Haiselden v P & O Properties Ltd

Where a County Court claim falls within the automatic small-claims arbitration procedure, reference occurs without any administrative order. The protection against liability for ordinary trial costs should not be removed through court error or procedural default. A transfer onto the trial track may override the reference, but the claimant must have a fair opportunity to address that change. Where proceedings are mistakenly tried rather than arbitrated, the court retains discretion over costs and should consider whether the claimant has been deprived of the intended costs protection. In an appropriate case, the appellate court may exercise that discretion afresh.

The claimant, acting in person, brought a personal injury claim for less than £1,000. On receipt of the defence, the claim fell within the automatic arbitration procedure under Order 19 of the County Court Rules. The court nevertheless issued directions appropriate to a trial, and the claim was tried before an assistant recorder. The claimant’s claim failed and he was ordered to pay the defendant’s Scale 1 costs.

The claimant appealed, contending that the claim had automatically been referred to arbitration and that the costs order should be limited to the costs recoverable in arbitration. The defendant argued that no reference had occurred or that the later court orders had overridden it. The central issues were the effect of the automatic reference, the significance of the subsequent procedural steps, and the proper exercise of the costs discretion.

1. Appeal allowed. Although the formal order recorded the appeal as dismissed, that order was expressly stated not to form part of the approved judgment. The approved reasons allowed the appeal and substituted the arbitration-costs basis.
2. Under Order 19, proceedings in which the sum claimed did not exceed £1,000, subject to the stated exceptions, stood referred to arbitration automatically upon receipt of a defence. No separate administrative notice or judicial order was required. This conclusion was supported by Greg Middleton v Denderowicz [1997] 4 All ER 181.
3. The notice issued on 6 November, indicating that automatic directions applied, effectively transferred the proceedings onto the trial track. The later trial was neither a nullity nor an arbitration. Since the parties accepted the validity of the trial, the trial judge had a discretion whether to award ordinary Scale 1 costs or the fixed costs applicable to arbitration.
4. A litigant in person who invokes the arbitration procedure should not lose its protection unless there has been an inter partes determination of an application to rescind the reference. The defendants had perceived the court’s error, deliberately taken advantage of it, and failed to draw the error and its costs consequences to the claimant’s attention.
5. The assistant recorder had failed properly to take those matters into account and had erred in exercising the discretion. The Court of Appeal could exercise the discretion afresh. Justice required that the claimant’s liability be limited to the costs recoverable had the matter been determined by arbitration. The £100 setting-down fee was also erroneous, although its recovery from the court service was a separate matter.
6. Lord Justice Mantell agreed and added that Order 19, rule 3, paragraph 2 permitted the district judge to order a trial in a case otherwise requiring arbitration, subject to the parties’ right to be heard.

• Court of Appeal (Civil Division): allowed the appeal from the Lambeth County Court decision and substituted the costs basis applicable to arbitration.
• Lambeth County Court: after trying the personal injury claim, dismissed the claim and ordered the claimant to pay the defendant’s Scale 1 costs.