Credit hire firm “voluntarily assumed” risk of claimants being dishonest


Audi A5: Claimant sought substantial credit hire cost after accident

A High Court judge has refused to overturn a non-party costs order (NPCO) against a credit hire company, saying the firm “voluntarily assumed the risk” of the claimants turning out to be dishonest.

Mr Justice Turner also said that Kindertons “would or should have known only too well that the nature of its business put it at risk of a NPCO application”.

“Little in the way of scrutiny” of the claim was discernible from the transcript of a conversation between the claimant, Serhat Ibrahim, and the credit hire company.

“Of course, it may well be that the cost of exercising higher levels of scrutiny would be disproportionate to the money thereby saved but this is a commercial decision the consequences of which must be borne by Kindertons.”

Turner J said that following a “minor collision” on the A13 in London, Mr Ibrahim made a claim for £20,000, most of which was for credit hire, repairs to his Audi A5, recovery charges and additional charges arising under the agreement with Kindertons – and the rest personal injury claims by him and his wife, who claimed to have been a passenger.

At a fast-track trial in August 2020, things went “very wrong” for the Ibrahims. Mr Recorder Berkeley found that, although a collision had occurred, the “damages claimed in respect of the repairs and hire charges” had not been caused by the accident.

He found Mrs Ibrahim had not even been in the car at the time and that both she and her husband had been fundamentally dishonest in saying she had been.

The Ibrahims were ordered to pay the other side’s costs of £12,000 but “promptly disappeared from forensic view”, leaving the costs bill unpaid. The defendant insurer, esure, responded by applying for an NPCO against Kindertons.

Mr Recorder Gallagher, sitting at Chelmsford County Court, awarded esure 80% of its costs against Kindertons.

On appeal, by which time the parties’ combined costs were £100,000, Turner J rejected Kindertons’ argument that the recorder was wrong to conclude that the company had a financial benefit in the litigation.

He said: “In common with credit hire companies generally, the whole purpose of Kindertons providing credit hire facilities is to make a commercial profit out of the client’s legal claim.”

The company “stood to gain substantially from the claim brought in Mr Ibrahim’s name”, with a price for their services which “very significantly exceeded” the value of the couple’s personal injury claims.

Any benefit to Mr Ibrahim in pursuing the claim for hire charges was “all but illusory”.

The judge rejected a further argument that Kindertons did not control the litigation.

“On the facts of this case, there was a high degree of control. The contractual terms identified above tied Mr Ibrahim into bringing a claim and continuing it at the risk of incurring serious financial consequences in the event that he were to fail to comply.”

An argument that esure “had not given the appellant any notice” that they might pursue a NPCO was rejected as “without merit”, because “Kindertons would or should have known only too well that the nature of its business put it at risk of a NPCO application”.

Turner J said the fact Mr and Mrs Ibrahim “were found to have been dishonest did not make it unjust to make the NPCO against Kindertons”.

Graeme Mulvoy, partner at Horwich Farrelly, which represented esure, described the ruling as “a significant win for insurers”.

He said Turner J had “brought an end” to the debate on XYZ v Travelers Insurance Co Ltd, by commenting that Lord Briggs was not intending to lay down any general guidance on all NPCO applications.




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