A credit hire claim brought in the Portal, should have been resolved by way of a Stage 3 hearing and not transferred to the Small Claims Track the Court of Appeal have ruled in an appeal before them in Phillips v Willis (2016). The District Judge’s decision to transfer the claim was “illogical” when the defendant had not presented any evidence to challenge the claimant’s hire rate and the sum at stake was only £462.

DWF Head of Motor Claims, Nigel Teasdale takes a look at the judgment, which may affect how insurers deal with credit hire and additional claims, such as claims for rehab, in the Portal and serves as a reminder of the need to serve any evidence in respect of a claim at Stage 2 of the Portal process, or face being prevented from producing any evidence at a later stage.


The claimant, represented by Winns, had brought a claim through the Portal that arose out of a road traffic accident. As part of that claim, the claimant sought to recover the cost of hiring an alternative vehicle from On-Hire in the sum of £3,486. Whilst the parties were able to agree the claim for personal injury, they could not agree the claim for hire. The defendant made a counter offer in the sum of £2,334 and the claimant served evidence at Stage 2 of the Portal process in the shape of a “rates report” from an On-Hire employee but the defendant did not serve any specific evidence in response.

The claimant then issued proceedings under Part 8 of the CPR to request a Stage 3 Hearing and the parties duly appeared before District Judge Howard in Gateshead County Court. Although both parties attended the hearing with the intention of resolving the dispute that day, the District Judge indicated that, as the only issue between the parties was the amount of hire charges that should be recovered, the case needed to be transferred to the Small Claims Track under Part 7 of the CPR and he went on to make an order to that effect and also gave directions in respect of the exchange of any further evidence relating to the credit hire argument.

The claimant appealed that decision, which was heard before HHJ Freedman, who concluded that the District Judge had made a case management decision that he was entitled to make under Practice Direction 8B paragraph 7.2, which states that:

“Where the court considers that

  1. further evidence must be provided by any party; and
  2. the claim is not suitable to continue under the Stage 3 procedure,

the court will order that the claim will continue under Part 7, allocate the claim to track and give directions”

The claimant appealed to the Court of Appeal.

The arguments before the Court of Appeal

In arguing the appeal, the claimant contended that:

  • no further evidence was needed for the court to determine the case; and
  • consequently there was no need for the District Judge to vacate the hearing and transfer to the SCT; and
  • neither of the two criteria set out in PD 7.2 (above) were met

The evidence before the court at the time of the Stage 3 hearing included a statement from an On Hire employee, essentially comprising a rates report of comparative hire figures. That statement was served at Stage 2 of the Portal process. The defendant did not serve any evidence in response to that evidence, as they were free to do. Defence counsel indicated at the Stage 3 hearing that he intended to argue the case on the basis of the claimant’s rates evidence, that impecuniosity was not taken as a point and that there was no dispute over the hire period of 32 days.

The Court of Appeal anticipated that the defendant would have argued at the Stage 3 hearing that the claimant should have hired a vehicle from one of the providers mentioned in the rates report and at a weekly rate, rather than at a daily rate and that he had failed to mitigate his losses. During the course of the appeal, counsel for the defendant submitted that there was a need for the District Judge to vacate the Stage 3, so as to allow the claimant to attend court and give oral evidence.

In identifying that the parties were only £462 apart, the Court of Appeal stated that it was unsurprising that the parties had not sought an adjournment of the Stage 3 hearing as that to do so would have been “a grossly disproportionate step to take”. However, the Judge of his own volition moved the matter to the Small Claims Track to hear the arguments and gave directions which were fairly standard directions in credit hire cases heard in the SCT.


It was held by Jackson LJ, Floyd LJ and Macur LJ, with Lord Justice Jackson delivering the lead judgment that:

  • By moving the matter to the small claims track, the parties would be forced to incur substantial extra costs, totally disproportionate to the sum at stake, including a further court fee in the sum of £335, along with the costs of complying with seven “elaborate” directions that the District Judge also gave.
  • The District Judge’s conclusion that further evidence was necessary to resolve the dispute was “irrational” and not a conclusion that he was entitled to reach.
  • Just because the personal injury claim had been resolved, that was no reason for the case to exit the RTA Portal process.
  • There could be cases involving very high car hire charges and/or complex issues of law or fact which are not suitable for resolution at Stage 3.
  • This case did not fall within the ambit of paragraph 7.2 of the Practice Direction and the District Judge had no power under that paragraph to direct the case to proceed under Part 7 of the CPR.

The Court of Appeal accepted that CPR r.8.1 provides for the court to order a claim to continue as if the claimant had not used the Part 8 procedure, but that that rule should not be used to “subvert the protocol process”. The Court did not believe that the District Judge in this case was relying upon that rule to transfer this case and that it would have been “an impermissible exercise of the power” under that rule to transfer this case out of Part 8 and into Part 7.


In arriving at its judgment, the Court of Appeal accepted that there would be cases involving “very high car hire charges”, or involving “complex issues of law or fact” which would not be suitable for resolution by way of a Stage 3 hearing and presumably those cases could still be transferred to the SCT or indeed to another track if of sufficient value.

Whilst the Court of Appeal did not go any further than that, in a claim where the personal injury element has settled and one or more issues remain at the end of Stage 2, the Court of Appeal appear to have set an expectation that those cases should continue to be dealt with by way of a Stage 3 hearing and should not be transferred to the SCT. The Court of Appeal said:

Once a case is within the RTA protocol, it does not automatically exit when the personal injury claim is settled. On the contrary, the RTA process is carefully designed to whittle down the disputes between the parties as the case passes through the various stages

Consequently, where insurers have to date adopted a strategy of settling the personal injury aspect of a claim submitted to the Portal, leaving the credit hire element to be ultimately dealt with at a SCT hearing, then those strategies will need to be reviewed.

It is worth bearing in mind that in this case the defendant did not present any rates evidence of their own, there was no dispute as to the length of the hire period and nor was it suggested that the claimant was impecunious. It is also worthwhile bearing in mind that the sum at stake here was only £462. It does not therefore necessarily follow that another claim, perhaps with more money at stake, or with more issues to argue, would need to be dealt with in the same way.

The Court observed that the defendant did not present any evidence at Stage 2 and commented that they were therefore unable to do so later as of course that is what paragraph 7.1 of Practice Direction 8B provides. The judgment does therefore serve as a reminder that any evidence for the defendant must be presented in response at Stage 2 of the Portal process, or it will not be permitted at a Stage 3 hearing. Not only that, but the lack of any such evidence from the defendant will also weaken any argument for the defendant that a case should be allocated to the SCT, rather than proceeding to a Stage 3 hearing.

Following this decision, insurers will need to review their Portal processes, particularly as we also anticipate as part of a developing claimant strategy seeing more credit hire claims being brought via the Portal, with the intention that the quantum of those claims would be assessed at a Stage 3 hearing, where claimants may feel they are likely to achieve a better outcome. It is essential that arguments are raised at stage 2 with the appropriate evidence in support.

This case also serves as a reminder that the same evidential obligations apply to claimants; they too must also serve any evidence that they seek to rely upon at Stage 2, or they will not be permitted to rely upon that evidence at the Stage 3 hearing. This would be true of any head of loss that might be submitted at Stage 2, including credit hire, or a claim for rehabilitation.

In respect of rehabilitation, DWF have recently acted in a case where a claim for rehabilitation was struck out at a Stage 3 hearing as a result of the claimant only presenting a “request for payment” for those services, despite the defendant’s insurers calling for a triage report, treatments notes or a discharge report. The claimant was also ordered to pay the defendant’s costs of the hearing.

Where cases fall out of the Portal process and proceedings are subsequently issued under Part 7 of the CPR, and where heads of loss are agreed pre-allocation, the court should look at the amounts in dispute between the parties before allocating to track, in accordance with the Court of Appeal decision in Akhtar v Boland (2014). If the amounts in dispute are less than £10,000 at the time of allocation (assuming generals have been agreed), then the court should usually allocate to the SCT, the case falling within the current financial limits for the SCT where the claim is not involving personal injury.

With the SCT financial limit for personal injury claims expected to be raised to £5,000, perhaps by the end of next year, Jackson LJ’s comments about the suitability of the SCT for a claim where the parties were less than £500 apart are of interest. The directions given by District Judge Howard, when transferring the Phillips case to the SCT were fairly typical of the directions given in most SCT cases and specifically in credit hire claims. Yet Jackson LJ described them as being “elaborate” and the costs of complying with them as being “totally disproportionate to the sum at stake”. Does this suggest that the SCT is no longer fit for purpose for some claims and that there is a need for a more straightforward, streamlined process?

This judgment is one of a number of recent appeal decisions where courts have been asked to consider the nature of agreements and arguments at stages 2 and 3 of the RTA Portal, although this is the first time that such issues have been heard at Court of Appeal level.

In the case of Maddocks v Lyne (2016), His Honour Graham Wood QC sitting in Chester CC held that a claimant, where he had agreed figures for a head of loss with a defendant at Stage 2 and then proceeded to Stage 3, was bound by those figures that had been agreed and could not ask the court to assess those heads of loss at any subsequent Stage 3 hearing. However, HHJ Wood went on to say that it did not follow where a claimant agrees a defendant’s figure for general damages (for example) within Stage 2 of the Portal process “..that a binding agreement is thereby created, preventing the claimant from pursuing a higher award for general damages outside the portal”. It is therefore necessary if the matter should drop out of the Portal to specifically plead any agreed items at stage 2 failing which they could become live issues again

The case of Mulholland v Hughes (2015) was another decision of HHJ Freedman in Newcastle CC where he indicated that if a Defendant wishes to challenge certain aspects of the claim, in that case the need for a replacement vehicle, that needs to be specifically raised at stage 2. He also confirmed thankfully that a claimant can recover less than the amount offered by the defendant at Stage 2 and if that should happen the Claimant needs to reimburse any overpayment he has received at the end of stage 2.

The above claims taken in conjunction with the Court of Appeal decision in Phillips are a strong reminder that the MOJ Portal and Stage 3 process operate as a self-contained code and the Courts will interpret any ambiguities in favour of a streamlined, cost effective process which the Portal is intended to be. As one would expect, Jackson LJ was very keen to come down on the side of proportionate cost.