Smith -v- AXA Insurance UK PlC & Spectra Drive Limited (24th December 2024) - Philip Matthews, Temple Garden Chambers
23/01/25. Smith is the latest decision in the long-running trench warfare between credit hire companies and defendant insurers on the issue of non-party costs orders (NCPOs). Despite the hire charges in issue being just £11,809.94, both sides instructed leading silks, suggesting that the principle at stake is much more important than the sums involved.
Background
The Claimant’s vehicle was damaged in an RTA, for which liability was admitted. She contacted a claims management company, Spectra, that arranged for her to hire a replacement vehicle. She subsequently made a claim for damages which included hire charges in addition to PSLA.
The Defendant highlighted that the Claimant had insured another vehicle within 10 days of the accident. This, it was submitted, established that she did not actually need a hire car for three months.
The Claimant discontinued her case.
The Defendant’s Application
The Defendant subsequently made an application seeking to set aside QOCS protection on the grounds that the Claimant had been fundamentally dishonest. A non-party costs order was also sought against the claims management company.
The District Judge Decision
At first instance, the allegations of fundamental dishonesty were rejected by the Court. In summary, the District Judge found that the claimant had insured a car after 10 days but it was not available to her until she had received the benefit of the total loss claim. She had, therefore, used the hire car for the relevant period.
The non-party costs issue was determined at a later hearing and the District Judge found that Spectra was a real party to the claim and had intermeddled in it. It was ordered that Spectra pay 65% of the costs of the claim.
The costs order was appealed.
Circuit Judge Appeal
On appeal, HHJ Gargan found that Spectra were likely to be the principal beneficiary of the proceedings. However, this is a necessary, but not sufficient, condition for the making of a non-party costs order. There were a number of factors which weighed against making an NPCO [§173-§76]: -
- There were joint causes for the litigation – the vehicle claim and the personal injury claim.
- Given the DJ’s findings that the claimant was not fundamentally dishonest, the claim would have succeeded (in least at part) had the matter gone to trial.
- Spectra had not played any part in the funding of the proceedings. It did not have a retainer with the solicitors. They did not have any day-to-day control over the progress of the litigation.
On this basis, the appeal was allowed and the NPCO was dismissed.
At the end of his judgment, HHJ Gargan made a plea for more definitive guidance from the senior courts: -
“I have spent an inordinate time considering this matter and trying to balance the various factors pointing towards and away from an NPCO. Given the appetite for litigation amongst both insurers and CHCs, it may be that judges up and down the country will have to perform similar exercises. Whilst the question must remain a matter of discretion and what is just, it would be very helpful to have clear guidance on the approach to be taken in ‘bog standard’ credit hire cases.” [§188]
Image ©iStockphoto.com/Tramino
![Appeal judge rules that credit hire company has no costs liability following a finding of fundamental dishonesty in personal injury case: RSA v. Fastrack Solutions Limited [2023] 4 WLUK 92 - David Bowden, Erimus Chambers](/content/images/resized/images/stories/carkeys_72_72.jpg)
