Conlon v Royal Sun Alliance Insurance Plc

Once a claim is allocated to the small claims track, CPR rule 27.14 restricts recoverable costs, including the costs of a second appeal. Costs may be ordered only within the rule’s exceptions, including unreasonable conduct.

A court may later re-allocate a claim. Under CPR rule 46.13 it may, for good reason, displace the usual rule that the costs regime of the original track applies until re-allocation. A late application will fail where the opposing party reasonably relied on the small-claims costs regime and acted reasonably throughout.

Following a non-fault motor accident, the claimant hired a replacement vehicle on credit-hire terms and claimed the hire charges from the insurer of the driver at fault. A deputy district judge restricted the recoverable period and rate. On the claimant’s first appeal, Judge Gosnell held that she had not failed to mitigate by claiming under her own insurance and allowed recovery for the full hire period, but fixed a lower basic hire rate.

The claimant obtained permission for a second appeal on the rate issue. The insurer then agreed that Judge Gosnell’s order should be set aside and that judgment should be entered for the full sum claimed. The only live issues were costs and the claimant’s late application to re-allocate the claim from the small claims track to the multi-track.

1. Disposition. By agreement, the court set aside Judge Gosnell’s order and entered judgment for the claimant for the full amount claimed. It dismissed her application to re-allocate the claim and made no order for the costs of the claim or appeal.

2. CPR rule 27.14 applied because the claim was allocated to the small claims track. It restricted any costs order, including on this second appeal, unless the insurer had behaved unreasonably. Akhtar v Boland [2014] EWCA Civ 943 made that application to second appeals clear.

3. The insurer’s conduct was not unreasonable. It was entitled to defend a properly allocated low-value claim. The case was not initially treated as a test case. Once the appeal was listed with another appeal and the associated expense became apparent, the insurer reasonably chose not to contest the substantive issues and offered judgment for the full claim without costs. Its minor failures concerning the appeal documents did not warrant a special costs order in that context.

4. CPR rule 26.10 gave the court power to re-allocate the claim. CPR rule 46.13 ordinarily preserved the small-claims costs regime until re-allocation, but implicitly allowed a court, for good reason, to order otherwise and thereby backdate re-allocation for costs purposes. No such reason existed here. The application was made four months after the notice of appeal, by which time the insurer had reasonably relied on the applicable costs regime and had agreed to judgment.

• Court of Appeal (Civil Division) — Judge Gosnell’s order was set aside by agreement and judgment was entered for the claimant for the full sum claimed. The claimant’s application for re-allocation was dismissed and there was no order for costs.
• County Court at Bradford (Judge Gosnell) — On 11 July 2014, allowed the claimant’s appeal from the deputy district judge on mitigation and hire period, but determined a basic hire rate of £56.15 including VAT.
• County Court at Bradford (Deputy District Judge Greenwood) — On 7 February 2014, held that the claimant had failed to mitigate by not claiming on her own insurance and awarded damages for 28 days’ hire at £60 including VAT per day.