Keoghs Insight


Fraser McAndry

Fraser McAndry


T:01204 678693

Bringing CHOs or AMCs into proceedings and out of the shadows

Fraud Aware Issue 4

The recent Keoghs cases of Hassan v Cooper & Accident Claims Consultants Ltd and Yousaf & Ahmed v Mason and Hanif both highlighted the level of claim control and management exerted by credit hire and accident management companies. The cases got me thinking about why we don’t see more CHOs or AMCs joined into proceedings either for the purposes of costs or, more seriously, where claim fraud is alleged.

In the context of fraudulent credit hire claims, I am now seeing an ever-increasing number of claims litigated upon where there is no personal injury claim at all or it was settled by the insurer pre-litigation. As HHJ Butler pointed out in the Hassan judgment this is a definite trend. He observed: “In addition…, there are those who jump on the bandwagon of that genuine collision where the defendant has been negligent, in order to add egregious claims for credit hire”. He went on to include the almost obligatory bolt-on head of loss of recovery and storage charges. It is refreshing to see an acceptance that fraudulent credit hire and storage claims can emanate from a truly genuine accident and this is something that requires constant vigilance from insurers. A validation of the accident itself does not necessarily extend to the claims for hire and storage. Whilst the traditional model of personal injury motor fraud has certainly not gone away, we must remain wary of this trend of fraud in non PI cases insofar as fraudulent credit hire and storage claims are concerned.

So, in these instances of non PI fraud who is, pardon the pun, the driving force behind the claim and its prosecution? The axiomatic answer, as was accepted by the courts in Hassan and Mason is, invariably, the credit hire company and/or the AMC. Indeed, if one goes back to the judgment in Farrell & another v Direct Accident Management Services (DAM) Ltd & another this was accepted to be the case. The court in Farrell fully accepted that DAM were a true beneficiary of the litigation and were directing and in control of the case at all times and for this reason awarded 80% of the costs of the unsuccessful litigation against DAM. At appeal, the Chancellor of the High Court remarked that the costs award could have been 100%!

In Hassan, the AMC, Accident Claims Consultants Ltd (ACC), were joined into the action when it became apparent that they were instrumental in the production and disclosure of a fraudulent repair invoice and a grossly exaggerated credit hire bill. In his judgment, HHJ Butler was absolutely clear that he considered ACC to be behind the attempted fraud and, for that reason, ordered ACC to pay £60,000 in exemplary damages. In Mason, Recorder Osborne found that the CHO, Apex, were the ones profiting from the litigation. At the resultant Judicial Review (where the Recorder’s comments around the issues of fraud were strongly criticised) the Justices stated “Had the Recorder restricted himself to the observation that Apex and Pennington were among those who benefitted from the claim, there could have been no objection.” The message is clear.

It is certainly not common to see credit hire and accident management companies joined into proceedings and the cases discussed above are stark examples of the spotlight being shone upon the true beneficiaries of these claims being justified and proportionate. Of course, when considering whether to embark on this course of action we must be mindful of economics and evidence. However, where the evidence exists, I believe the courts have an increasing appetite to deal with CHOs and AMCs who are brought into proceedings whether it be for costs purposes or to answer allegations of fraud. They certainly won’t appreciate the spotlight being shone upon them and their business practices, but the more it is done, the stronger the message will be to the CHO market – you cannot simply hide behind the claimant, you must stand beside him!