Many motor dealers and finance providers have spent a considerable amount of time dealing with payment protection insurance (PPI) complaints under the Financial Conduct Authority’s Dispute Resolution: Complaints Handbook (DISP) and claims in the County Court. It seems clear, following the extremely welcome judgment of Judge Richardson in Binns & Binns v FirstPlus Financial Group plc (2013) EWHC 2436 (QB). He ruled that where a finance provider or intermediary offers full redress, which is rejected by the customer’s solicitors or claims management company because they want their costs, any proceedings then issued are an abuse of process and will likely be struck-out.
Mr & Mrs Binns were mis-sold PPI and complained using solicitors to FirstPlus Financial Group. After considering the complaint under DISP, FirstPlus offered full redress but made no offer towards costs. This was rejected and proceedings were issued. FirstPlus applied for summary judgment or for the claim to be struck-out.
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District Judge Sarah Richardson considered FirstPlus’s application but dismissed it. FirstPlus appealed to Judge Richardson. He decided that:
- The concept of no reasonable grounds to bring the claim must "import the notion of having already achieved a just result". If a "person has already achieved all that they could upon any reasonable assessment of the case, it cannot be reasonable to add to the burden of the court or the defendant by continuing the litigation";
- The court had a "duty under the overriding objective to encourage Alternative Dispute Resolution (ADR). The proportionate management of cases is of cardinal importance";
- The court "must possess the power to prevent litigation that has achieved its objective from continuing". The court "must not allow its process… to be used unwarrantably when a civil litigant has already achieved full redress or has the option to achieve full redress";
- If the only issue is costs then this is "an adjunct to the claim" and "the claim must not be allowed to proceed. The court’s process is then being used for an improper purpose";
- If there is a "perfectly good ADR scheme and it is free which will provide (or has already provided) proper redress the court should seek to encourage ADR in advance and if there is an award (but it has not been accepted) then the court is left with no alternative but to say the claim… is not being brought reasonably and is also an abuse of the process of the court";
- The court had "not the slightest hesitation in saying the only advantage in pressing on with this case is the possibility (far from a probability) of an award of costs" but this was "a highly speculative adventure" because any damages would not have exceeded the offer;
- It was "a construct of fancy to suggest the claimant would obtain more in the litigation";
- The DISP offer remained "open for acceptance" but had it "been revoked, the claim would have proceeded" meaning the "only advantage in this case was the far-fetched notion [of] a costs order"; and
- The "moral of this case is litigants should ordinarily follow the ADR route when there is a perfectly good scheme that offers (i) speedy justice; and (ii) full redress" and, if they do not, "the court should and will strike out cases".
The appeal was therefore allowed and the claim was struck-out (with Mr & Mrs Binns being responsible for FirstPlus’s costs). It’s likely a similar conclusion will be reached where there is an offer of full redress for any complaint under DISP where the offer remains open for acceptance.
Russell Kelsall is a senior associate at Squire Sanders LLP
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