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The Cautionary tale of the postman, the application for relief and not enough money? Diriye v Bojaj [2020] EWCA Civ 1400

  1. This credit hire appeal case was heard in the Court Of Appeal on 15 October 2020 with judgment being handed down on 4 November. It was heard by Lord Justice Coulson who gave the leading judgment, Lady Justice Davies and Lady Justice Rose agreeing.

 

  1. The case has been touted as a boon for Defendants. However, it can also be seen as providing invaluable guidance for Claimants and their representatives which consolidates what is required of them when preparing a case based on impecuniosity so that they do not find themselves in the same unfortunate position.

 

  1. The appeal was based on the following three grounds:

 

  1. Whether or not the judges in the lower courts were wrong to have found that the Appellant had breached the “unless order” contained within the court’s initial case management directions both in relation to service and content of its Reply to Defence;
  2. Whether Royal Mail 1st class signed for was subject to the same interpretation of deemed service as service by first class post in accordance with CPR 6.26;
  3. Whether or not relief from sanctions should have been granted.

 

  1. The claim arose out of a road traffic accident on 30 May 2014. The Claimant, a minicab driver, made a claim for personal injury and also for special damages, the main head of loss being credit hire charges in the sum of £12,048.29.

 

  1. The claim form was issued at the end of the limitation period in 2017. The Particulars Of Claim, served on 20 October 2017, contained a pleading that the Claimant was impecunious and as such the entirety of the credit hire charges were recoverable. As with many such pleadings, it did not go beyond the bear assertion of impecuniosity and no supporting evidence was provided to the Defendant despite the passage of over three years since the index accident.

 

  1. The subsequent Defence challenged the pleading of impecuniosity and as such it was apparent that impecuniosity was a contentious issue between the parties and would therefore need to be particularised and proven.

 

  1. It is trite law that any pleading of impecuniosity must be proved by a Claimant in order to demonstrate that he was not in a financial position to have paid for hire charges up front and therefore that it was reasonable for him to have entered into a credit agreement in order to obtain a replacement vehicle. A Claimant need not be penniless but a thorough examination of his finances will need to demonstrate that he would have been placed under an unreasonable burden and would have had to make unreasonable sacrifices in order to pay for a hire vehicle outright.

 

  1. In order to satisfy a court that he is impecunious, fairly standard directions are usually made requiring a Claimant to provide copies of his wage slips or equivalent documentation, all bank account statements where his name appears on the account and also copies of any credit card statements for a period of three months pre accident and covering the period of hire. The directions can differ slightly from court to court but this gives a general flavour of what is routinely required.

 

  1. On 7 March 2018, the Claimant not having provided any further detail as to his impecuniosity, DDJ Walder listed the matter for a Fast Track Trial on 1 November 2018 and made an” unless” order as follows:

 

“The Claimant shall be debarred from relying upon the facts of impecuniosity for determining the appropriate rate of hire unless:

  1. By 4pm on 4 April 2018, the Claimant files and serves a reply to the Defence setting out all facts in support of any assertion that the Claimant was impecunious at the commencement of and during the hire of the vehicle in question and;
  2. By 4pm on 18 April 2018, the Claimant serves copies of the following documents which are in his control:
  3. Copies of the Claimant’s wage slips or equivalent documentation evidencing the approximate level of income available to the Claimant for the period of three months pre accident and covering the period of hire and;
  4. Copy bank and credit card statements for the period of three months pre accident and covering the period of hire.”

 

  1. At paragraph 7 of the judgment Lord Justice Coulson opined that “unless” orders in the terms set out above were commonplace owing to the fact that Claimants were taking too lax an approach to pleading and proving impecuniosity. He therefore rejected the Appellant submission that an order in such terms should not have been made at all as the Claimant had not breached any previous order.

 

  1. Following DDJ Walder’s order, the certificate of posting of the Reply showed that it had been sent at 17.36 Hours on 4 April 2020 using the Royal Mail 1st class signed for service. It was accepted by the Appellants that even applying the same approach of deemed service by ordinary 1st class post, the Reply would have been deemed served on 6 April 2018 and as such was in breach of the order. In fact it was signed for and therefore received on 9 April 2018.

 

  1. The Royal Mail United Kingdom Post Scheme stated that the 1st class signed for service is not a tracked service but simply a means by which proof of delivery can be obtained. In every other respect it is effectively the same as 1st class posting with the intended date of delivery being the day after posting. It is notable that the Court Of Appeal had site of the relevant paragraphs of the scheme whereas the judges in the lower courts did not.

 

  1. In a letter of 17 April 2018 the Appellant solicitors accepted that the “unless order” had been breached. However, an application for relief from sanctions was not made until 31 May 2018 and was issued on 5 June 2018.

 

  1. The Application came before DJ Goodman on 21 August 2018 and the Appellant accepted there that the Reply had been served out of time even if it were deemed served on 6 April 2018. As well as the issue regarding service out of time, the Respondent also took issue with the delay in making the application for relief and also with the fact that even by August 2018 no further pleading or evidence as to impecuniosity had been received.

 

  1. On the first issue of deemed service, the judge found that the Reply was not deemed served until 9 April 2018 when it was signed for. She distinguished 1st class signed for post from ordinary 1st class post owing to the additional requirement of signing for the item in order for it to be received.

 

  1. When considering Denton, the judge found that the breach of the unless order was both serious and significant. There was no explanation for why the breach had occurred. When considering all of the circumstances, significance was attached to the delay in making the application. The judge was also highly critical of the lack of evidence having been provided to demonstrate the Claimant’s impecuniosity given that several years had passed since the accident. Current financial information must have been available to the Claimant at the time and should have been provided in order for the case to be built and considered.

 

  1. Accordingly, the application for relief from sanctions was dismissed. The Appellant appealed against the decision meaning that the trial date of 1 November 2018 could not be maintained.

 

  1. The appeal was heard on 2 October 2019 and, giving an ex tempore judgment, HHJ Lethem upheld DJ Goodman’s conclusions and dismissed the appeal. The Appellant then appealed that decision and the matter was heard at the Court Of Appeal on 15 October 2020.

 

  1. Regarding the issue of service, at paragraphs 34 – 42 Lord Justice Coulson set out his reasoning for finding that 1st class signed for and ordinary 1st class post were to be treated the same and therefore that the conclusions of DJ Goodman and HHJ Lethem were incorrect. He found that in substance the intention of Royal Mail was that the services were to be considered as the same given that identical wording was used to describe them. The only material difference was that the signed for service provided proof of receipt to the sender. To consider them differently would frustrate the entire purpose of CPR 6.26 which was designed to give certainty as to when service is deemed and to prevent satellite litigation about when a document was served. Lord Justice Coulson also went on to say that to differentiate the 1st class signed for service by not deeming an item served until it was signed for, a loophole could be opened whereby the recipient sought to frustrate service altogether by refusing to sign for the item. This was not, and could not, be the intention of CPR 6.26.

 

  1. Further to his reasoning, Lord Justice Coulson determined that the breach of the “unless” order was one of two days rather than five albeit that it was a significant breach nonetheless.

 

  1. When considering DJ Goodman’s use of judicial discretion in considering the Denton principles, it was held that even taking into account the reduction in the time of deemed service, she was entitled to have reached the conclusions she had and was correct to do so having had regard to all of the matters that she should have.

 

  1. Firstly, the breach in failing to serve the Reply by 4 April 2018 was serious. Degrees of seriousness should not come into it. Either the breach was serious or was not. Whether it was serious but less serious than some breaches was, in Lord Justice Coulson’s view, a flawed submission to have been made on behalf of the Appellant.

 

  1. Secondly, despite the contention that late service was the only serious breach of the order, Lord Justice Coulson found that the substance of the Reply itself had not complied with the “unless” order. The order had been made so that the Claimant would properly particularise his assertion of impecuniosity. This required him to set out the facts on which he relied, e.g. his income and expenditure and how this meant that he could not have afforded to hire a vehicle on basic terms. The Reply simply stated that as a minicab driver he received his payments in cash and subsequently this cash was spent on family expenses. No figures were put forward. The Claimant’s witness statement, which had been served by August 2018, did not expand much further. It stated that the Claimant had no money to repair or buy another car, that his bank accounts were closed due to their overdraft limits and that his credit cards were maxed out. The specifics of his financial situation therefore remained unpleaded and unevidenced.

 

  1. Lord Justice Coulson, in what is likely to be the most quoted comment of the judgment, stated that “the submission seemed to be based on the incorrect notion that a Claimant was entitled to advance a rubbishy case in stages from pleading to witness statement to trial, presumably in the hope that, by the time the trial came on, there was a commercial imperative on the part of the Respondents to settle the case.”

 

  1. In essence, what Lord Justice Coulson was getting at was that he did not accept the distinction between pleading and evidence in that a pleading should properly go beyond a bald assertion and should set out such facts as the amounts relied upon in asserting impecuniosity. These facts would then be borne out by the financial evidence provided. As such, he found that in not setting out these facts within the Reply, the Appellant had not complied with the terms of the “unless” order and this failure should properly fall under the first stage of the Denton test in that it was a serious and significant breach of the highest order. After all, a Defendant must know the case that he is to meet at the earliest opportunity and, given the passage of time, there was no reason that the case could not properly be particularised by October 2017 when the Particulars Of Claim were served. This failure had necessitated the unless order directing the Reply which, in expanding little further than the Particulars Of Claim had done, constituted a serious and significant breach.

 

  1. Lord Coulson also addressed the submissions that the court timetable had not been imperilled and also that the two day default in service was in essence minor. Taking the first point, he found that the fact that no trial date had been imperilled by the late service in itself did not reduce the significance of the breach and was not the only measure by which significance should be measured. He also considered that although the late service may not have affected the timetable, owing to the fact that he found the Reply not to have complied in substance with the order, there were other considerations here. The Claimant’s failure to properly particularise his impecuniosity before or following the “unless” order did have a significant impact on the court timetable. Had the issue been addressed the trial would have gone ahead in November without interference. However, the non-compliance had necessitated the application for relief which had itself not been made promptly. It must also fall that by the Defendant not knowing precisely the case to be met, meaningful negotiations could not take place in order to resolve or narrow the issues prior to any trial. Regarding the second point, all of the circumstances for late service must be considered and there should be no artificial cut off by which the delay can be considered minor e.g. one day is not that bad but three days is.

 

  1. When considering why the breaches occurred, the second stage of Denton, the court agreed with the conclusion of DJ Goodman that there was no good reason. The matter therefore came down to all of the circumstances. Firstly, the delay from acknowledgement of the breach owing to late service was made on 17 April. Given a trial date of 1 November, there was no justification for the weeks of delay that followed this acknowledgement before the application was made. Secondly, the Appellant’s solicitors’ consistent failure to properly plead and evidence the assertion of impecuniosity, even at the time the application for relief was heard, heavily weighted the court’s mind towards dismissing any such application. These circumstances went far beyond a Defendant opportunistically taking advantage of a minor breach.

 

  1. For all of the reasons set out, it was concluded that, whilst 1st class signed for postage should have the same meaning as ordinary 1st class post, the Reply had failed to comply with the unless order. In addition, having considered its late service, the delay in applying for relief and the consistent failures to properly particularise its case, the application for relief from sanctions was rightly dismissed and as such the Appellants could not rely upon the assertion of impecuniosity.

 

  1. The judgment may be seen as being a hammer blow to Claimants wishing to plead impecuniosity and heavily critical of how such cases are conducted. However, by applying the following principles, cases should run successfully to trial or, with any luck, be settled prior to litigation:

 

  1. Obtain the Claimant’s full financial information as soon after the accident as possible and in any event pre-issue so that the Particulars Of Claim can clearly set out the facts of impecuniosity.

 

  1. Ensure that all accounts are provided and check those which have been thoroughly to establish whether there are transactions to other accounts or credit cards. Claimants often say that they did not mention a savings account because it has nothing in it or did not mention a credit card because they never use it. However, the court will still need to see the £0 balances on a statement.

 

  1. Make sure any joint accounts are included. They are an account on which the Claimant’s name appears even if the funds are shared.

 

  1. If the Claimant has any outstanding loans or payment plans, obtain evidence of this even if it is by way of letter confirming the same from the relevant company.

 

  1. Set out clearly in the Particulars Of Claim the Claimant’s position, for example: The Claimant could not have afforded to hire a vehicle himself and relies upon the fact of impecuniosity. He earns X per month and has an expenditure of X. He also has commitments to pay off credit card debts which amount to X.

 

  1. Be sure to check the court’s directions on allocation. While most ask for financial information for three months pre accident and for the duration of hire, some courts ask for information for longer periods.

 

  1. Check that the statements you have do cover the entire period. Failure to include a month of statements within a bundle usually results in the Claimant being debarred from relying on the assertion on the day of trial unless a judge is persuaded by an application for relief in the face of the court.

 

  1. Be realistic. Claimants sometimes object to having their financial information considered. If it is likely they will refuse to provide it, should impecuniosity be pleaded at all as it will not succeed based on the Claimant’s unevidenced assertion alone.

 

Kelly Cronin, Park Square Barristers

 

Contact Kelly’s clerks

Francine Kirk on 0113 202 8605

Andy Reeves on 0113 213 5252

Talia Webster on 0113 213 5207

Daniel Highfield on 0113 213 5207

Patrick Urbina on 0113 213 5250

Joshua Duree on 0113 213 5246