NPCO Update – UK Insurance Limited v Direct Accident Hire Limited

Despite CHCs relying more heavily on the unusual decision of HHJ Freedman in the case of OnHire v Smithson to argue against being responsible for the defendant’s costs in cases involving credit hire, Keoghs is pleased to report a further successful non-party costs order application in the County Court at Cardiff.

HHJ Porter-Bryant found that Direct Accident Hire Limited (DAHL) were not only the real party to the claim and stood to financially benefit from the proceedings, but that the claim for credit hire and DAHL’s involvement had directly caused the defendant’s costs.

Facts

As a result of an incident on 22 January 2016, the claimant entered into a credit hire agreement with DAHL and subsequently sought recovery of special damages in the sum of £66,229.20, which included credit hire in the sum of £61,237.20. Liability for the accident was admitted and the claimant’s claim for personal injury had been compromised between the claimant and the defendant prior to the issue of the proceedings.

The matter proceeded to trial on 21 June 2018, at which time all of the claimant’s claims, save for £620 physiotherapy charges, were dismissed. Having bettered the terms of a pre-litigation Part 36 offer, the defendant was awarded their costs and ultimately obtained a default costs certificate in the sum of £20,482.88.

On behalf of the defendant Keoghs sought recovery of these costs from DAHL, but no response was received and, as such, a formal application was lodged. We succeeded in obtaining an order not only that DAHL were added as a party to the claim for the purpose of costs, but also that DAHL provide disclosure and witness evidence of all correspondence passing between DAHL and the claimant’s solicitors.

Despite the order from the court, there were several issues with the disclosure provided and, therefore, a further application was required. The court made a further order setting out the class of documents to be disclosed by DAHL and in the absence of such, a further witness statement to be provided by a director at DAHL setting out why the disclosure could not be complied with. The office manager who had provided an earlier statement was also ordered to attend the hearing for the purpose of cross-examination.

The matter proceeded to a determination hearing on 4 November 2022.

Determination Hearing

The court was presented with the terms of the DAHL hire agreement which provided clear evidence that DAHL was the ‘real party’ to the underlying claim. They were also presented with the disclosure which, despite still being incomplete, provided evidence that DAHL exercised significant and real control over the claim. In particular:

• DAHL appointed solicitors on behalf of the claimant from their ‘panel’ of solicitors.
• Correspondence from the claimant’s solicitors, with updates on the progress of the claim, both pre- and post-issue of proceedings was with DAHL and not the claimant himself even where such correspondence did not pertain to credit hire issues.
• Instructions in respect of settlement proposals were sought and received from DAHL.
• DAHL gave clear and specific instructions to the claimant’s solicitors to issue the claim.
• The claimant’s solicitors requested documents in support of the claim from DAHL and not the claimant.
• Advice on appealing the outcome of the trial went to DAHL and not the claimant, with the request to be put in funds for the appeal being made to DAHL and not the claimant.

In summary, HHJ Porter-Bryant accepted our arguments on all fronts and ordered that the CHC pay the defendant’s costs of defending the main claim. This was on the basis that DAHL was not only the real party to the underlying claim and had a clear financial interest in it, but also exercised significant control over the claim – all of which caused the defendant to incur costs that would otherwise not have been incurred.

A determination of the proportion of those costs is ongoing.

Comments and Implications

It is clear in this case that a concerted pursuit of evidence to show DAHL’s actions, which ultimately came to light through disclosure of correspondence and cross-examination of the office manager, was a key factor in the court determining that DAHL exercised a significant degree of control over the litigation and was the ‘real party’ to the proceedings.

This approach is an increasingly important element of non-party costs applications, particularly those involving CHOs that use external panel solicitors as opposed to being ‘one-stop shops’ with solicitors under the same corporate umbrella, and is key to lifting the veil on the true extent of a CHC’s involvement in any given credit hire claim.

For more information, please contact Jenny Milburn