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Abbot v Long: Costs in Credit Hire Claims - Adam Gadd, Pump Court Chambers

12.01.12. The case of Abbot v Long [2011] EWCA Civ 874 will have important implications for costs arguments in credit hire cases. In particular, caution must be exercised where there is a risk that a claimant may not recover close to the amount claimed.

The  appellant, (claimant in the proceedings below) appealed the decision of Her Honour Judge Marshall QC made at Central London County Court that there be no order for the costs of the litigation.

The claim arose out of a road traffic accident. The appellant sought recovery for credit hire charges. The period of hire was from June 2008 to December 2009 for which £48,000 was claimed. At trial, Mr Abbott accepted he would have been able to finance a substitute vehicle. The damages were reduced to £8,600 accordingly. Damages were also reduced by 75% on account of contributory negligence.

On the issue of costs, the judge found that the claim had been “grossly exaggerated” and that the litigation had been run as a commercial enterprise by the hire company, who were driving the claim. They had failed to properly scrutinise the claim and had not taken a responsible attitude towards the conduct of the litigation, particularly with regard to the duty to mitigate. She took the view this was a very significant issue of conduct, and was heavily to be discouraged.

The judge made no order as to costs, taking in to account;

i) that there would have had to be a fast track trial in any event since the Defendants had made no offer,

ii) the Claimant’s conduct showed no proper regard for their duty to mitigate their losses, and

iii) that the Defendant had had a significant measure of success both in resisting the claim for credit hire and establishing contributory negligence on the part of the Claimant.

On appeal, the Appellants accepted that they would have to show the judge had erred in principle or that the decision was perverse. They argued that there should have been no reduction to their entitlement to costs based on the finding of contributory negligence. Further, the inflated value of the claim was due to a misjudgement rather than dishonesty. The conduct was not reprehensible to the extent that a reduction in costs could be justified.

The Court of Appeal held that the starting point was CPR 44.3 which sets out the discretion to award costs. Under this rule conduct of the parties can be taken in to account in the exercise of this discretion. 

On the issue of contributory negligence the court pointed out that there is no general rule preventing a reduction based on this, however in the circumstances of this case the issue caused no distinct costs and therefore any reduction would have been minimal. The central issue was whether costs could be reduced due to the conduct of the Appellants.

Arden LJ referred to the judge’s comments that the hirer was a serial litigant, who ought to have had systems in place to ensure claims were pursued appropriately. While this conduct was not dishonest it was blameworthy or capable of being reprehensible. Despite the fact that the conduct had not occasioned any wasted costs, since a trial would have been required in any event, a reduction could be made on the grounds of misconduct, as long as the court was satisfied that this would be a proportionate sanction.

The judge at first instance had taken a number of factors in to account, including the inflated claim for credit hire charges, the failure to have proper regard to the duty to mitigate loss or keep expenses to an appropriate level and the use of the litigation as a commercial enterprise. It was held that she had given a carefully reasoned judgement and was entitled to take in to account the appellant’s conduct. Reducing the costs was not a disproportionate sanction. The appeal was therefore dismissed.

Adam Gadd
Pump Court Chambers 

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