Tactical Team Update

With several strategic litigation initiatives well under way, spearheaded by the bespoke CHO facing tactical team, we are pleased to provide an update to clients. 

Pre-Action Disclosure Applications

Every PAD application Keoghs have issued for financial documents against claimants of a specific CHO in the last 12 months has resulted in the documents being provided (either voluntarily or by way of court order). In most of the cases where the court made the order, we were also successful in recovering our client’s costs. Summaries of the most notable judgments are below.

• R v Tela (Cardiff CC, 10/01/20)

The order for pre-action disclosure of financial documents, plus costs, was initially made on the papers without a hearing. The Claimant applied to set this order aside, with an application supported by a lengthy witness statement. Amongst the points raised were that the application was premature, and that the court at which the application was issued had no connection to the claim so the application should be transferred out to the claimant’s home court. Following service of a statement in response which addressed the points raised, the application to set aside was dismissed, with the claimant once again ordered to pay further costs. (Keoghs handler – Aadil Amla)

• G v Lowe (Cardiff CC, 28/11/19)

In granting the order for pre-action disclosure, District Judge Coats stated: “I agree with the conclusions that Judge Harrison reached in EUI v Charles.  This case does seem to be full square with the decision in EUI.  I have noted the submissions about the [CHO] model being based on the impecunious customer. I agree that the four stage test set out in CPR 31.16 is met in this case.” When awarding costs, the judge further found that it was not reasonable for the Claimant to contest the application, expressing “surprise” that they had chosen to do so. (Keoghs handler – Jenny Milburn)

• A v Diniz (Cardiff CC, 21/02/20)

Deputy Judge Morgan had no hesitation in making an order for the documents sought. Costs were awarded in our clients favour on the grounds that the respondent’s conduct had been unacceptable and wholly at odds with the overriding objective. The claimant’s Counsel applied for leave to appeal the costs decision. This was refused as having no reasonable prospects of success. (Keoghs handler – Aadil Amla)

Non-Party Costs Orders

Although CHOs are usually the driving force and beneficiary of any given credit hire claim, they have often been able to stand in the shadows and avoid direct costs liabilities as a result of unsuccessful litigation. Keoghs seek to address this in cases where a costs order is obtained against a claimant by making applications to join the CHO to the proceedings to enforce the order against the CHO instead.

Applications for non-party costs orders are now being routinely settled by a particular CHO, to avoid a contested hearing and the risk of an adverse precedent. Ordinarily, offers for 80% of the defendant’s costs of the action are made upon receipt of an application.

• A v B (Central London CC, 07/02/20)

In a rare case which the CHO chose not to settle, handled by Keoghs Solicitor Scott Croft, the judge accepted our submissions and awarded costs to be paid by the CHO, which are likely to be in the region of £23000.  He rejected the CHO’s attempts to distance themselves from the litigation generally, and found that:

1. The CHO quite clearly had a very substantial connection with, promoted, and stood to benefit from the litigation. At trial the judge had already found that the CHO had “a very substantial connection to the litigation”.
2. The CHO would have known that in promoting the litigation they were doing so in respect of someone who they knew would be unable to pay any adverse costs order.
3. The CHO’s contract with the Claimant provided them with the right to pursue an action in the Claimants name against the third party and required the Claimant to bring an action through the courts and required the Claimant “to cooperate in the conduct of the action” and to “attend any hearing”.
4. The Claimant’s solicitors were appointed by the CHO and managed the claim. Their own website under the heading “How it works” stated:

“i. Submit your claim using our online form above

1. One of our claims handlers will call you back to discuss your claim

iii. If the claim proceeds, our solicitors will fight your case”

5. The CHO stated that they “manage your whole claim, so you don’t have to”.
6. The Claimant could never have settled the litigation without the CHO’s agreement.
7. The CHO pursued the litigation in the name of the Claimant.
8. In reality the Claimant had no choice in terms of the appointment of his solicitors
9. Importantly, the CHO had not disclosed any evidence in terms of their communications with the Claimant and his solicitors to show that they had “sat back” or were a “free agent”.

Fundamental Dishonesty

Whilst the provisions in relation to fundamental dishonesty do not apply unless a personal injury claim is or was a part of the claim, where the provisions are available there is an increased willingness on the part of the judiciary to find fundamental dishonesty in the very common occurrence where a claimant has lied regarding a credit hire claim or an issue relating to it. Following on from the High Court judgment in Haider v DSM, where a claimant who had concealed financial accounts was held to be fundamentally dishonest, some recent findings of fundamental dishonesty obtained by Keoghs include:

• E v N

The entire £30k claim was dismissed pursuant to s57 Criminal Justice and Courts Act 2015, on the basis of a finding that the claimant was fundamentally dishonest in attempting to conceal the fact that other vehicles were available to him during the period of hire. Subsequently the CHO agreed to pay 80% of the defendant’s costs when threatened with a non-party costs order application. (Keoghs handler – Kaveh Rashid)

• B v A

The claimant was found to be dishonest as to the date that his vehicle was repaired, alleging in a witness statement that it was after the PAV was received when the evidence showed that it had passed an MOT early on in the hire period. The entire claim was dismissed. The CHO have offered to pay 80% of the defendant’s costs when threatened with a non-party costs order application. (Keoghs handler – Gary Herring)

• M v U

The Claimant was found to be fundamentally dishonest in respect of his claim for injury and this resulted in the entire claim being dismissed, including hire in the region of £37k. A non-party cost order against The CHO is in the process of being pursued. (Keoghs handler – Scott Croft)

Ongoing initiatives

We continue to engage with clients in relation to a number of strategic challenges to the highly litigious business model of certain CHOs and how the threat can be best mitigated. We will report further as to the outcomes in due course.