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Orton v Barclays Bank UK Plc
Factual and Procedural Background
In 2004, the Appellant entered into a credit agreement with Company A and took out payment protection insurance, under which Company A received commission of between 59.7% and 84.6% of the monthly premiums. The policy ended in 2010, but the credit relationship continued. [Para 87]
The Appellant had previously complained about mis-selling, and in 2019 a claims management company wrote alleging mis-selling and non-disclosure of commission under Plevin. Company A confirmed that commission had been paid and later paid redress to the Appellant. [Para 88]
In July 2023, the Appellant brought a claim under sections 140A-B of the Consumer Credit Act 1974 for about £2,750 plus interest, and the case was allocated to the small claims track. Company A defended the claim on limitation, lack of unfairness, and quantum. [Para 89][Para 90][Para 91]
Company A's solicitors repeatedly sought discontinuance and warned of costs consequences, including a letter of 22 May 2024 invoking CPR 27.14(2)(g). The Appellant served a notice of discontinuance on 7 June 2024, twelve days before trial, saying the decision was a commercial one after reviewing the evidence and the likely cost of instructing counsel. [Para 94][Para 96][Para 97][Para 102][Para 106][Para 114][Para 115][Para 122][Para 123]
Company A then pursued a costs hearing under CPR 27.14(2)(g); the District Judge found unreasonable behaviour and ordered costs of £2,132.88, and the Circuit Judge dismissed the appeal. [Para 124][Para 125][Para 135][Para 151][Para 153][Para 154]
Legal Issues Presented
- What is the proper approach to CPR 27.14(2)(g) in the small claims track, where costs are generally disapplied? [Para 30][Para 33][Para 38][Para 40][Para 193][Para 196][Para 200]
- Did the Appellant's late discontinuance, after repeated invitations to discontinue, amount to "unreasonable behaviour" justifying a costs order? [Para 31][Para 135][Para 144][Para 149]
- Did the Circuit Judge err in law by adopting and applying a four-stage framework derived from relief from sanctions reasoning? [Para 158][Para 159][Para 160][Para 161][Para 165][Para 175][Para 212][Para 213]
Arguments of the Parties
Appellant's Arguments
- The courts below set too high and too stringent a standard for the small claims track, and treated Company A's letter as though it imposed a Part 36-type deadline. [Para 168][Para 169][Para 174]
- A litigant may reasonably make a cost-benefit decision shortly before trial, and it would be perverse if a claimant were worse off for discontinuing than for fighting on. [Para 170]
- Company A's correspondence was not a genuine offer to settle, so it should not have been used to manufacture unreasonableness. [Para 171]
- The authorities were said to require something closer to abusive or vexatious conduct, and the Circuit Judge's four-stage framework impermissibly glossed CPR 27.14(2)(g). [Para 173][Para 174][Para 175]
Respondent's Arguments
- The District Judge was correct, or at least entitled, to find unreasonable behaviour on the facts. [Para 176][Para 178]
- The proper question was whether the conduct had a reasonable explanation, and the late commercial decision lacked one because the relevant factors existed throughout the litigation. [Para 179][Para 180][Para 183][Para 184]
- The overall course of conduct mattered, including repeated invitations to discontinue, the failure to engage, and the avoidable costs caused by delay. [Para 181][Para 182][Para 183][Para 184][Para 185]
- Any extra guidance from the Circuit Judge was said to be a useful framework based on experience. [Para 186]
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Dammermann v Lanyon Bowder LLP [2017] EWCA Civ 269 | In CPR 27.14(2)(g), rejection of a settlement offer alone is not enough; the focus remains on whether the conduct permits a reasonable explanation. [Para 65][Para 68][Para 69] | The Court treated it as important but cautioned against extending it into a general gloss divorced from the small-claims costs-neutral regime. [Para 82][Para 83][Para 204][Para 205][Para 208] |
| Lea v GP Ilfracombe Management Co Ltd [2024] EWCA Civ 1241 | Appellate restraint is required when reviewing evaluative decisions on unreasonable conduct. [Para 73][Para 74][Para 79][Para 82] | The Court accepted the need for latitude, but held that the District Judge's decision was not merely a factual evaluative call because it involved legal error in approach. [Para 178][Para 179][Para 230][Para 231] |
| Willow Court Management Co (1985) v Alexander [2016] UKUT 290 (LC) | "Unreasonable" means conduct with no reasonable explanation, and the jurisdiction is for the clearest cases. [Para 48][Para 49][Para 58][Para 59] | The Court relied on it for the reasonable-explanation test, but stressed that its tribunal context differs from CPR 27.14(2)(g). [Para 204][Para 208][Para 209] |
| Ridehalgh v Horsefield [1994] Ch 205 | The "acid test" is whether the conduct permits of a reasonable explanation; unreasonable conduct may be vexatious but need not be improper. [Para 49][Para 50] | The Court adopted the acid test as the safe starting point, while rejecting an importation of more burdensome explanations from other procedural regimes. [Para 68][Para 85][Para 86][Para 211][Para 212][Para 213] |
| Cancino v Secretary of State for the Home Department [2015] UKFTT 59 (IAC) | The test asks whether a reasonable person would have acted that way or whether there was a reasonable explanation. [Para 52][Para 53][Para 54] | The Court used it as reinforcing authority, but did not treat it as requiring a Denton-style staged inquiry. [Para 58][Para 59][Para 212][Para 213] |
| McPherson v BNP Paribas [2004] EWCA Civ 569 | Claimants should not be deterred from dropping claims by the prospect of a costs order on withdrawal. [Para 60][Para 61] | The Court treated it as supporting the proposition that withdrawal should not be stigmatized as unreasonable. [Para 62][Para 63] |
| Lastminute.com v. Moskalevitch [2019] EWHC 1091 (QB) | Pursuing an unsuccessful claim is not, without more, unreasonable behaviour in the small claims context. [Para 84][Para 85] | The Court used it to show that continuing an arguable claim to trial is not automatically unreasonable. [Para 84][Para 85] |
| Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 | Cited as the basis of the non-disclosure commission complaint in the background facts. [Para 88] | The Court mentioned it only as part of the history of the Appellant's PPI complaint. [Para 88] |
| Smith v RBS Plc [2023] UKSC 34 | The limitation period for such claims runs from the end of the credit relationship. [Para 99] | The Court noted that this decision caused limitation to drop out of the later correspondence. [Para 99] |
| Canada Square Operations Ltd v Potter [2023] UKSC 41 | Another PPI authority, dealing with deliberate concealment. [Para 101] | The Court mentioned it only in the chronology of later authorities. [Para 101] |
| Volpi v Volpi [2022] 4 WLR 48 | Appellate courts should be slow to disturb evaluative findings unless no reasonable tribunal could have reached them. [Para 82] | The Court referred to it when discussing the limits of appellate interference with objective-fact assessments. [Para 82][Para 230] |
| Denton | Relief-from-sanctions reasoning was used as an analogy by the Circuit Judge. [Para 212][Para 213] | The Court held that importing a Denton-style staged test into CPR 27.14(2)(g) was erroneous and unnecessary. [Para 212][Para 213][Para 254][Para 255] |
Court's Reasoning and Analysis
The Court identified three key points: the small claims track is a costs-neutral regime, analogies from other procedural contexts may mislead, and the factual background had been imperfectly understood below. [Para 188][Para 189][Para 190][Para 193][Para 194][Para 195][Para 196][Para 197][Para 198][Para 199][Para 200][Para 201]
It held that the burden remained on the party alleging unreasonableness, and that the jurisdiction should be confined to cases with no reasonable explanation, with due regard to the danger of deterring use of the small claims track. [Para 203][Para 204][Para 205][Para 206][Para 207][Para 216][Para 217][Para 218][Para 219]
The Court considered the lower courts to have erred by treating the Respondent's letters as settlement offers, by shifting focus away from the default costs-neutral starting point, and by interrogating the Appellant's explanation as though the Appellant had to disprove unreasonableness. [Para 222][Para 223][Para 224][Para 232][Para 233][Para 234][Para 235]
It also rejected the assumption that the Appellant's commercial decision made no sense, noting that the need to instruct counsel became clearer only after reviewing the Respondent's materials and that issues could still narrow further. [Para 238][Para 239]
The Court further held that it was wrong to treat the short period before trial as creating an obligation to respond in a Part 36-like way, because the small claims regime does not impose that structure. [Para 240][Para 241][Para 242][Para 246][Para 247][Para 248][Para 249][Para 250]
On Ground 2, the Court said the Circuit Judge's four-stage framework was unnecessary, unhelpful, and liable to encourage escalation of costs. [Para 252][Para 253][Para 254][Para 255]
Holding and Implications
Appeal allowed on both grounds; the District Judge's order was set aside. The parties had agreed that there should be no order as to the costs of the appeal. [Para 257]
The practical consequence was that no costs order under CPR 27.14(2)(g) survived against the Appellant, and the Court gave narrow guidance reinforcing the small claims track's costs-neutral ethos rather than expanding the unreasonable-behaviour jurisdiction. [Para 252][Para 254][Para 255][Para 257]
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