Allocation and the Salford Factor

A large number of cases are emerging, where in a claim worth more than £5000 but less than £10,000, the proceedings were sent to court before 1st April 2013, but issued afterwards: in such circumstances, should the case be allocated to the Fast Track or the Small Claims Track ?

The mischief can be succinctly stated as the “Northampton Factor” or perhaps more accurately, the “Salford Factor”.

A client has instructed solicitors to act for him, on the basis of a Conditional Fee Agreement, prudently incepted an After the Event insurance policy and incurred a liability for disbursements.

It was widely promulgated that on 1st April 2013, the Civil Procedure Rules will change, with substantial amendments, to the Small Claims limits.

In good time, his solicitors lodge the Claim Form at Court, in order to take advantage of the provisions that (i) pursuant to rule 26.6 due to the value of the claim the Fast Track will be the normal track and (ii) pursuant to rule 26.7(3) the Court must allocate the case to the Fast Track unless the Claimant consents to it being allocated to the Small Claims Track.

The court then sits on the proceedings.

They are noted as duly received prior to the 1st April but not issued until afterwards.

The issue then is simply drawn: if due to the Court’s default, the Appellant suffers financial prejudice in that a putative Fast Track case has now become a Small Claims Track case, should the Court exercise its discretion on allocation to put the Appellant back in the position that he would have been in had the Court acted promptly?

If the Court does not exercise its discretion to allocate the case to the Fast Track, the Appellant is deprived of a valuable financial benefit, in that he cannot recover the necessary costs of pursuing his claim and which renders to him, the benefits of pursuing the claim, nugatory.

The amendments to the Rules are drawn from the Civil Procedure Amendment Rules 2013 (SI No 262 of 2013) which in paragraphs 6 and 8(f) and (g) raises the limit from £5000 to £10,000 and remove the bar on the Court allocating a case to a track, below the normal financial limit, without the consent of the parties.

The starting point is rule 26.6 which (with effect from 1st April 2013) provides so far as is material as follows:

26.6 (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 £1,000; (3) Subject to paragraph (1), the small claims track is the normal track for any claim which has a value of not more than £10,000.

Rule 26.7 then directs the Court’s attention to rule 26.8:

26.7 (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).

It should be noted that the effect of 8(g) of the Amendments, was to remove the bar on the Court allocating a case to the Small Claims Track, where the value was in excess of the normal limit, unless the parties agreed.

Rule 26.8 is the key provision. It grants the Court’s a broad discretion to allocate a case to a track, but draws the Court’s attention to a list of specific factors which the Court must take into account.

26.8 (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. (3) Where – (a) two or more claimants have started a claim against the same defendant using the same claim form; and (b) each claimant has a claim against the defendant separate from the other claimants, the court will consider the claim of each claimant separately when it assesses financial value under paragraph (1).

The Practice Direction provides some further guidance to the application of rule 26.8 in paragraphs 7 and 8. 24. The transitional provisions in the statutory instrument provide as follows:

(3) The following amendments do not apply to claims issued before 1 April 2013— (a) the amendments made by rules 6, 8(f) and (g), 9(a) and 19 of these Rules;

Pursuant to rule 7.2 a Claim Form is issued when:

7.2 (1) Proceedings are started when the court issues a claim form at the request of the claimant. (2) A claim form is issued on the date entered on the form by the court.

This is clear and categorical. The date on the Claim Form, is the date when the Claim Form is issued and the date when proceedings are started. However, this date is not prescriptive of other consequences, which might hinge on when proceedings are started.

Paragraph 5 of the Practice Direction 7A to Part 7 specifically states:

5.1 Proceedings are started when the court issues a claim form at the request of the claimant (see rule 7.2) but where the claim form as issued was received in the court office on a date earlier than the date on which it was issued by the court, the claim is ‘brought’ for the purposes of the Limitation Act 1980 and any other relevant statute on that earlier date. 5.2 The date on which the claim form was received by the court will be recorded by a date stamp either on the claim form held on the court file or on the letter that accompanied the claim form when it was received by the court. 5.3 An enquiry as to the date on which the claim form was received by the court should be directed to a court officer.

This provision has a long history. It reflects the development of the case law in respect of the old Rules of the Supreme Court and the new Civil Procedure Rules, and which involves the formulation of policy considerations which are plainly material to the issue in this appeal.

It should be noted, that the following points can be drawn from this recital of the Rules and the Practice Direction.

(i) That from 1st April 2013, the financial value of the Small Claims Track was increased from £5000 to £10,000.

(ii) That that increase in the financial value does not apply to cases issued before 1st April 2013.

(iii) That conversely there is no requirement that cases issued after the 1st April, which fall to be judged against the increased limit, should be automatically allocated to the Small Claims Track.

(iv) Rather the court retains, a broad discretion on allocation, which will take into account both the increased financial limit of the Small Claims Track and other relevant factors.

(v) If the claim had been issued before the amendments to the rules took effect on 1st April 2013, not only would the Fast Track have been the normal track to allocate the claim to, by reason of rule 26.7(3)(since repealed), the Court had no power to allocate the case to the Small Claims Track, and was indeed prohibited from doing so, unless the Claimant had consented to such a step.

(vi) That although proceedings are started on issuing a Claim Form, that is not the relevant date for calculation of a limitation period: on analogous basis, the point when the Claim Form is issued, should not be determinative of allocation and which track the case is allocated to.

(vii) This last point can be developed through consideration of the caselaw, as noted below.

There is no case directly on point, but there is a long line of authority, which deals with two analogous situations, namely whether the default of the Court in failing to issue a Claim Form before the expiry of a limitation period should be held against a litigant and whether the default of the Court prejudicing a litigant constitutes a relevant factor when the Court comes to exercise a procedural discretion.

The Court has long been mindful of the problem that can arise, when a litigant in good time, lodges proceedings at the Court office and the Court fails to issue them, prior to the expiry of a limitation period.In those circumstances, under the former Rules of the Supreme Court, the Court of Appeal has explained not only the way that the Rules, should be applied but the policy purpose that underlines the application. In essence the Court treats the proceedings as having been “brought” when they are lodged with the Court. See in particular the cases of Barnes.v.St Helens MBC [2006] EWCA Civ 1372. A differing approach is taken with claims under the Housing Act 1996, but that is due to the wording of that statute: see Salford City Council.v.Garner [2004] EWCA Civ 364 and the distinction of that case in Secretary of State for Trade and Industy.v.Vohora [2007] EWHC 2656.

The Court has also noted, that irrespective of the Rules, in any event it had an inherent jurisdiction to act so as to treat proceedings as issued, when received, to direct a just result. See the decision in Riniker.v.University College London 1999 WL 477711 33. It should be noted that the County Court has no inherent jurisdiction, as it is a creature of statute, but pursuant to section 76 of the County Courts Act 1984, the general practice of the High Court may be adopted and applied in the County Court. There would be no different approach between the High Court and the County Court in this context.

With the introduction of the Civil Procedure Rules, paragraph 5 of Practice Direction simply reflects the law as formulated by the Court of Appeal in the preceding cases. 35. The policy considerations remain as current today, as they were under the previous regime: see the decision of Page and Page.v.Hewetts Solicitors [2012] EWCA Civ 805 where the Court of Appeal stated in the judgement of Lewison LJ at paragraphs 33 to 36:

However, literalism is not fashionable, so it is also necessary to consider the policy that underpins the decision. Tuckey LJ dealt with this too. He pointed out that this meant that a claimant had the full period of limitation within which to “bring” his claim; and that it would be unjust if he had to take the risk that the court would fail to process it in time. It does not seem to me that the reason why the court fails to process the request in time alters the justice of the case. If it is unjust for the claimant to take the risk that the court staff are on strike, it seems to me to be equally unjust for him to have to take the risk that a member of the court staff might erroneously put his request in the shredder or the confidential waste, or that his request is destroyed by flood or fire in the court office, or is taken in a burglary. Each of these might be reasons why the court failed to process the request in time. Essentially the construction of the Act that this court favoured in Barnes v St Helens Metropolitan Borough Council is based on risk allocation. The claimant’s risk stops once he has delivered his request (accompanied by the claim form and fee) to the court office. PD 7 cannot, in my judgment, alter the correct construction of the Act.

This is not a new approach. In Aly v Aly (1 January 1984), which also concerned time limits in the context of limitation periods, Eveleigh LJ said: “It would be indeed surprising and harsh if a party who had done all that was required of him, should find himself unable to obtain the assistance of the court because the court itself had failed in some matter of procedure. Furthermore, when the rules lay down a time limit which has to be observed by a party to the litigation, their aim is to achieve whatever particular purpose is in mind by controlling the action of the party, and where on the reading of the appropriate rule that seems to be its intention it would be quite ridiculous, as I see it, to make the party responsible for anything that has subsequently to be done by the court. ”

Thus the Court of Appeal held that: “… one can only treat the words “apply to the Court” as meaning doing all that is in your power to do to set the wheels of justice in motion according to the procedure that is laid down for the pursuit of the relief which you are asking.”

Likewise in Riniker v University College London (31 March 1999) the Court of Appeal held that when a draft writ was in the custody of a proper court officer and in proper form the court had an inherent jurisdiction to treat it as issued on the day on which it was received. The underlying theme is, in my judgment, that a would-be litigant is not responsible for any shortcomings of the court.

The Court will act in other contexts: see the cases where the Court failed to effect service. See for example the case of Barr.v.Barr [1994] PIQR P45 and Lord Bingham’s comments on the approach the court would adopt, as opposed to requiring the litigant to seek a speculative financial remedy against the Lord Chancellor’s department. See further the earlier case of Ward-Lee.v.Lineham [1993] 1 WLR 754

In summary, a golden thread of public policy is clearly discernible: where the Court, through its failure to act, has caused prejudice to the litigant, through failings in the Court office, the Court will in turn exercise its discretion to correct the failing and restore the status quo ante.

Accordingly, when  exercising its discretion to allocate cases, the fact that the claim may only have been issued after 1st April 2013 by reason of the Court’s delay and that failure to issue it timeously, has deprived a litigant, of a valuable financial benefit derived from the £5000 limit and the bar on allocation to the Small Claims Track without consent, predicates that the discretion should be exercised to allocate the claim to the Fast Track.