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Legal case

Low costs and low expectations

The Court of Appeal assess insurers’ potential to challenge credit hire claims within the MOJ portal.

Hot off the press – the judgment in the cases of London Borough of Islington v Said Bourous/Samantha Davis v Khalil Yousaf (which were heard on 21/22 June 2022 before Sir Andrew McFarlane; LJ Nicola Davies and LJ Elisabeth Laing) was handed down on 16 September 2022.   

Here is a copy of the judgment for you to read at your leisure. In addition, to help you, below is a brief note of the issues, outcomes, and ramifications:

  • The conjoined appeals relate to handling of credit hire claims within the Protocol for Low Value Personal Injury Claims in Road Traffic Accidents (the ‘RTA Protocol’). 
  • Both involved claims for credit hire brought by taxi drivers. 
  • The RTA Protocol is a process designed to deal with a large volume of low value claims quickly, at proportionate cost, and with limited court resources.
  • The previous appeal of Phillips v Willis which dealt with an RTA Protocol case confirmed parties were to expect rough justice for cases dealt with within its process. 
  • In London Borough of Islington, the defendant had challenged only the rate of the hire at stage 2 of the RTA Protocol. Part 8 proceedings were issued to assess quantum. The defendant filed an Acknowledgment seeking a transfer to Part 7. At the stage 3 hearing the defendant sought to argue that the claimant should have presented a loss of profit claim and had not done so meaning the loss should be dismissed. They relied on Hussain v EUI Limited.   At first instance that argument was accepted, and the hire claim dismissed. 
  • This was overturned on appeal on the basis that the loss of profit argument was not raised at stage 2 so should not have been considered at the stage 3 hearing.
  • In Samantha Davis, the defendant argued need (based on the failure to submit a loss of profit claim), intervention and rate at stage 2. At stage 3 the intervention argument was rejected, and the judge went on to allow the credit hire rate.
  • The first instance appeal was dismissed but the defendant appealed to the Court of Appeal arguing it was wrong to find the claimant impecunious based on the limited evidence disclosed (a bland statement with no accompanying financial disclosure) or that it was alternatively wrong not to transfer the claim to Part 7.
  • The Court of Appeal dismissed the London Borough of Islington appeal re-confirming that need to hire had not been raised at stage 2 (as an alternative rate was offered) and you could only object to a head of loss at a stage 3 hearing if it was challenged at stage 2. 
  • They additionally dismissed the Samantha Davis appeal finding the evidence as to impecuniosity was sufficient for an RTA Protocol case. If the defendant wanted to challenge the veracity of evidence, they should have sought to transfer the case to Part 7.  They also refused to consider whether the matter should be transferred to Part 7 as this was not a ground of appeal for which permission should be granted.
  • They highlighted that insurers benefit from the economies of scale and costs created by the RTA Protocol and so should be accepting of the lower level of evidence/rough justice. They also pointed to the fact insurers are not locked into the process, with many credit hire cases settled outside, and them being able to take cases out if they wished to investigate further.
  • As a footnote they confirmed that the White Book suggestion that Phillips v Willis states RTA Protocol cases should only be transferred to Part 7 if they are rare or exceptional is not correct.
  • On the face of it, the outcomes are both negative for the defendant market.
  • However, London Borough of Islington is just a confirmation of the already stated proposition that you cannot raise arguments at stage 3 which are not included in stage 2.
  • As to the Samantha Davis outcome, insurers should be reassured that the creation of the new OIC portal means fewer cases will now be dealt with under the RTA Protocol so there will be fewer repercussions.
  • Sadly, the case is likely to result in more claimants alleging impecuniosity by serving a bland statement only.  Insurers therefore need to focus on their intervention offers so they can challenge rates whilst not removing cases from the RTA Protocol.
  • Insurers will also need to now assess whether they wish to accept allegations of impecuniosity or to test them by removing cases from the RTA Protocol and transferring to Part 7. This will of course incur additional costs and so will be a balancing exercise between the sums challenged and the additional costs.

If you want to get in touch with regards to the case and its effect on your processes, don’t hesitate to contact Sarah or a member of our team of expert motor insurance solicitors.

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