COURT OF APPEAL DECISION ON THE ROAD TRAFFIC PROTOCOL: INSURERS SHOULD KNOW THE RULES, AND CAN’T COMPLAIN WHEN THEY ARE APPLIED
In The London Borough of Islington -v- Borous  EWCA Civ 1242 the Court of Appeal rejected two appeals from defendants in relation to car hire/replacement charges where damages were considered within the Road Traffic Protocol. The judgment contains a detailed consideration of the rules of the Protocol and contains a clear warning to insurers that they must be aware of the rules and detailed provision of the Protocol. They cannot argue it is unjust when the principles of the Protocol are applied.
“I am not impressed by A2’s argument that this approach is anomalous or unjust. Insurers must be taken to know about both the purpose and the detailed provisions of the RTA Protocol, and how it differs from other methods of deciding civil claims. The sheer number of these claims means that they are a form of bulk business. Insurers can take advantage of the economies of scale and cost created by the RTA Protocol for these claims. Insurers are not locked into the RTA Protocol.”
In both cases defendants appealed against awards of damages made following the loss of use of a car. Damages were awarded at a Stage 3 hearing. There had been a first-tier appeal to the Circuit Judge where the findings were made in favour of the claimant.
NOT A MATTER OF PRINCIPLE
Lady Justice Elisabeth Laing was not impressed by the argument that these cases were matters of general importance or involved issues of principle.
Both Appellants suggest that their appeals raise points of wide importance about the scope and interpretation of the RTA Protocol. For the reasons I give below I disagree. I consider, on the contrary, that each appeal turns on what, in the framework of the RTA Protocol, was actually in issue in each claim at the Stage 3 hearing before the Deputy District Judges and before the Circuit Judges who heard the appeals from decisions of the Deputy District Judges.
The claimant is a licensed taxi driver. He was involved in a crash. He hired a replacement vehicle. There was a claim for hire. The defendant did not dispute the claim but did dispute the rate. The claim was issued under Part 8. The defendant asked for the claim to be transferred to Part 7 so that they could investigate issues of impecuniosity.
The District Judge dismissed the claim for hire charges on the grounds that a claim should have been made for loss of profit. The claimant then appealed to the Circuit Judge. The Circuit Judge held that the defendant could not take the point it did at the hearing as it had not raised the issue at Stage 2. The Circuit Judge allowed the appeal.
THE DEFENDANT’S UNSUCCESSFUL APPEAL IN APPEAL ONE
The defendant appealed. That appeal was unsuccessful.
142. I have summarised the relevant law, the procedural histories and the arguments at some length. The reasons for my decision can therefore be brief. As I foreshadowed in paragraph 2, above, these appeals turn on the uncontroversial application of the RTA Protocol to their own procedural facts and do not raise any wider points.
143. Defendants in these cases are almost always insurers, as they are in these two appeals. There are hundreds of thousands of these claims every year, and they are routine for insurers. Insurers can be assumed to be familiar with the provisions of the RTA Protocol and to have ready access to legal advice if an unusual or difficult issue arises in one of these cases. I have summarised the relevant provisions of the RTA Protocol and the decision in Phillips v Willis. The themes which emerge from both are that the RTA Protocol is intended to be a quick and cheap procedure to enable the parties to settle at a cost which is proportionate both to the sums at stake, and to the run of the mill legal issues which arise, and in a way which does not place an undue burden on the courts. The RTA Protocol is designed to enable the parties to narrow and limit the issues in dispute, so that if a decision by the court is necessary at Stage 3, that decision will only concern the narrow issue which the parties’ exchanges under the RTA Protocol will already have defined for the court. As Jackson LJ observed, the RTA Protocol has ‘an inexorable character’. If the parties do not observe its provisions, they bear the consequences: for example, if an issue is not raised, or evidence is not served when it should have been, it can (in general) not be raised later.
Appeal 1: decision
144. In his oral submissions, Mr Bright accepted that all his grounds of appeal were aspects of the same point. He also accepted, I think, that CJ1 was, at the very least, entitled to read Mulholland, if for no other reason than to consider whether its citation was consistent with the Practice Direction, or not. He further accepted, in effect, that his objections to Mulholland were a side issue: what mattered was whether CJ1’s reasoning, which, admittedly, was similar to the reasoning in Mulholland, was correct.
145. He referred repeatedly to Hussain as ‘the governing authority’. The main premise of his written and oral submissions, therefore, was that Hussain, which was a claim under Part 7 and was not decided under the RTA Protocol, is not only relevant to claims under the RTA Protocol, but governs the court’s approach to such claims. He appeared, nevertheless, to accept that the court’s approach would, or could, have been different if A1 had deliberately ambushed R1 with Hussain on the eve of the Stage 3 hearing.
146. Mr Bright was right to accept that his five grounds of appeal are different ways of putting the same argument. On analysis, he makes two linked points: a claim under the RTA Protocol must be pleaded and proved in the same way as a claim to which the RTA Protocol does not apply, and, further, that, if, as late as the Stage 3 hearing, the defendant argues that the claim has not been pleaded and proved in that way, a DJ is obliged to dismiss the claim. Each of those two points is based on a fundamental misunderstanding of the express provisions of the RTA Protocol, and of its purpose.
147. As HHJ Freedman rightly said in Mulholland v Hughes, ‘…to make an offer in respect of hire charges is not to admit the need for hire, but not to challenge the need at Stage 2 is equivalent to saying that the claimant does not need formally to prove it’. As CJ1 put it (paragraph 54), again rightly, on both a literal and a purposive interpretation, a defendant cannot object, at Stage 3, to a particular head of damages except on grounds raised at Stage 2. Here, as Mr Campbell pointed out, there was no dispute about the need for car hire at Stage 3, because A1 had, in effect, conceded the need for car hire by offering R1, at Stage 2, a different rate from the rate which R1 claimed. A1 did not identify any relevant dispute at Stage 2.
148, It is not open to A1 to argue, on this appeal, that CJ1 erred in not transferring the claim to Part 7. I accept Mr Campbell’s submission that this was not a ground of appeal.
147, I agree with CJ1, for the reasons which he gave, that DDJ1 erred in law in dismissing the claim at the Stage 3 for the reasons relied on by DDJ1. I would dismiss the appeal against CJ1’s decision, which I consider not only to have been open to him, but to have been clearly right. I thank the parties for their submissions on the issue I referred to in paragraph 89, above, even though, in the event, it was not necessary for me to express any view on that issue.
THE SECOND APPEAL
The claimant was a taxi driver who had been involved in an accident. His claim included a claim for credit hire charges. The defendant had made certain offers in relation to hire charges at Stage 2. At the Stage 3 hearing the defendant argued that there was insufficient evidence to establish the need for the charges and that the claimant had failed to establish impecuniosity. The District Judge awarded damages for credit hire. The defendant appealed to the Circuit Judge. The Circuit Judge found that there was sufficient information before the District Judge to make the award and dismissed the appeal.
THE DEFENDANT’S UNSUCCESSFUL APPEAL TO THE COURT OF APPEAL
Again the appeal was unsuccessful.
Appeal 2: decision
150. There is a dispute about whether the question of R2’s impecuniosity was argued before DDJ2. The transcript suggests that it was raised in passing, but also that the focus of A2’s argument was the Copley point. The question of impecuniosity was one of the grounds of appeal to CJ2, and CJ2 decided it, so I consider that this Court should decide ground 1.
151.. I can see no error in CJ2’s approach to this question. I consider that, in the context of the RTA Protocol, and if it was necessary for R2 to show that he was impecunious, the evidence on which R2 relied was sufficient for that purpose. I accept R2’s submission that if A2 wanted to argue that the evidence was insufficient for that purpose, it was for A2 to ask, at an appropriate time, for a transfer to Part 7, so that the issue could be investigated further. I also accept the submission that it is simply not feasible for a DJ to investigate such an issue in the depth which A2 now demands in the context of a Stage 3 hearing.
152. I am not impressed by A2’s argument that this approach is anomalous or unjust. Insurers must be taken to know about both the purpose and the detailed provisions of the RTA Protocol, and how it differs from other methods of deciding civil claims. The sheer number of these claims means that they are a form of bulk business. Insurers can take advantage of the economies of scale and cost created by the RTA Protocol for these claims. Insurers are not locked into the RTA Protocol. First, they can take advantage of the ‘industry agreements’ dealing with vehicle-related damages which are referred to in paragraphs 6.4 and 17.23 (see paragraphs 12 and 18, above). Second, there are many opportunities for a defendant to take a claim out the RTA Protocol (see paragraph 23, above) if a defendant considers that it is better suited to investigation and determination under Part 7 (with the costs risk which that entails).
153. I would dismiss ground 1.
[The defendant attempted to argue a point that the claimant had been unreasonable in not accepting an offer of a free car. However this was not argued below]
154. I accept R2’s submission that A2 needs the permission of this Court to argue ground 2, which was not taken before DDJ2 and was not a ground of appeal to CJ2. I also accept R2’s submission that Bean LJ’s grant of permission to appeal does not prevent R2 from making this submission.
155. A2 was represented both before DDJ2 and before CJ2. As this Court pointed out in Jones v MBNA, the parties are expected to advance their full cases at trial. There are very few cases in which it could be just to allow a party to run a wholly new point on appeal. That argument applies with even greater force to this appeal, for three reasons. First, this is a second appeal. Second, this is not a pure point of law, as it concerns a case management discretion. Third, this new point is wholly theoretical, as it concerns the hypothetical exercise of a discretion which the DDJ2 was never in fact invited to exercise. Having heard full argument, I would refuse A2 permission to rely on ground 2 and would therefore dismiss ground 2.
THE NOTE IN THE WHITE BOOK
There is a passage in the white book which the Court of Appeal held is incorrect.
35.”The editorial note in paragraph 8BPD.7.1 of the White Book says that Phillips v Willis  EWCA Civ 401;  RTR 4, ‘illustrates that transfer out of the Protocol Stage 3 procedure to Part 7 will be rare and for exceptional cases only’. The parties in appeal 2 submitted that that note is not accurate. I will return to that note at the end this judgment (paragraph 156, below).
Post-script: the note in the White Book
156. I consider that the note (see paragraph 35, above) is not an accurate statement either of the actual decision in Phillips v Willis, or of its implications. The power to transfer cases to Part 7 is not constrained in the way that the note suggests.