Binns v Firstplus Financial Group Plc

Where an effective ADR scheme has already provided, or remains available to provide, full redress for the substance of a civil claim, the court may strike out proceedings under CPR Part 3.4. A claimant has no reasonable ground for continuing litigation merely to obtain a possible costs order, because costs are adjunctive to the claim rather than an intrinsic remedy. The court must balance access to justice with its duty to manage proceedings proportionately and encourage ADR. Proceedings should continue where the claimant has a realistic, non-fanciful prospect of obtaining greater substantive relief or another material advantage intrinsic to the claim. The decision was fact-specific to PPI litigation, although the reasoning might apply more broadly to effective ADR schemes.

The claimants alleged that payment protection insurance had been mis-sold in connection with two loans. Their solicitors sought redress under the Financial Services Authority’s PPI complaints scheme while reserving the right to issue court proceedings. The defendant upheld the complaint and offered £8,797.06, representing full financial redress, but refused to pay the claimants’ solicitors’ costs.

The claimants issued county court proceedings alleging negligent misrepresentation, negligence, breach of ICOB rules and an unfair credit relationship under sections 140A and 140B of the Consumer Credit Act 1974. The district judge refused strike-out and summary judgment, considering that a claim under section 140A might yield further damages. The issue on appeal was whether the proceedings should be summarily ended where the ADR offer supplied full substantive redress and the only alleged additional advantage was costs.

1. The appeal was allowed and the claim was struck out in its entirety. The ADR offer remained open and provided full redress for the PPI claim.

2. Under CPR Part 3.4(2)(a), the court may strike out a claim where, although a cause of action is disclosed, the claimant has already achieved everything reasonably obtainable through an effective ADR process. Under CPR Part 3.4(2)(b), continuing proceedings in those circumstances may constitute an abuse of the court’s process and an unwarrantable use of court resources.

3. Access to the courts remains a fundamental principle, but the courts are masters of their own procedures. The overriding objective requires proportionate case management and encouragement of ADR. The court was not importing the administrative-law doctrine of alternative remedy into ordinary civil litigation. It was applying the overriding objective together with the strike-out jurisdiction.

4. Where a claimant has a realistic and non-fanciful prospect of obtaining greater damages or another material advantage intrinsic to the claim, proceedings should continue. A possible costs recovery alone is not such an advantage. It is an adjunct to the claim and cannot justify litigation where the claimant has obtained, or can obtain, full substantive redress through ADR.

5. The pleaded section 140A case disclosed a possible cause of action, but the pleaded losses sought only full economic compensation. The court found no identified additional substantive benefit under sections 140A or 140B, and no basis for concluding that Wilson v Howard Pawnbrokers would increase the likely damages. Summary judgment might have produced a similar result, but strike-out was the more appropriate route on the facts.

1. High Court (Queen’s Bench Division) — On appeal from the Kingston upon Hull County Court, the court allowed the appeal, reversed the district judge’s refusal to strike out or grant summary judgment, and struck out the claim in its entirety.
2. Kingston upon Hull County Court — District Judge Sarah Richardson refused strike-out and summary judgment on 1 March 2013, considering that the section 140A claim might permit further damages.