For those that have not seen how Keoghs are approaching impecuniosity post Diriye, their recent release is repeated below:
"Court of Appeal firmly reiterates requirement to properly plead ‘Impecuniosity’ in credit hire cases.
In a welcome and robust judgment handed down in the case of Diriye v Bojaj, the Court of Appeal have firmly reiterated the requirement for claimants to properly address the issue of impecuniosity at the outset of the claim. We consider the implications of the judgment and whether it is likely to bring an end to the kind of generic and unhelpful bare assertions which are still so commonly seen in credit hire cases.
The claimant, a taxi driver, issued proceedings for a claim arising as a result of a road traffic accident which consisted predominantly of credit hire charges. His Particulars of Claim contained a familiar one line assertion that he was impecunious, with no further information or detail given.
An ‘Unless’ order was later made obliging the claimant to file and serve a reply to defence setting out “all facts in support of any assertion that the claimant was impecunious”, with an automatic sanction that the claimant would not be allowed to rely on his allegation of impecuniosity if he failed to comply.
In breach of the order, the reply was served late. It was sent on the day that it was due, by Royal Mail first class recorded delivery, and was signed for as received by the defendant’s solicitor five days later.
The reply in relation to impecuniosity was typically unrevealing. It simply stated:
“As the claimant earned cash as a minicab driver, he expended the same on bills and daily living allowances for his family”
The claimant applied for relief from sanctions. It was argued primarily that in accordance with the “deemed served” provisions of the CPR, the reply was only two days late and therefore that the default was not “significant”.
The application was rejected. The District Judge held that the reply was in fact served on the date that it was signed for, and that the usual rule that documents served by first class post were deemed served two days after posting did not apply to signed for delivery, since confirmation was available by that means as to the date that the document was actually received. Therefore, the reply was five days late.
Further, the District Judge was unimpressed by the contention that nothing more could have been pleaded in relation to impecuniosity because the claimant was paid cash and had no evidence of income. She stated:
“13…this man is a minicab driver. He does not exist in a vacuum. He must be given work by somebody. He must be employed, even if it was as a self-employed contractor, by a firm of minicab drivers. There must be a licence, there must be some record of when he worked. He must be paid on some basis and there must be a record because there must be transactions between him and his cab company.
14 I disagree that there are no records, and if there are no records, there should be and this is a man who should be forced to have records. He has to pay tax. How is he paying tax? What is he paying tax on? If he cannot produce any evidence of his income, even though he says he is a self-employed cab driver, that does not mean that he is impecunious; rather the reverse. He clearly has money if he is working, so where is it and why is there no evidence of it?
16 …this is a road traffic accident from 2014. It was issued at the last minute in 2017 but it must have been clear to those instructing Mr Peter, Lincoln Harford, that if impecuniosity was going to be part of this case, then the information relating to it was going to be needed at the beginning, so they have had plenty of time. They have had months if not years to get this information and to ask the claimants for the information. Why they did not do so is not a matter for me but it should have been available and they should have told the claimant what the court needed if he was going to plead impecuniosity and there is no reason why it should not have been prepared properly and it clearly has not been."
The claimant appealed. Following the dismissal of the first appeal by HHJ Latham, who upheld the reasoning of the District Judge, the claimant appealed again to the Court of Appeal. There were two distinct issues to be considered, namely:
Did the usual rule that documents sent by first class post are deemed served two days later apply to first class ‘signed for’ deliveries?
Did the substance of the Reply comply with the order’s requirement for the claimant to set out “all facts in support of any assertion that [he] was impecunious”?
Issue 1: Service
The Court of Appeal disagreed with the interpretation of the District Judge that the first class ‘signed for’ post was not ‘first class post’ for the purposes of CPR rule 6.26. It was held that the service was exactly the same as first class post, except that it was signed for. The rules in relation to service existed to eliminate any scope for dispute as to what date any given document was in fact received, therefore the date of actual delivery was irrelevant and it would be wrong in principle to draw a distinction between standard first class and ‘signed for’ first class.
Therefore, the reply was held to have been ‘deemed served’ on 6 April and accordingly was taken to have been two days late and not five.
Issue 2: The contents of the Reply
Although the appeal succeeded in relation to the ‘deemed served’ date, it had no impact on the overall outcome of the appeal. The Court of Appeal firmly rejected the claimant’s arguments that the substance of the reply was otherwise in compliance with the order. In giving the leading judgment, Lord Justice Coulson stated:
“II consider that, on analysis, the Reply, even when served, did not comply in substance with the Unless Order. That Order required the Reply to set out "all the facts" relied on in support of the assertion of impecuniosity. The appellant was a minicab driver, and that was the source of his income. So, the Reply needed to set out what his income was and what his expenditure was, and how those figures meant that he could not afford to hire a replacement vehicle.…
…[The defendants] are entitled to know the case they have to meet. They should not be expected to have to prepare for a trial where the critical item of claim depends on a one line assertion, and hoping that, as a result of the cross-examination of the appellant, the judge will reject the claim. That is not how civil litigation is supposed to work post-CPR...
…Parties to civil litigation need to make clear the important elements of their respective cases at an early stage. Gone are the days of ambush and keeping important points up your sleeve. The aim of much civil litigation is to bring about a cost-effective settlement. If a claimant delays in providing critical information, particularly where he has been ordered to provide it by way of an Unless Order, that delay adversely affects the other side's ability to a take a view about the strength or weaknesses of the claim they face…
…In considering all the circumstances of this case, I conclude that the appellant and his solicitors have never engaged with the need properly to plead and prove his impecuniosity in support of the claim for credit hire charges. They did not do that at the outset of the claim; they did not do so when the subject of an Unless Order; and they have not done so subsequently. In those circumstances, there was no basis on which the court could grant the appellant relief from sanctions.
The appeal was therefore dismissed.
Implications and comment
It is now clear that the deemed served provisions within CPR 6.26 apply equally to ‘signed for’ first class post as they do for standard first class post. A document sent by that means will therefore be deemed served 2 days after it was sent, irrespective of the date it is signed for as received.
Perhaps more importantly, the decision is a robust and very welcome reminder of what should be expected of claimants in credit hire cases when it comes to pleading impecuniosity. Although the main focus of the appeal was concerned with whether the claimant had complied with the specific wording of the order, the comments set out above are clearly of wider application. It is clear that the type of vague assertions which are still routinely seen in credit hire cases – particularly in witness statements adduced in MOJ stage 3 cases – should no longer be permitted generally, if properly challenged.
Further, the judgment assists considerably as to the interpretation of the amendments to the CPR Practice Direction 16, as implemented on 6 April 2020. Under those new provisions, a claimant seeking credit hire charges now has to plead “relevant facts” in relation to any allegation of impecuniosity (amongst other things) within the Particulars of Claim. It must therefore be the case, following the comments of Coulson LJ which are highlighted above, that full details of income and expenditure along with an explanation of “how those figures meant that he could not afford to hire a replacement vehicle” are required to be pleaded in order to comply with this requirement. Whilst the new provisions are mandatory, there is no automatic sanction for failure to comply.
Defendants are likely therefore to want to pursue applications for ‘debarring orders’ and other sanctions in cases where claimants clearly fall short."