Holt v Allianz - High Court endorses pre-action disclosure of financial documents in credit hire cases

In a landmark judgment in which Keoghs acted for the applicant and appeal respondent, Mr Justice Andrew Baker emphatically reinforced the earlier decision of His Honour Judge Harrison in relation to the requirement on the part of credit hire organisations to properly address the issue of impecuniosity at the pre-litigation stage.

While Baker J upheld Auxillis’ appeal on the grounds that the likely party to any subsequent proceedings was the insured and not Allianz, it was acknowledged that this was a narrow technical point which could be resolved simply by bringing future applications in the name of both the insurer and the insured. Therefore, given that permission to appeal to the High Court had been given solely on the basis of the wider importance of the case, with the intention that general guidance would be given on the issue of whether the pre-action disclosure of financial documents in credit hire cases is appropriate, Baker J determined the substantive issues in a detailed written judgment that will have significant ramifications.

The key points of the judgment are:

• The fact that the CPR requires pleadings in relation to impecuniosity and that directions are given for the disclosure of financial accounts during proceedings does not imply a general rule that the issue is not to be considered until litigation. If anything, the requirements envisage that the issue will have been explored between the parties well in advance [paragraph 33].
• Disclosure of basic documentary evidence supporting a claim of impecuniosity is no more than disclosure of “key documents” relevant to the issues in dispute, as is required by the CPR Practice Direction – Pre Action Conduct [37].
• A claimant (or in reality the CHO) cannot, by reason that litigation has not yet been commenced, refuse to state a position on whether the basis of the claim they have chosen to assert and threaten to litigate includes a claim of impecuniosity [38].
• It will generally be the case that impecuniosity should be dealt with before proceedings, particularly when the intimation of a claim based on credit hire rates is met with a serious response suggesting that those rates are very much higher than the BHR [39].
• Auxillis’ pre-litigation correspondence was “unhelpful and the opposite of engaging in constructive dialogue” [48].
• Any notion that Auxillis might not contend that the BHR was not a realistic option for the claimant (for instance by virtue of impecuniosity) was “contrived and invalid” [81].
• The fact that the pre-action disclosure sought would reveal personal financial information is nothing to the point so far as assisting the dispute to be resolved without litigation or saving costs is concerned [86].
• The objection to providing the documents on the grounds of privacy and confidentiality was “misplaced” [93]. Further, the privacy objection was “somewhat bizarre” in the context that the provision of disclosure may well avoid the need for public litigation [94].
• “Auxillis had adopted, applied, and chosen to stand their ground on, a wrongheaded policy of refusing even to consider, before intimating a claim and threatening litigation, the obviously central issue of their client’s means and what, if any, case of impecuniosity they would assert as a result…” [111].
• HHJ Harrison’s decision to award Allianz the costs of the application at first instance, and to limit the respondent to the costs of obtaining the documents sought and any copying charges incurred, was well within the ambit of his discretion [112].

Comment

Gary Herring, partner and head of credit hire strategy at Keoghs, said:

“The judgment in Holt represents the culmination of a six-year strategic initiative and it is therefore very pleasing to see the High Court endorse our long-standing approach based on the Practice Direction – Pre-Action Conduct, in support of requests for impecuniosity information and financial disclosure at pre-litigation stage. It is now beyond doubt that impecuniosity disclosure is pinned squarely to the requirement to voluntarily provide “key documents” and that it is entirely appropriate for the court to order pre-action disclosure where reasonable requests are not adhered to.

Regrettably, the case does serve to starkly highlight the policies of many large credit hire organisations who continue to take a commercial decision to avoid addressing the fundamental issue of impecuniosity until the last possible moment, if at all. In view of the High Court’s robust criticism of this approach, we would expect credit hire organisations to immediately cease the practices highlighted in this case and to commit to engaging with reasonable requests to address the impecuniosity position before litigation is commenced.”

Nick Kelsall, head of motor claims at Allianz Commercial, said:

“We’re delighted that we’ve been successful in our bid to reduce friction and remove unnecessary legal costs from the process of settling credit hire claims.

“Personal injury claims have seen significant reform in the last decade but credit hire remains a relatively unregulated field where opportunistic practices have added significant expense to motor claims and ultimately to motor insurance premiums in recent years.

“By requiring credit hire organisations to evidence impecuniosity, this court ruling will bring much needed transparency. This is excellent news for insurers and their customers.”

We are pleased to announce that we will be running bespoke Hire Bites – Lunchtime Briefing sessions covering the practical implications of the decision in more detail and exploring ways in which the judgment can be utilised most effectively. To register your interest in attending these sessions, please click here.