Non-party costs order win for Keoghs on appeal
In another welcome decision which further entrenches the principle of non-party costs orders made against credit hire organisations, HHJ Roberts firmly rejects On Hire’s arguments on appeal that they were not a “real party” to the litigation and that the claim was not made for their financial benefit.
Following an accident on 16 November 2017, the claimant entered into a credit hire agreement with On Hire Limited and incurred a total sum for hire charges of £10,782.72. Proceedings were issued by Winn Solicitors on behalf of the claimant to recover the credit hire charges, along with claims for personal injury, physiotherapy, vehicle damage and delivery and collection.
The defendant, represented by Keoghs, disputed both liability for the accident and quantum.
Upon striking out the claim, the court made an order for the claimant to pay the defendant’s costs. Those costs would ordinarily be prevented from being enforced against the claimant by operation of the Qualified One Way Costs Shifting (QOCS) provisions.
Keoghs lodged an application on behalf of First Central to join On Hire and for them to pay the costs of the proceedings, in accordance with the QOCS exceptions which permit a costs order to be made against a non-party for whose financial benefit the proceedings were brought. The application cited, amongst other things, the common ownership of On Hire and Winn Solicitors, the terms and conditions of hire which granted On Hire authority to handle the claim, and the factors that enabled them to exert influence over the proceedings. It was argued that On Hire was the real party to the litigation and stood to derive a clear financial benefit from it.
At first instance, District Judge Lightman agreed. He found that the proceedings were brought for the financial benefit of On Hire, that they exerted a degree of control over the proceedings and that the costs would not have been incurred but for the existence of the hire claim. Accordingly, On Hire was ordered to pay 60% of First Central’s costs.
On Hire instructed leading counsel and appealed on a number of grounds. The main points made by them on appeal can be briefly summarised as follows:
His Honour Judge Roberts roundly rejected each of the arguments put forward by On Hire and dismissed the appeal on all of the grounds.
Significantly, HHJ Roberts refused permission to appeal on grounds one to four, meaning that he took the view that there was no real prospect of On Hire being able to argue that the District Judge was wrong in coming to the conclusion that the claim was brought for the financial benefit or On Hire, or that On Hire was not a “real party” to the litigation.
In relation to grounds of appeal on the ‘causation’ points, HHJ Roberts found as follows:
Accordingly, the order that On Hire pay 60% of First Central’s costs of the underlying litigation was upheld. In addition, they were ordered to pay First Central’s costs of the non-party costs order application in the further sum of £15,500.
Although most credit hire organisations ordinarily meet their customer’s liability for costs which arise by way of an order made during proceedings, it is perhaps surprising that some continue to resist, particularly in circumstances where the claimant has protection from enforcement of a costs order under the QOCS provisions.
The wording of practice direction 44 could not be any clearer and more specific, that claims for credit hire are an example of a claim brought for the financial benefit of another. Further, the High Court reiterated unambiguously in Mee v Jones that in a conventional credit hire case, the claim for the hire charges will be made for the financial benefit of the credit hire organisation, and that in this regard the practice direction “amounts to little more than a statement of the obvious”.
Whilst financial benefit alone is not sufficient in itself for the court to make an order for costs against a non-party, it might be said to be something of a surprise that highly technical points are still being taken in an attempt to argue that, in essence, both the practice direction and the High Court are wrong and that the financial benefit is not with the CHO but with the claimant.
Further, it surely stands to reason that ordinarily, a CHO will be the ‘real party’ to the litigation or at least have a sufficient connection to it so as to warrant the making of a non-party costs order. This is particularly the case against the background of modern credit hire litigation, where ‘one-stop shops’ are prevalent which collectively derive revenue from the fruits of litigation, not only in respect of the hire charges recovered as damages, but also by way of the legal costs generated in the process.
The judgment of HHJ Roberts is, therefore, welcome recognition of this reality, particularly in relation to the ‘financial benefit’ and ‘real party’ points, and it is hoped that it will serve to discourage further satellite litigation on these issues going forward.
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