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Lord Justice Jackson has slammed as “irrational” the decision of a District Judge to transfer a £462 hire dispute from the Stage III procedure to the Small Claims Track. In a case which is interesting not only for its insight as to how the Portal process should work, but also the wider issue of the need for proportionate decisions on case management, he set out very forthright views in the case of Phillips v Willis [2016] EWCA Civ 401.

This was a case which involved the earlier version of the Low Value Personal Injury Claims in Road Traffic Accidents protocol. The process which this case could have followed, had it not been for the intervention of the Court of Appeal, would not apply to those cases under which the newer version (post 30 July 2013) of the protocol provides for a different Stage III process. By way of reminder, in the earlier version, if the matter did not settle at Stage II, Part 8 proceedings were required which would lead to a determination of the outstanding issues on paper or, if requested, at an oral hearing.

In Phillips, at Stage II, two of the 3 heads of claim were agreed, being physiotherapy charges and general damages for personal injury. The hire claim, involving charges of £3486, could not be agreed and thus Part 8 proceedings were issued with a request that the matter be dealt with by way of an oral hearing. Both parties turned up at the hearing ready to argue on quantum, but the District Judge, on his own motion, directed that the matter be treated as a Part 7 claim and allocated it to the Small Claims Track. He also gave directions for further evidence to include disclosure of documents, exchange of witness statements, disclosure of financial documents if the Claimant were to raise impecuniosity, the provision of surveys of spot hire rates from both parties and a direction that the Claimant should attend the Small Claims hearing. There was an additional Court fee required as a consequence, of £355.

Lord Justice Jackson said “I dread to think what doing all that would have cost”. He also noted that in addition representatives would be required for attendance at the hearing, there would have been no recoverable costs of the oral hearing and that the winner would recover virtually no costs because the matter would have been on the Small Claims Track. On the Portal process as a whole he said:

“This modified procedure is designed to minimise the expenditure of further costs and in the process to deliver fairly rough justice”.

The idea of “rough justice” is one to which he has referred previously and is at the heart of his views as to how litigation must be conducted if it is to be at proportionate cost. The whole point of the Part 8 procedure in this process was because the costs of a full trial would rarely be justified.

At the heart of the District Judge’s decision had been a provision within Practice Direction 8 B, paragraph 7. The relevant part there is:

“7.2. 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 III procedure,

the court will order that the claim will continue under Part 7, allocate the claim to a track and give directions.”

On the first appeal to the Circuit Judge, it was held that the District Judge had been entitled to make the Order, that it was within his discretion and that an appellate court should not interfere with such a decision. As noted, Lord Justice Jackson took a radically different view. He found that the District Judge was not entitled to reach the conclusion which he did that further evidence was required or that the claim was not suitable to continue under the Stage III procedure. He found that at the time of the oral hearing, the Defendant’s representative had been prepared to argue his case based upon the evidence then available (it should be noted that the only evidence to be considered at such a hearing is that which had been disclosed in the Stage II process) and the Defendant had obviously made a choice not to obtain its own figures on comparable hire rates.

The Defendant argued that because the personal injury element of the claim had been settled prior to the Stage III hearing it was appropriate for the matter to then be treated as Part 7 because the personal injury claim was the gateway to the Portal process and without that the Portal process was not required. This was said to be irrelevant by Lord Justice Jackson. He said that the Portal process was designed to whittle down the issues and that the claim did not automatically exit the process when the personal injury element was settled. It was fully to be expected that there would be a much smaller sum in issue by Stage III than at the outset.

The Defendant also argued that CPR 8.1 (3) gave the District Judge the power to make the decision which he did:

“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.”

Lord Justice Jackson found that in fact the District Judge had made his order pursuant to paragraph 7.2 of Practice Direction 8 B, but that even if that had not been the case it would be an impermissible use of discretion to use CPR 8.1 (3) in the circumstances.

Quite what motivated the District Judge to make the Order which he did is not entirely clear, but it is surely difficult to argue with Lord Justice Jackson’s analysis in this case. The procedure was there to be used, the value of the claim was limited and the parties had had the opportunity to procure additional evidence had they so wished within the Portal process. This case may well be useful for practitioners to have to hand when faced with a District Judge who appears to be making an Order which has scant regard to the requirements of proportionality, in order to reinforce the position that District Judge’s must bear in mind the practical consequences of their decisions.

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