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Almost there – the CPRC Consultation on Model Order for Directions to be used in Credit Hire cases

August, 4, 2017

The Civil Procedure Rules Committee consultation closed on Tuesday 1 August.

Anything which seeks to reduce the amount and costs of credit hire litigation is to be welcomed. In our own response to the consultation we expressed a hope that any order introduced would substantially reduce or eliminate the satellite litigation and frictional costs currently being expended on the issue of directions and disclosure.

But to do so, the order will need to create clarity, certainty and consistency around the evidential requirements on both sides, setting them out in plain language and avoiding caveats or ambiguities wherever possible.

There were a number of features in the proposed draft (which can be found here) which we found encouraging, particularly the proposal that credit hire provisions on disclosure and witness evidence be dealt with early in proceedings as distinct steps from the rest of the directions, and that the order’s provisions are to apply to all tracks.

As far as the latter is concerned, any exception to small claims cases would be illogical, since claim value or track allocation has no bearing on the principles to be applied in the assessment of damages in credit hire cases. Further, an exception or divergence in requirements for small claims cases would create uncertainty, given that the value of the credit hire claim very often does not determine track allocation. For instance, very low value credit hire cases will usually be allocated to the fast track where accompanied by a claim for personal injury.

Similarly, straightforward credit hire claims for well over £10,000 are often allocated to the small claims track as the court may take the view when exercising its discretion on allocation that, taken as a whole, the factors set out in CPR 26.8 weigh in favour of this irrespective of value.

Almost there – the changes we suggested

From our perspective, the draft order is ‘almost there’, and the amendments we suggested are designed to improve the clarity and certainty required from a defendant perspective, notably that:

  • The early witness statement required by the draft order should also address the reasonableness of the hire period as well as need and impecuniosity. As per Zurich Insurance v Sameer Umerji [2014] EWCA Civ 357 (at paragraph 37), the burden of proof is on the claimant to plead then prove as to the reasonableness of the claim for hire and this applies as much to period as it does to rate. In reality, the hire period is second only to rate as the most commonly contested issue between the parties in credit hire litigation. It would therefore clearly be desirable to have this point addressed at an early stage.
  • The discretion included for the trial judge to allow impecuniosity arguments to be heard where the claimant has not complied with the requirements for financial disclosure should be removed. We view the discretion of the trial judge to waive the sanction as being a departure from the usual position pursuant to CPR 3.8 that a sanction has effect unless the party in default applies for and obtains relief under CPR 3.9. We see no reason for such a departure and take the view that this is an unnecessary caveat which creates uncertainty. In particular, it leaves the door ajar for a claimant who refuses to provide bank statements for inadequate or questionable reasons to attempt to ‘get home’ on impecuniosity solely on the basis of oral evidence at trial. This is likely to lead to more contested trials than would otherwise be the case and risks leaving the parties in limbo as to the true position right up to the trial.

In the event that a claimant does not comply with the requirements as to financial disclosure, the reasons for this ought to be set out in an application under CPR 3.9 which is supported by evidence. It should be noted that financial statements for any accounts held by an individual will always be within that person’s ‘control’ as defined by CPR 31.8, since they have a legal right to access such documents from the financial institution pursuant to Section 7 of the Data Protection Act 1988. That notwithstanding, it is possible that under the draft in the current form a trial judge may view an apparent lack of immediate possession of the documents as being a reason to exercise discretion to waive the sanction.

  • Witness statements should be exchanged simultaneously and not sequentially as in the current draft. Given that BHR evidence is evidence of fact, we are of the view that this should be simultaneously exchanged in the usual way. We believe that there is no reason in principle why credit hire should be an exception to the conventional wisdom as to exchange of evidence of fact, i.e. that sequential exchange should be avoided for the obvious reason that it gives one party an unfair advantage by allowing the opportunity to amend the content of their statements in response to the statements served by the other side. A claimant does not have to see what the defendant’s BHRs are before preparing evidence as to his own.

Sequential exchange is also far more likely to encourage the practice of serving ‘rebuttal’ evidence. Often claimants will, instead of sourcing BHRs of their own, adduce a witness statement which sets out various objections to the defendants BHR evidence. These statements will usually consist largely of submissions rather than evidence of fact. The question would then arise as to whether the defendant ought to be able to adduce a further statement in response to the ‘rebuttal’. A proper and more proportionate approach to the issue – and the one that puts the parties on a genuinely even footing – is for both parties to source their own evidence as to the BHR and serve this simultaneously.

What next?

There is no defined timescale for the Committee to respond to the submissions they receive. For most Government consultations this is usually a minimum 12 weeks, but given the fairly straightforward nature of the proposals the Committee may move quicker than this.

Whilst it fell outside of the scope of the current consultation, we also put forward our view to the Committee that the steps required by the new directions should, ideally, not be undertaken not during litigation but as part of a binding pre-action protocol. Whilst a consequence of this would be that an element of cost would be front loaded to some extent, and it could potentially see more credit hire companies outsourcing credit hire recovery to solicitors pre-litigation, we believe that a protocol would be a substantial step forward in reducing the volume of contested credit hire litigation. It will therefore be interesting to see whether our suggestion gains any traction.

 

To discuss any of the these issues further please contact

Max Withington, Partner & Head of Credit Hire     
0161 413 1518 | max.withington@h-f.co.uk

Darren Mendel, Partner
03330 881601 | darren.mendel@h-f.co.uk

Gary Herring, Head of Credit Hire (Cardiff)
02921 676027 | gary.herring@h-f.co.uk

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