Allocation wars

Over the last two decades, there have been at least two great battles on allocation, which form part of the wider Credit Hire Wars that are waged at varying levels of intensity: sometimes burning hotly, sometimes unfolding as a “cold war” with the litigants and those that stand behind them, raising arguments de jour, but unwilling to press them to a binding appellate decision: illegality, misrepresentation, use of comprehensive insurance to name but three such issues.

Allocation seems to be coming round again, as I have noticed an increasing number of decisions, which are being challenged by the parties. Typically they concern a modestly valued claim, still comfortably in excess of £10,000 which is directed to the Small Claims Track. These latter claims may amount to £11,000 or £12,000 or even as much as £30,000: yet a District Judge on paper will have allocated the case to the Small Claims track in a particularly muscular decision that a party will seek to have set aside.

Rule 26.6 of the Civil Procedure Rules provides as follows:

(1) The small claims track is the normal track for–

(a) any claim for personal injuries where –

(i) the value of the claim is not more than £10,000; and

(ii) the value of any claim for damages for personal injuries is not more than—

(aa) £5,000 in a claim for personal injuries arising from a road traffic accident, except as provided in sub-paragraph (bb);

(bb) £1,000 in a claim for personal injuries arising from a road traffic accident, in any of the circumstances specified in rule 26.6A; or

(cc) £1,000 in any other claim for personal injuries

Rule 26.7 states:

(1) In considering whether to allocate a claim to the normal track for that claim under rule 26.6, the court will have regard to the matters mentioned in rule 26.8(1).

Rule 26.8 sets out the following criteria:

(1) When deciding the track for a claim, the matters to which the court shall have regard include –

(a) the financial value, if any, of the claim;

(b) the nature of the remedy sought;

(c) the likely complexity of the facts, law or evidence;

(d) the number of parties or likely parties;

(e) the value of any counterclaim or other Part 20 claim and the complexity of any matters relating to it;

(f) the amount of oral evidence which may be required;

(g) the importance of the claim to persons who are not parties to the proceedings;

(h) the views expressed by the parties; and

(i) the circumstances of the parties.

(2) It is for the court to assess the financial value of a claim and in doing so it will disregard –

(a) any amount not in dispute;

(b) any claim for interest;

(c) costs; and

(d) any contributory negligence.

Practice Direction 26 notes at paragraph 8.1:

(1) (a) The small claims track is intended to provide a proportionate procedure by which most straightforward claims with a financial value of not more than £10,000 can be decided, without the need for substantial pre-hearing preparation and the formalities of a traditional trial, and without incurring large legal costs. (Rule 26.6 provides for a lower financial value in certain types of case.)

(b) The procedure laid down in Part 27 for the preparation of the case and the conduct of the hearing are designed to make it possible for a litigant to conduct his own case without legal representation if he wishes.

(c) Cases generally suitable for the small claims track will include consumer disputes, accident claims, disputes about the ownership of goods and most disputes between a landlord and tenant other than opposed claims under Part 56, disputed claims for possession under Part 55 and demotion claims whether in the alternative to possession claims or under Part 65.

(d) A case involving a disputed allegation of dishonesty will not usually be suitable for the small claims track.

(2) The court may allocate to the small claims track a claim, the value of which is above the limits mentioned in rule 26.6(2). The court will not normally allow more than one day for the hearing of such a claim.

Perusal of these provisions collectively, lends itself to the view that although a District Judge allocating a case has a discretion, when making her decision, that decision can be characterised as a weak discretion rather than a strong one.

These are terms of art.

A strong discretion would provide that the procedural judge can “make such order as the court thinks fit” or must only take into account “all the circumstances” of the case.

A weak discretion by contrast, provides a starting point for the exercise of a discretion, or a presumption or limits the factors to be taken into account. The court’s discretion under rule 26.6 is plainly structured in a way more akin to the latter, than the former type of discretion.  There must be positive reasons, falling within the criteria noted in rule 26.8(1) to justify a departure from the “norm”.

Of all the considerations, the role of “normal value” is key: it effectively stands as a divining rod, which enables the court to determine which cases should be allocated to the Small Claims track, and which cases should be allocated to the costs bearing tracks, where it is possible for the winning party to recover their costs.

Conversely, a case which is allocated to the Small Claims track, should be one which in round terms is worth less than £10,000 or where the complexities are few, so that a party can reasonably be expected to litigate the case at her own expense, through her own efforts. 

This conclusion does not affront the overriding objective, but rather runs with the grain of it, providing a neat means of ensuring that the requirement of proportionality is met, and reflecting the fact that for cases worth more than £10,000 the rules contemplate that a party will recover their costs.

This is key to understanding the purpose behind the “normal track” concept: where both parties are professionally represented, to under-allocate a case, will not save costs at all. The costs will still be the same, they will still be incurred, but the winning party will not recover them. Moreover  removing the costs of the proceedings from the scope of costs recovery on a costs bearing track, can have two unwanted, but foreseeable consequences.

The first of these is the disapplication of Part 36, which in turn means that the court creates a disincentive to settlement. It is no co-incidence that the district judge’s lists are choked with credit hire small claims, where all sorts of weird and wonderful arguments can be put forward without potential penalty: misrepresentation, collateral contract, the list goes on. Conversely, if the cases were allocated to a costs bearing track, in quantum only disputes they would virtually all settle.

The second is that the court with its enthusiasm to load up the lists with Small Claims, is nobly cutting its own financial throat, in order to subsidise the final throes of the latest battle in the saecular war that has been fought for nearly 30 years between the credit hire industry and the insurance industry, using drivers as proxies, by foregoing its proper hearing fee. A £30,000 credit hire case allocated to the Small Claims track will attract a hearing fee of £335 set against the multi-track fee of £1090.

This may be small beer, in the individual case, but there are an awful lot of individual cases, and the lost fee income to the courts must be significant year on year, and particularly hard to swallow in these straitened times.

In conclusion, although credit hire claims come in all shapes and sizes, without more, an unexceptional claim for £12,000 should be allocated to a costs bearing track, and the concept that “we deal with these all the time on the Small claims track” has no place in rule 26.8 as a criteria to justify depriving a winning party of her costs and the court of its reasonable fee.


4 thoughts on “Allocation wars

  1. A recent ruling in the area of undisclosed commissions provides support for the “normal track” concept, the case of Elias and Elias v Blemain Finance, 2nd June 2021 at the County Court at Cardiff, before His Honour Judge Keyser QC. The District Judge allocated to the SCT but the Claimants appealed. I can share the pdf judgment by email if you wish.

  2. Hi Michael, I am not sure how to do that (lack of that kind of IT skill). If you find me on LinkedIn, I can message you a pdf copy of the ruling.

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