Spotlight on Credit Hire Fraud

It has been another busy few months in Credit Hire Fraud at Keoghs where we continue to see an increase in fraudulent credit hire claims volumes and some examples of quite blatant, fraudulent activity and business practices on the part of, predominantly (although not exclusively) non ABI GTA credit hire companies.

In this article some of our lead fee earners share unusual or stand out recent successes. Whilst not all of the many cases we deal with are so ‘interesting’ I hope it gives a flavour of some of the issues we can come across. If you require any further detail regarding any of these articles or cases please do not hesitate to contact me.

Claim: Hire - £5,764.00 Storage and Recovery - £2,472.00 Vehicle damage - £336.00 Misc - £30.00

“This was a case against a well known CHO in West Yorkshire. The claimant owned an MOT station and, during the course of our investigations, we discovered he was also a partner in a vehicle repair business.

“Via a DPA request to his insurers, we also found that the claimant had three other vehicles on his policy - so we repudiated partly on the issue of need. The claimant alleged that the other vehicles were used exclusively and that he had no access to them.

“We also raised issues with regard to the signatures on the two hire invoices. It wasn't that they were different - quite the opposite. The signatures, allegedly signed weeks apart, were identical, right down to the angle of the signature and the placing of the signatures on the documents. The inference was that, in reality, they had been signed at the same time. We also discovered and established links between the claimant and the CHO.

“The case was transferred to Skipton County Court and, post the Jackson reforms, allocated to the small track despite the claimant's solicitors’ best efforts to persuade the court it should be a fast track case. We were confident of success and ran the case to trial on all of the issues raised. At trial, it transpired that the claimant's business partner was, in fact, his brother. The District Judge found it odd that the claimant had not referred to his brother as such on the basis that brotherhood was probably the more dominant relationship. The District Judge was wholly with us in our various submissions and dismissed the pleaded claims for hire and storage.

“It wasn’t all bad news for the claimant however, who did recover £100 + VAT for recovery charges. In a similarly unprofitable end to the case the solicitors were awarded the same amount for their legal costs. All other claims were dismissed.”

Fraser McAndry Associate Director of Credit Hire Fraud 01204 678693 fmcandry@keoghs.co.uk

Claim: Hire - £14,428.77 Storage and Recovery - £2,088.00 Engineer's fee - £150.00

“We were proceeding with a defence based on the fact that there had been a compromised agreement following a meeting between the parties, in a Subway sandwich shop, two days after the index accident when money changed hands in full and final settlement of the claim.

“The claimant however, denied this meeting ever took place.

“We had a credible witness who stated that he also attended Subway and witnessed the agreement being made.

“We managed to obtain a statement from the insured's solicitor who drafted the compromise agreement as well as a statement from the insured's father who had lent him the money to give to the claimant on the day of the meeting.

“One week before trial the claimant’s solicitors applied to come off court record.

“This was granted the morning of the trial.

“The claim was then struck out with judgment for the defendant in respect of the counterclaim and costs to be paid on an indemnity basis.”

Clare Duncan Associate 01204 678612 cduncan@keoghs.co.uk

Claim: Hire - £24,750.00 Storage and Recovery - £1,344.00 Vehicle damage - £1,440.00

“The claimant had entered into a rental agreement with the third party driver (TPD), who was involved in the index accident.

“As a result of the accident, the claimant's vehicle was deemed unroadworthy and he therefore argued that he entered into a credit hire agreement in order to fulfil his contractual obligations to the TPD.

“The claimant sought to recover the pre-accident value (PAV), hire charges, together with storage and recovery.

“In his witness statement the claimant disclosed that he owned a further nine vehicles, but he failed to provide us with evidence that these vehicles were all hired out at the time of the accident, or where he stores his vehicles when they are not hired.

“More importantly, he had failed to provide us with a copy of the rental agreement between him and the TPD, which was disclosed to us just 30 minutes before the trial was due to commence.

“Subsequently, the hire claim was dropped and we only paid £1,440.00 for vehicle damage. All other claims were discontinued with both parties to bear their own costs.

“The hire claim and storage and recovery saving was £26,094.”

Daniella Gonzalez Solicitor 01204 677374 dgonzalez@keoghs.co.uk

Claim: Hire - £17,540 Storage and Recovery - £660 PAV - £950 Miscellaneous expenses - £50

“There were initial concerns due to the lack of obvious trading premises for the hire company. It was also not registered for VAT purposes, had a status of ‘authorisation cancelled’ with the MOJ and held no consumer credit licence.

“The case also raised alarm bells as the handwriting on the hire agreements appeared to match the handwriting on the particulars of claim.

“Investigations were carried out and, whilst the claimant was not linked directly to the hire company, the hire vehicle was found to be registered to a taxi firm, the same company the claimant’s vehicle was registered to.

“In addition, we also discovered that the taxi firm not only was the claimant’s employers but also that he was a director of it. The firm was a large operation with around 40 drivers. It was also found to be registered to the address of the storage yard.

“The claimant alleged that the company had only moved to this address recently. However, we discovered that the claimant had been registered as the proprietor of the premises with the Land Registry from 2008 and had previously made a planning application to extend the garage for use as an MOT centre.

“Having completed the hire agreements himself, the claimant had submitted a claim for hiring his own vehicle, as well as for storing it on his own premises.

“Following disclosure of this evidence and strong arguments being made, a drop hands offer was received. This was refused and the claimant eventually agreed to discontinue when the further evidence relating to the storage yard was obtained.

“The total saving was £19,200 including additional vehicle damage claimed and misc. expenses, plus the claimant’s costs. Own costs recovered of £6,000.”

Jennifer Evans Litigation Executive 01204 677091 jevans@keoghs.co.uk

Claim: Hire - £34,926.88 Storage and Recovery - £4,494.38 Admin Charge - £200.00 Misc - £30.00

“The claimant brought a claim for personal injury (PI), the PAV of his vehicle, storage and recovery charges plus credit hire charges of nearly £35,000.

“We thoroughly investigated the alleged credit hire company and undertook surveillance of the CHO's address as well as other linked addresses.

“Although these investigations found no links to the hiring and/or storage of vehicles, we did discover that the primary business of the ‘credit hire company’ was not the hiring of vehicles - it was in fact the importing of frozen chickens and medina dates.

“We also ascertained that the insurance position relating to the vehicle hired was in question; the policy only covered customers whose vehicles were being repaired, whilst in this case the claimant's vehicle was a total loss.

“We raised our concerns with the claimant's solicitors and issued a robust repudiation letter.

“After our concerns were raised the claimant discontinued the claims for storage, recovery and hire charges.

“The claimant's PI claim was agreed at £2,500 and the vehicle damage claim at £920.00 - which was less than 50% of the amount originally claimed. The total saving to our insurer client was £40,571.26.

“In addition, the claimant paid our legal costs of the abandoned heads of loss.”

Clare Duncan Associate 01204 678612 cduncan@keoghs.co.uk