - courts began allocating claims valued between £10,000 to £13,000 to the small claims track. Time passed and yet this bracket only seemingly expanded. I began to see decisions by various courts around the country allocating claims worth even £16,000 to £18,000 to the small claims track.

Earlier this year, the most surprising decision still came in a claim I had personally dealt with, where the value exceeded £21,000. The court had also set basic small claims directions. Based on value alone, it would have seemed that this particular case was far more suitable for the fast track – a more involved track with the court providing a variety of steps to allow the parties better prepare and understand the case before them. Indeed, both the claimant and the defendant party had agreed in their ‘proposed directions’ that the fast track was the most suitable track. 

On this, Rule 26.6 of the Civil Procedure Rules provides that the small claims track is for claims under the £10,000 threshold. Of course, as I said earlier, the amendment to Rule 26.7(3) meant that this threshold no longer carried the weight it once did.

Moreover, in this particular case, there existed a number of complex arguments and counter arguments. The claimant had set out a detailed and involved ‘reply’ to the defendant’s ‘defence’ which set these arguments out in detail. As a secondary point, due to the complexity of the matter, it would again seem logical that the claim would not be suitable for the small claims track.

To that end, Rules 26.7 and 26.8(1)(c) Civil Procedure Rules state that the court is required to take into account the complexities of a particular claim when deciding on track allocation.

Further, Practice Direction 26 notes at paragraph 8.1;

(1)(a) The small claims track is intended to provide a proportionate procedure by which most straightforward claims with a financial value of not more than £10,000 can be decided, without the need for substantial pre-hearing preparation and the formalities of a traditional trial, and without incurring large legal costs.

 (b) The procedure laid down in Part 27 for the preparation of the case and the conduct of the hearing are designed to make it possible for a litigant to conduct his own case without legal representation if he wishes. 

In this particular claim, my client was a hard-working Hackney carriage taxi driver who required a credit hire vehicle following a non-fault accident in order that he could continue to work and support his family. This claim involved substantial preparation including reviewing large amounts of documentation – including (but not limited to) hire agreements and invoices, Hackney carriage taxi documents and licences, local authority documents including suspension notices and reinstatement notices, engineer reports from both parties’ insurance companies and images of the damaged vehicles; witness questionnaires, V5Cs, MOT certificates, insurance policy terms and conditions and the list goes on from there.

The claim also required specific and detailed instruction from my client on his need for the vehicle as it is no longer simply sufficient to say he needed a vehicle for his work and home life, but rather he was required to go into exact reasons why he needed a vehicle.

“Why did you need a vehicle? Was there not another vehicle available? What hours did you work? Did you work weekends? How long have you been a Hackney carriage taxi driver? What type of clientele did you transport? Did this involve any contractual or executive work? What would have happened had you not been provided a replacement vehicle? What action would the taxi base have taken if you could not work? What did you use the vehicle for outside of work – did you do the school run of a morning and evening? Did you take your children to and from any after school activities? Did you yourself have any hobbies? Did you use the vehicle for any trips to family at weekends? Did you visit a place of worship often? What financial and personal sacrifices would you have faced if you could not have earned a living?”

This is a non-exhaustive list of questions facing claimants in credit hire claims up and down the country (specifically in this instance, those claimants who happen to be taxi drivers). A litigant in person cannot be expected to know that such detailed information on the need for a replacement vehicle is required by the court (and challenged by the defendant party).

Of course, it does not end there either, as the substantive preparation continues when faced with the defendant party’s position who will most definitely advance every argument that they can think to raise. Gone are the days, it seems, of a defendant party seeking to narrow the issues.

Moving on, as is standard in these types of claims, the questions of whether my client could afford the cost of hire charges and the cost to either repair or replace their vehicle (known as ‘impecuniosity’) are also raised. This involves requesting my client’s financial documentation from a set period (generally, two months pre-accident to the end of the hire period) and performing a detailed review to identify whether there are any unusual transactions that a defendant party may query, any references to any other bank accounts and indeed whether this account shows regular incoming and outgoings, as well as payments of mortgage/rent and utility bills. There are more nuanced identifiers involved but this provides a gist of the substantial preparation required.

Whilst the skill and abilities involved in the preparation of credit hire claims (as identified above) may be considered the norm by practitioners in this given field, the requirement to prepare correctly, with specialist knowledge and in line with court expectation, combined with the requirement to understand the relevant authorities (cases which have been decided upon by the Court of Appeal and, from which, all practitioners and the court rely on in deciding on these matters) is beyond the scope of a lay person, most of whom would struggle to reasonably prepare themselves without legal representation. 

Interestingly, one of the most recent authorities on this very subject, Elias –v- Blamain Finance Limited [CF019/2021CA] passes comment on a number of these issues.

The judge in Elias –v- Blamain Finance Limited [CF019/2021CA] considered that the value of the claim is fundamental to the question of normal track allocation.

Further, the judge in Elias –v- Blamain Finance Limited [CF019/2021CA] went on to say that;

If the court forms the preliminary view that the value placed on the claim by the claimant is unrealistic, in that it exceeds the amount that the claimant may reasonably expect to recover, it may (though it is not bound to) exercise its power under rule 26.5(3) by asking the claimant to justify the value it puts on the claim. If at the point of allocation the court is satisfied that the value placed on the claim by the claimant is unrealistic, it will proceed on the basis of its own assessment of the value of the claim. Nevertheless, an allocation hearing is not the same as a hearing for the summary determination of an issue, and where there is a live issue of quantum… —it will not generally be appropriate for a judge deciding on allocation to do so on the basis of an opinion that, on a contested issue of quantum, one side’s case is preferable to another’s.”

For the purpose of allocation, the value of the claim ought properly to be taken as the value advanced by the claimant.” 

The commentary in Elias –v- Blamain Finance Limited [CF019/2021CA] also suggests that whilst a matter may not be “complex”, it does not mean that it is therefore straightforward. 

Further, it is added that:

It is obvious that the ambit of the small claims track is capable of including cases where legal representation might be appropriate or even necessary. Nothing that I say is intended to deny or contradict that. However, it is also clear from the passages that I have mentioned in the Rules and the Practice Direction that the basic idea is that the small claims track is designed for low-value claims that people might be expected, with a degree of assistance from the court and with simple case management directions, to conduct from beginning to end (including at trial) by themselves and without the need for legal representation…

More generally, it seems to me that there is a real danger in cases of this sort that issues and arguments that can only be addressed and presented competently by lawyers, to whom perhaps the issue might indeed appear simple if they are experienced at the work, will end up being shunted into the small claims track where litigants in person are not going to be able to present the case… although judges will seek to assist litigants in person they do not act as advocates and are not responsible for researching the law on all the cases that come before them in the small claims lists or for presenting those claims; third, before the matter even comes before a judge the claimant must have been able to identify and formulate the claim that he or she wishes to advance. In cases such as the present, the defendants will almost always have legal representation, even if only in-house. The risk of depriving claimants of the real opportunity of obtaining legal representation seems to me to be a wider reason why some caution is required before cases of this sort are allocated to the small claims track, at least where that is not the normal track for them under rule 26.6.”

It therefore appears there is some inconsistency in the civil justice system when deciding upon allocation to track in these matters.

It also seems that, by allocating claims to the small claims track which do not technically belong there, the courts are effectively reducing income to the public purse insofar as a lesser “hearing” fee is required, in place of the higher hearing fee attributed to fast track and multi track claims.

It could also be suggested that by allocating such a high value claim to the small claims track, this removes the tactical pressure brought by Part 36 offers, thereby increasing the chance this matter will run to trial and take up further court time.

In my humble opinion, it seems in the interest of justice that these types of claims are allocated to the higher value tracks where they can be properly dealt with. 

I would not be surprised if this trend continues however, but then the question has to be asked, where does the court draw the financial line in the sand when it comes to small claims track allocation? £30,000? £40,000? £50,000?

Time will certainly tell and perhaps sooner than we think, with the forthcoming fixed recoverable costs extension looming large on the horizon.

Whether you are an individual looking for advice or whether you are a credit hire company looking for a firm of solicitors to assist with litigation, please contact our specialist credit hire team on 0161 696 6235.

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