Defendant lawyers who regularly deal with credit hire cases are often left frustrated by bland, generic pleadings provided by claimants in relation to the often decisive issue of impecuniousity.
However, following the recent Court of Appeal ruling in Diriye v Bojaj  EWCA Civ 1400 that should now change. In handing down his judgment Coulson LJ emphasised the need for claimants to engage with the litigation process and fully plead and particularise any assertion of impecuniousity at an early stage of proceedings. The appeal dealt with three points:
- Pleading of allegations of impecuniousity;
- The approach to relief from sanctions applications under CPR 3.9; and
- Whether “Signed for 1st Class” service is covered by CPR 6.26.
Handing down judgment, Coulson LJ said that claimants were not entitled to “advance a rubbishy case in stages from pleading to witness statement to trial” in the hope that eventually defendants may take a commercial decision to settle the case.
Facts of the Case
The matter stemmed from a road traffic accident in May 2014 resultant from which the claimant/appellant, a minicab driver, brought a claim for damages which included a claim for credit hire charges pleaded at £12,048.29.
In the course of the litigation, the claim was allocated to the Fast Track and the court provided familiar directions in respect of credit hire which included an unless order in the following terms:
“The claimant shall be debarred from relying upon the facts of impecuniosity for the purposes of determining the appropriate rate of hire unless … By 4:00pm on the 4th April 2018, the claimant files and serves a reply to the defence setting out all facts in support of any assertion that the claimant was impecunious at the commencement of and during the hire of the vehicle in question.”
The Reply to Defence was posted to the respondent/defendant using the Royal Mail’s “Signed For 1st Class Service” on the 4th April 2018. However, the Reply was not signed for and not received by the Defendant until 9th April 2018 putting the Claimant in breach of the order.
The Claimant made an application for relief from sanctions which was heard by DDJ Goodman at first instance who found that sending the documents by “Signed For 1st Class” was not effective service and dismissed the relief application applying the three-stage Denton test.
At the first appeal the decision was upheld, and the second appeal was heard by the Court of Appeal in October 2020.
The Claimant had advanced pleadings which are all too commonly seen in which the Claimant had made a one-line assertion to have been impecunious simply stating that the money he earned as a minicab driver was expended on bills and his family’s daily living. Nothing else of relevance was provided and no figures offered. In addition, the Claimant’s witness statement had not taken the issue much further.
Coulson LJ referred back to the wording of the unless order which required a pleading of “all facts in support of any assertion” of impecuniousity. He added that:
“They [defendants] are entitled to know the case they have to meet. They should not be expected to have to prepare for a trial where the critical item of claim depends on a one line assertion, and hoping that, as a result of the cross-examination of the appellant, the judge will reject the claim. That is not how civil litigation is supposed to work post-CPR.”
“Therefore, in considering all the circumstances of this case, I conclude that the appellant and his solicitors have never engaged with the need properly to plead and prove his impecuniosity in support of the claim for credit hire charges. They did not do that at the outset of the claim; they did not do so when the subject of an Unless Order; and they have not done so subsequently. In those circumstances, there was no basis on which the court could grant the appellant relief from sanctions.”
Service/Relief From Sanctions
Although the Court of Appeal held that “Signed for 1st Class” did fall within the parameters of CPR 6.26, the Reply had still been served two days late. Coulson LJ referred to the Denton test and considered it appropriate to consider the breach at stage 1 of the test, concluding that the breach was both serious and significant.
It had been submitted that the breach was not significant because it had no effect on the court proceedings, but Coulson LJ firmly rejected the assertion that significance can only be measured by whether the court timetable had been imperilled. He said:
“If a breach was required adversely to affect the court timetable before it could be called serious or significant, that would be uncomfortably and unacceptably close to the pre-CPR regime, where the defaulting party could get away with repeated breaches of court orders simply because the other side could not show that they had suffered specific prejudice as a result. That is not now the law.”
Significantly he added:
“Even if the breach in this case had been confined to the delay in service, that would not make it insignificant. Parties to civil litigation need to make clear the important elements of their respective cases at an early stage. Gone are the days of ambush and keeping important points up your sleeve. The aim of much civil litigation is to bring about a cost-effective settlement. If a claimant delays in providing critical information, particularly where he has been ordered to provide it by way of an Unless Order, that delay adversely affects the other side’s ability to a take a view about the strength or weaknesses of the claim they face. The effect on the ligation in question should not be measured simply by whether or not the trial date can still be met; in properly run litigation, the aim must be to avoid having a trial date altogether.”
It was noted that there had been some delay in bringing the application the explanations for which were described as being of “the dog ate my homework variety”.
In dismissing the application, the Court of Appeal also made reference to the submissions made on behalf of the Claimant that the Defendants had been responsible for the breach because of an unreasonable refusal to allow an extension of time in respect of the unless order. Coulson LJ concluded that the Defendants had in no way acted unreasonably. Whilst it had been said in Denton that mistakes should not be taken advantage of where the failure was neither serious or significant, Coulson LJ said that this was a “relatively high bar” and that it was emphatically not designed to give carte blanche to the defaulting party to blame the other side for the delays caused by its own breach.
This case firmly places the onus on claimants to fully plead and particularise credit hire claims and pleadings of impecuniousity at the outset of the action. Defendants, having previously had to wait until disclosure and beyond, before being in a position to credibly assess a claimant’s financial position should now be in a position to do so at an earlier stage, allowing for costs protective offers to be made sooner and with a greater degree of justification.
It is interesting to note that Coulson LJ in his judgment made repeated reference to the need for the Reply to set out all the facts in support of an assertion to be impecunious. This could be read in conjunction with the recent amendments to CPR PD16 which provides an obligation on the particulars of claim to set out “relevant facts” in relation to credit hire claims which pleadings still all too often fail to do.
When making relief from sanctions applications, lack of disruption to the court timetable is often cited as a reason for such relief to be granted. Coulson LJ confirms this is not the overriding consideration. Defendants should further not be fearful of refusing extensions where it is appropriate to do so.
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Chris Dibb, Associate
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