A district judge was wrong to move a dispute over hire car costs from stage 3 of the RTA protocol to the small claims court, the Court of Appeal has ruled.
Lord Justice Jackson said that the costs which the district judge caused the parties to incur were “totally disproportionate to the sum at stake”.
He said: “First, the parties would have to pay a further court fee of £335 as a result of the district judge’s order. Secondly, the parties would incur the costs of complying with the district judge’s elaborate directions…
“I dread to think what doing all that would have cost, but that was not the end of the matter. Both parties would need to instruct representatives to attend the further hearing. They would also have to write off the costs of the 9 April hearing [which was meant to be the stage 3 hearing]. At the end of all that, the winning party would recover virtually no costs, because the case was now proceeding on the small claims track.”
In Phillips v Willis  EWCA Civ 401, the defendant insurer agreed to pay general damages of £2,500 and £571 for physiotherapy treatment, but baulked at hire charges of £3,486, offering £2,334 instead.
No agreement was reached and the claimant, represented by Winns Solicitors, moved to stage 3 of the RTA protocol by issuing a claim form under part 8 in the Gateshead County Court, and seeking an oral hearing.
At the hearing on 9 April 2014, District Judge Howard said that since the only issue between the parties was the proper amount of car hire charges, the action would proceed under part 7 on the small claims track. He fixed a fresh hearing date of 12 June 2014 and gave detailed directions.
His Honour Judge Freedman dismissed an appeal, saying he could not interfere with a case management decision, and the case moved to the Court of Appeal. Nick Bacon QC and Tim Chelmick of 4 New Square acted for the claimant, and Steven Turner of Parklane Plowden, instructed by Keoghs, for the defendant.
The case turned on whether further evidence was required than had been exchanged during stage 2, as required to justify a move to the part 7 procedure under paragraph 7.2 of Practice Direction 8B.
As part of the stage 2 pack, the claimant had provided a schedule, produced by the hire car company involved, which included comparative figures for hiring other cars from Avis.
Giving the judgment of the court, Jackson LJ said it was clear that the defendant would have used this to argue at the stage 3 hearing that the claimant had failed to mitigate his loss. Further, Mr Turner “very candidly conceded” that the only other evidence the judge would have needed was oral evidence from the claimant “to determine whether it was reasonable to hire a replacement vehicle on a daily basis as opposed to a weekly basis”.
Given the costs that his decision had caused, Jackson LJ said: “In my view, the district judge’s decision taken on 9 April 2014 that further evidence was necessary to resolve the outstanding dispute between the parties was irrational. The district judge was not entitled to reach that conclusion.”