Decisions of the Court of Appeal on aspects of credit hire litigation have proved rare recently, and so I was interested to read the recent decision of Diriye v Bojaj and Quick Sure Insurance Limited.
The case itself largely concerns a second appeal from a refusal to grant relief from sanction, and an uninteresting discursive analysis of whether a particular First Class method of delivery, is actually First Class for the purposes of the deemed service provisions in the Civil Procedure Rules.
Of more interest is the analysis by Coulson LJ, of the underlying approach to providing particulars and then evidence of facts pertinent to whether someone is impecunious or not for the purposes of recovering credit hire rates or basic hire rates.
Claimants in credit hire cases are sometimes shy about providing full details of their earnings and expenditures: some of the likely reasons are not hard to discern.
Some credit hire claimants operate like submarines, in the cold dark waters of the black economy, dealing in cash, invisible to HMRC and without a piece of paper to evidence their finances.
Some solicitors acting for credit hire claimants would rather skimp on providing full details, noting that in a fixed costs case, this is yet another tiresome “touch” upon the file, which can produce nothing but pain.
Whenever I act for a defendant in a credit hire claim, I always try to build up a picture of the claimant’s finances from the trial bundle: which is never to be found in the pleadings or the claimant’s witness statement, which alway contain bland assertions that the claimant spends everything that he earns.
Instead one has to turn to the documents. Starting with the Claimant’s wage slips, or their accounts and tax records to work out what their income is, and whether they could afford to basic hire or not. If those documents have not been provided, because they do not exist then a klaxon of alarm starts to sound.
One then turns to the claimant’s bank or credit card statements, looking for signs of what monies are coming into the Claimant’s bank account, and what monies are going out, and also to see if key expenditure which the claimant must be making, such as payment of rent is evidenced on the bank statements. If it is not, then the claimant is either dealing in cash, or has other accounts, of which disclosure may not have been given.
Thus this recent case is going to be very useful for defendants going forward when confronted with uninformative pleadings and witness statements. Coulson LJ was noticeably critical of such documents:
48. I consider that, on analysis, the Reply, even when served, did not comply in substance with the Unless Order1. That Order required the Reply to set out “all the facts” relied on in support of the assertion of impecuniosity. The appellant was a minicab driver, and that was the source of his income. So, the Reply needed to set out what his income was and what his expenditure was, and how those figures meant that he could not afford to hire a replacement vehicle. Yet all the Reply said on this topic was at paragraph 5, which stated simply that “As he earned cash as a minicab driver, he expended the same on bills and daily living allowances for his family”. Nothing else of relevance was provided. No figures for income were pleaded at all.
The witness statement was no better:
49. For completeness, I should say that this position was not improved by the appellant’s subsequent witness statement for the trial, served well before the hearing before the DJ in August 2018, where on the same subject, the appellant just said:
“I had no money to repair or buy another car and all my accounts were close(d) to their overdraft limits and my credit cards had reached the maximum credit card limit. I have a bad credit rating as I have outstanding credit card bills so I could not get a loan.”
Attempts to justify these documents were not received well by the Court of Appeal:
51. Mr Peter disagreed with that analysis of the Reply and repeatedly drew a distinction between a pleading and the evidence required to support it. Stripped of its repetition, that argument was to the effect that a claimant in the position of the appellant was entitled to assert impecuniosity by way of a bald statement, and then seek to adduce evidence later on to embellish it. He said that, although that might mean the case would go badly for the appellant at trial, he should not be shut out from pursuing his claim for credit hire in court.
Coulson LJ explained why.:
52. I consider that there are a number of fundamental errors in that submission. The first is that it seeks to get around the clear wording of the Unless Order, which required the pleading of “all facts in support of any assertion” of impecuniosity. On this issue, therefore, there was no room for any gap between the pleading and the statement. Secondly, the submission seemed to be based on the incorrect notion that a claimant was entitled to advance a rubbishy case in stages, from pleading to witness statement to trial, presumably in the hope that, by the time the trial came on, there was a commercial imperative on the part of the respondents to settle the case.
“Rubbishy” it will be noted is quite a strong word to use.
53. Thirdly, Mr Peter’s approach ignored the respondents’ position. They 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. And fourthly, the argument was unsupported on the facts. I have already set out the one line assertion in the Reply (paragraph 48 above) and the equally unrevealing evidence in the witness statement (paragraph 49 above). So the Reply did not in fact herald a witness statement with more detailed support for the impecuniosity claim.
54. Accordingly, I consider that, even if the Reply had been served on time, the document itself failed to comply with the substance of the Unless Order. Even if it is taken together with the witness statement, the Reply created precisely the situation that the Unless Order was designed to avoid: a simple assertion of impecuniosity, with no facts set out to support it. The breach of the Unless Order was therefore serious and significant
Coulson LJ went onto explain what the purpose of a pleaded case on impecuniousity and a witness statement setting out evidence on the point should be:
61. 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.
This led to the conclusion:
67. 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.
So what should defendants do when confronted with a similar case which can engagingly be described as “rubbishy”?
One of the consequences of this case, should be, that a properly detailed part 18 request should find its way to claimants who have put forward bland or undetailed assertions in their pleadings and witness statements.
It can condescend to asking for particular figures for income and expenditure. I would suggest such a part 18 request could be effectively drafted to extract an “affidavit of means” from the claimant. If that request is not fully answered, an application for an unless order can follow.
Thus a new interlocutory weapon has been created for credit hire cases: or, as there is nothing really new in the basic principle that you need to plead and prove your case , it is perhaps more accurate to say that an old weapon has been burnished and refurbished by this judgment, and will now be put to increased use.