His Honour Judge Simpkiss (sitting on appeal) recently handed down judgment in Linda Loughlin v Black Horse Limited  EW Misc 8 concerning whether a claim for the alleged misselling of payment protection insurance (“PPI”) should be re-allocated from the small claims track to the fast track. In a robust judgment, HHJ Simpkiss dismissed Ms Loughlin’s appeal and decided that the claim should remain on the small claims track. This is a further example of the changing tide of PPI litigation and is to be welcomed by lenders, brokers and intermediaries facing claims of PPI mis-selling in the Courts.
Ms Loughlin’s claim against Black Horse Limited (“Black Horse”) raised a number of familiar points: negligence, misrepresentation, breach of the General Insurance Standards Council’s Code of Conduct (the “GISC Code”) and an unfair relationship within Section 140A of the Consumer Credit Act 1974 (the “CCA 1974”). If successful, Ms Loughlin’s claim was for just over £2,000. Black Horse defended the claim and also alleged that Ms Loughlin’s claim was time-barred by virtue of the Limitation Act 1980.
After issuing proceedings, and each party filing “lengthy skeleton arguments”, the Court listed an allocation hearing which was “hotly contested”. After considering those submissions, District Judge Burgess allocated the claim to the small claims track and gave standard directions to a small claims hearing. Ms Loughlin, who was represented by Wixted & Co Limited, filed an appellant’s notice arguing DJ Burgess was wrong. His Honour Judge Hayward, when considering the appellant’s notice, granted permission to appeal and reallocated the claim to the fast track. Black Horse objected and requested an oral hearing, which came before HHJ Simpkiss.
By CPR 52.11(3), an appeal court will allow an appeal where the decision of the lower court was (a) wrong or (b) unjust because of a serious procedural or other irregularity in the proceedings in the lower Court. Before HHJ Simpkiss, Ms Loughlin argued that DJ Burgess was wrong to allocate the claim to the small claims track because:
- she failed to take into account the alleged unenforceability claim under the CCA 1974 which, if successful, increased (so Ms Loughlin argued) the ‘value’ of the claim to over £5,000.00;
- the limitation defence and the alleged breaches of the GISC Code meant the claim was complex and could not be dealt with on the small claims track; and
- the overriding objective was not properly considered because if it remained on the small claims track, the parties would be on an unequal footing as Wixted & Co Limited would no longer act for Ms Loughlin.
After hearing detailed submissions, HHJ Simpkiss decided that:
- he was “not convinced” by the argument that an unenforceability claim created any ‘value’ to Ms Loughlin;
- the Claim Form indicated a value of £1,500 to £3,000 which the Court accepted was correct;
- while the Particulars of Claim ran to sixty-two paragraphs including allegations of misrepresentation, negligence, breach of the GISC Code and an unfair relationship, and the Defence raised an issue of limitation, this was not sufficient to make the claim ‘complex’;
- the issue of limitation was a “straightforward question” about what Ms Loughlin knew and when;
- it was normal practice for District Judges in small claims trials to help parties with the law: a District Judge would do so as a matter of course;
- while Wixted & Co Limited may no longer act for Ms Loughlin if the claim remained on the small claims track, this did not create an inequality of arms between the parties. HHJ Simpkiss therefore dismissed the appeal.
HHJ Simpkiss’ decision is extremely important and follows hot on the heels of His Honour Judge Michael Kay QC’s decision in Gillies v Black Horse Limited  EW Misc 20 (which we discussed in our article entitled “On The Right Track”). It provides further persuasive commentary on the appropriate track for claims alleging the mis-selling of PPI when the amount in dispute is £5,000.00 or less. As a matter of judicial comity, both Gillies and Loughlin must be followed by District Judges (and their deputies) unless they consider HHJ Simpkiss’ decision is wrong. In our view, there is no scope for such an argument. We have recently seen a number of submissions by borrowers’ solicitors referring to His Honour Judge Hughes’ decision in Dickson v Bank of Scotland plc (2010), Unreported, 12 August 2010, Winchester County Court. While HHJ Hughes did allow an appeal and re-allocated the claim to the fast track, judgment was handed down more than sixteen months before Gillies. Since Gillies, there has, in our experience, been a considerable sea change in allocation decisions. Even HHJ Hughes now takes a different view: in Gray v Lloyds TSB Bank plc (2012), Unreported, he noted that if Dickson came before him now, he would have dismissed the appeal due to the “changing wind”. Dickson was, of course, decided before the Court of Appeal’s decision in Harrison & Harrison v Black Horse Limited  EWCA Civ 1128 and there have been a number of other decisions since.
It is, of course, unsurprising that HHJ Simpkiss dismissed the appeal. The Court of Appeal has long decided that allocation is a matter of judicial discretion. In Forcelux v Binnie  EWCA Civ 854, the Court decided that there “is no automatic allocation to a track. Allocation is a matter of judicial decision”. This has always been in the mind of judges dealing with PPI. Even as long ago as 2009, His Honour Judge Halbert issued a note stating that “each case needs to be decided on its own merits”. The issue of allocation of claims with a value of £5,000.00 or less is also not new to the Courts. In Birmingham City Council v Lee  EWCA Civ 891, the Court of Appeal decided that the “general rule for allocation is that the small claims track is the normal track for any claim which has a financial value of not more than £5000. That is provided by CPR 26.6(3)”. In Peakman v Linbroke  EWCA Civ 1239, the Court of Appeal (in a similar vein) decided that the “normal track for [a claim at most a little over £3000] would be the small claims track: see CPR26.6(3). While when deciding into which track to allocate, the court would have had regard to the factors set out in CPR26.8(1), such as complexity, the amount of oral evidence required, the parties’ views and their circumstances” and the “submission that the complexity and length would have dictated the multi track [was rejected]. Application of the overriding objective would have excluded that. The court would have exercised its power to limit and control the evidence it heard”.
We also see borrowers regularly relying on His Honour Judge Waksman QC’s guidance note from March 2010. In our view, reliance on the guidance note is misconceived. HHJ Waksman QC was not considering the appropriate track for all claims: instead, he was considering whether to allocate claims of more than £5,000.00 to the fast or multi-track. Even if he was giving general guidance, the law has been significantly clarified since. If issues were complex in early 2010, they are certainly not complex any longer. The overriding objective requires the Court to make the best use of its scarce resources. This plainly requires (except for the most rare of cases) claims alleging PPI mis-selling where the value is £5,000 or less to be allocated to the small claims track. Borrowers do not, of course, need to bother the Court: the Financial Ombudsman Service (“FOS”) has significant experience in dealing with such claims. There is no reason why borrowers, instead of bringing claims in the Court, should not go to FOS where they have evidential presumptions in their favour (which they would not enjoy before the Court). Indeed, well-advised borrowers would be better off referring their complaint to FOS than pursuing such a claim.
We now have two very robust decisions in Gillies and Loughlin on the appropriate track for PPI mis-selling claims. Both came to the same conclusion: PPI claims are no longer complex and if the value of the claim is £5,000 or less it should (as a matter of judicial comity or judicial discretion) be allocated to the small claims track. There will, of course, be exceptions to this general rule but those will be rare: the issues raised in PPI mis-selling are familiar to most judges and we understand the judiciary has received training on PPI claims. Given the Court of Appeal’s reluctance to interfere with matters of judicial discretion, particularly where a second appeal would be necessary, the general position is very unlikely to change. This must be the right decision. As the meerkat would say, “Simples”!