High Court upholds decision to order a credit hire company to pay 60% of defendant’s costs
Select Car Rentals (North West) Limited v Esure Services Limited [19.06.17]
In the recent appeal case of Select Car Rentals (North West) Limited v Esure Services Limited, Mr Justice Turner upheld an earlier judgment to award costs to a successful defendant, despite the claimants themselves receiving the benefit of qualified one-way costs shifting (QOCS) protection.
The decision contradicts previous cases.
The case was initially pursued by three claimants — who brought an action against Esure — pursuant to a road traffic collision. Although the claims were dismissed at trial, there was no finding of fraud on behalf of the claimants (albeit the initial trial judge did find that the claims were suspicious).
As part of the action pursued by the claimants, a claim was made for £23,456.85 in hire charges, despite the salvage valuation of the vehicle in question being less than £2,000.
In light of the claimants being protected by QOCS — as a result of their claims for personal injury — the defendant insurer sought an award of costs against the credit hire company, Select Car Rentals.
The Civil Procedure Rules (CPR) 44.16(2) and (3) set out an exception to QOCS and provide that — where the proceedings include a claim for the financial benefit of a person other than the claimant — the court may make an order against that person or the claimant.
Section 51 of the Senior Courts Act 1981 and CPR 46.2 provide the statutory and procedural basis for making a non-party costs order.
The claimants were represented by Samuels Law, a firm of solicitors who had also been retained by Select Car Rentals.
The court at first instance considered the extent to which the claimants and Select Car Rentals were associated. This was to determine whether or not the court should exercise its discretion to grant an award of costs against a person who is not a party to the proceedings.
The court concluded that they were “absolutely locked together”, evidenced by the fact that — should the claimant seek to instruct alternative legal representation — then her credit hire would be automatically terminated.
In the first instance judgment, it was observed that Select Car Rentals’ role in the litigation was such that the court should exercise their discretion and award 60% of Esure’s costs to be paid by Select.
Select appealed against the decision.
It appealed on the basis that:
- It incorrectly broadened the circumstances in which it would be appropriate to award costs against a non-party.
- The relationship between CPR 44.16 and CPR 46.2 had not been properly considered.
On appeal, Mr Justice Turner upheld the earlier decision and found that — although CPR 44.16 did not create a new test — the court had exercised its discretion appropriately and in accordance with the case law.
In particular, he cited the observation of the Court of Appeal in the case of Deutsche Bank v Sebastian Holdings  that “the only immutable principle is that the discretion must be exercised justly”.
This judgment highlights the need for defendant representatives to consider the possibility that QOCS may be disapplied in any case where credit hire charges are claimed.
It confirms that claims for credit hire are brought for the financial benefit of the hire company.
It also precludes any arguments made by credit hire or claims management companies that for a non-party costs order to be made, their involvement in a claim must be of an exceptional nature.