Successful Appeal Of Defendant Costs On The Small Claims Track

Published 17 octubre 2019

Overview – Mr Nahid Ahmed v Axa Corporate Solutions Assurance [2019]

The Defendant successfully appealed the 1^st instance decision not to award the Defendant’s costs on the small claims track following the dismissal of the Claimant’s credit hire claim.

The Defendant recovered all their costs of the 1^st action, and was not limited to recovering only costs occasioned by the unreasonable conduct of the Claimant.

Background

The Claimant had stated the rental agreement, for the credit hire charges, had been signed by himself, when in fact was found at the hearing that it had been signed by his wife.

The claim was dismissed and the Defendant sought their costs in accordance with CPR27.14(2)(g), where costs can be awarded on the small claims track where a party has acted unreasonably.

It was the Defendant’s case that the 1^st instance Judgment erred in seeking to establish that the Claimant had been fundamentally dishonest, and/or acted with malice, in making any finding of unreasonable conduct:-

1. A finding of fundamental dishonesty and/or malice by the Claimant was not the proper test. The proper test is found in CPR27.14(2)(g), that being one of unreasonable conduct.
2. The Judge erred when failing to find on fundamental dishonesty because it could not be shown what communications/advice had passed between the Claimant and his Solicitors. Seeking to treat the Claimant’s conduct as distinct from his instructing Solicitors, would in effect provide immunity to any represented Claimant from a finding of unreasonable conduct.
3. The Judge similarly erred when failing to find malice as the Claimant did not have a financial interest in the claim. The entire premise of any credit hire claim is that the Claimant has a financial responsibility for the credit hire charges. If there were no financial responsibility for the credit hire charges then it must be unreasonable to bring litigation for charges the Claimant is not responsible for.

The Claimant, presumably funded by the credit hire company, seemingly recognised the commercial impact of a successful appeal would have in any frivolous litigation brought for credit hire claims, and the protection afforded on the small claims track with the normal small claims track provisions. The Claimant’s costs schedule for the appeal was 5 times the total value of the appeal. Even after the appeal was successful the Claimant sought for the Defendant to pay the Claimant’s costs occasioned by the appeal (seemingly in an attempt to prevent any further appeals on similar points).

HHJ Rocheford distinguished this case from the case of Dammermann v Lanyon Bowdler LLP [2017] EWCA Civ 269. In Dammermann the Claimant was a litigant in person and his claim failed on a technical point which the lay person may not have reasonably understood. This was distinguished in this case as the Claimant could have had no reasonable expectation that the claim would succeed when commencing litigation.

The decision of HHJ Rocheford is consistent with the similar issues faced in the appeal decision of HHJ Platt in the case of Dr Wali Memon v TNT UK Limited [2009]. In this case the 1^st instance Judge was wrong to refuse the Defendant a costs order in accordance with CPR27.14(2)(g), where the Claimant had attempted to claim 24 days car hire but where the court subsequently held that there was no need for the Claimant to hire a car at all.

Judgment

HHJ Rocheford overturned the 1^st instance judgment that the Claimant’s conduct was not unreasonable. The 1^st instance judge was wrong:-

1. to have sought to find evidence of the Claimant being fundamentally dishonest, and/or acting with malice.
2. In seeking to treat the Claimant’s conduct separately from his instructed Solicitors when looking at fundamental dishonesty (they should be treated as “one camp.”)
3. In seeking to find evidence of malice based on a financial incentive for the Claimant to act unreasonably, as essentially this would provide immunity of the provisions of CPR27.14(2)(g) on all credit hire cases where the Claimant does not have a direct financial interest.

HHJ Rocheford found that the issue of stating he had signed the credit hire rental agreement, when in fact he had not, in isolation to any other possible conduct issues from the Claimant, was sufficient to categorise the Claimant’s conduct as unreasonable. HHJ Rocheford therefore found that there was no good reason why the Claimant should not meet the costs occasioned by the Defendant, when any reasonable person would have known it was not his signature on the rental agreement, and/or he had not signed the rental agreement.

HHJ Rocheford also found that CPR27.14(2)(g) does not limit the Courts to awarding costs occasioned by the unreasonable conduct, but that the Court can award any costs occasioned against the party who has acted unreasonably.

Conclusion

There is an important balance to be reached by the Courts in awarding costs on the small claims track against parties who have acted unreasonably. Parties should not be deterred from access to justice, as is intended with the normal provisions of the small claims track; but should not be free to bring frivolous litigation that the reasonable lay person would understand is bound to fail; especially when the litigation is for the benefit of another party who is seeking to take advantage of the normal protection offered on the small claims track (e.g. credit hire litigation).

HHJ Rocheford recognised this balance and concluded that the Claimant’s conduct was unreasonable as the claim was always bound to fail, and the Claimant should have always have expected it to fail.

DAC Beachcroft Claims Solutions Group recognise the importance that the normal provisions of the small claims track bring in allowing litigants access to justice; however, with the support of our Clients, we also remain at the forefront of bringing litigants, and credit hire companies, to account for their actions when they seek to abuse the normal provisions of the small claims track, particularly on frivolous credit hire litigation (re. Unreasonable Conduct Costs on Small Claims Track)

Should you require further information please contact Owen Newcombe or Emma Fuller from our Credit Hire team.