Unreasonable Conduct Costs on Small Claims Track
Published 18 March 2019
Small claims litigation can be seen by Claimant firms, and/or credit hire organisations ('CHO's'), as a very low risk way of putting the Defendant under economic pressure to not defend or maintain the reasonable and evidenced position presented prior to litigation. Small claims litigation can cost the Defendant typically around £890 in costs, along with their own costs of instructing panel.
CHO's have evolved to adapt to the uncertainty and economic pressure to negotiate higher settlements than they might otherwise be entitled either before, or during, litigation.
The Claimant's/CHO's can too readily use the informal nature of the Small Claims Procedure to have a free bite of the cherry at the Defendant's expense and the Courts resources.
However, just because the Defendant has no automatic entitlement to costs on the small claims track, not all hope is lost. CPR27.14(2)(g) allows the Court to award to award costs " as the court may assess by the summary procedure and order to be paid by a party who has behaved unreasonably"
Strategy for Success
At DAC Beachcroft we aim to change the behaviours of CHO's who are litigating matters without proper engagement, or negotiation, with the Defendant prior to litigation; this conduct being contrary to the overriding objective of the civil procedure rules
We have developed and fine-tuned our strategies to enable us to seek recovery of costs incurred when the Claimant has unreasonably behaved.
Relatively modest success can have significant impacts on how CHO's approach litigation with specific insurers. For instances an award of just £800 costs to the Defendant is highly disruptive to a Claimant where (even if litigation had been successful) on the small claims track they would have only recovered a maximum of £100 profit costs. This is before you account for their wasted disbursements on the small claims track (typically another £455 to £790) along with the wasted time and effort along with delaying settlement.
Furthermore if we do not receive payment voluntarily we are able to apply for a non-party costs order against the CHO in accordance with s51 Senior Courts Act 1981 and Civil Procedure Rule 46.2(1). This means that any award made against the Claimant, along with the costs of applying by the Defendant, can be paid by the CHO. This protects the Defendant from attempting a failed recovery against a Claimant who can't/won't pay.
Leading Court of Appeal decisions in Farrell & Anr v Direct Accident Management Services Ltd  EWCA Civ 769 and Select Car Rentals (North West) Limited v Esure Services  EWHC 1434 (QB), recognise that CHO's are the enablers of litigation when credit hire is involved; thus there is a low threshold for the Defendant to obtain a non-party costs order against the CHO.
Below are a few examples from recent months where we have been awarded wasted costs at trial. This is in addition to the cases where we have obtained costs by negotiation.
Shafqat Ali v Keith Hill- DJ Swan sitting in Clerkenwell & Shoreditch County Court ordered the Claimant to pay the Defendant's costs of £1,136.30 for unreasonably refusing the Defendant's request to vary directions on the small claims track.
Andrew Kay v Axa Insurance UK PLC- DDJ Armitage sitting in York County Court ordered the Claimant to pay the Defendant's entire costs in the case upto trial to be detailed assessed when the Claimant failed to rectify his defective pleadings until trial. The Claimant was further ordered to pay the Defendant's costs of trial in the sum of £852 when the claim was defeated in full. DDJ Armitage further stated "I urge the Claimant's Solicitors to agree them [Defendant's costs in the case] and not to bother the Court with a detailed assessment"
Emmie Williamson v Axa Corporate Solutions- DDJ Jones sitting in Covernty County Court ordered the Claimant to pay £616.20 costs to the Defendant as the Claimant had unreasonably refused the Defendant's request to set aside judgment
Hugh Bowman v Cemex UK- DJ Wildsmith sitting in York County Court ordered the Claimant to pay the Defendant's costs in the case on the standard basis, along with £518.60 costs for making the application for costs entitlement, after the Claimant discontinued after failing to provide exchange when ordered.
Samantha Ford v Siemens PLC- DJ Field sitting in Bristol County Court ordered the Claimant to pay the Defendant's costs of adjournment, in the sum of £600, when the Claimant failed to apply for relief from sanctions until the trial.
Susan Jennings v Aaron Clifford- DJ Grand sitting in Southampton County Court ordered the Claimant to pay the Defendant's costs in the case of £1,222.00 after the Claimant sought to accept the Defendant's pre-issue offer late into litigation
Barrys Cars v Jean Mickleburgh- DJ Reeves sitting in Norwich County Court ordered the Claimant to pay the Defendant £5,151.50 for unreasonably pursing a claim for credit hire when the Claimant had no need to hire.
Kuwait Petroleum v Chubb Limited- DJ McCulloch sitting in Guildford County Court ordered the Claimant to pay the Defendant £4,684.86 for unreasonably pursing a claim for credit hire when the Claimant had no need to hire. The Claimant was refused permission to appeal.
Paula Williams v Axa Corporate Solutions- DDJ Hill sitting in the County Court Money Claims Centre ordered the Claimant to pay the Defendant's costs following a strike of out the Claimant's claim for an abuse of process. DDJ Hughes sitting at Mayors & City of London Court later awarded Defendant's costs in the case of £1,655.70 and £834.60 application costs.
These examples show the Judiciaries awareness of credit hire issues being played out and that, in the right circumstances, the Claimant/CHO's ought not to be wilfully allowed a free bite of the cherry at the Defendant's expense in litigation.
There is also a consideration of the valuable Court's resources being abused by Claimant's/CHO's in these matters and the impact this has in depriving other litigants their fair, and prompt, allocation of the Court's resources.
These examples provide the Claimant's/CHO's with a stark reminder of how unreasonable conduct can be penalised by the Court, and should give insurers reassurance that if you are confident with your pre issue position, costs should be recovered, meaning defending the litigation will be cost effective
Should you require further information please contact Owen Newcombe (01633 65 7735 firstname.lastname@example.org) or Emma Fuller (01633 657 891 email@example.com)