Recorder justified in making non-party costs order in favour of insurers against credit hire company/impact of QOCS regime
The claimant alleged that her car had been hit by a car driven by a driver insured by the defendant. Her claim was dismissed at trial, on the ground that it was suspicious. However, the insurers were unable to recover their costs from the claimant because she was immune from the enforcement of any adverse costs order by the operation of the Qualified One-way Costs Shifting ("QOCS") regime which applies to personal injury claims (and, indeed, she may well have been impecunious in any event).
The claimant had hired a replacement vehicle from a credit hire company ("Select") and the recorder made a non-party costs order against Select. Select then appealed against that decision.
Turner J has now rejected that appeal. He held that:
(1) Although the QOCS regime expressly provides that the court may "make an order for costs against a person, other than the claimant, for whose financial benefit the whole or part of the claim was made" (CPR r 44.16(3)), that does not create a new (and more relaxed) category of discretion to be exercised by the court, in addition to the existing discretion to make a non-party costs order. The judge noted that "It may well be that, as is often the case, where a credit hire company promotes litigation for its own financial benefit, knowing that the party in whose name the claim is brought will enjoy some level of protection under the QOCS regime or will probably not be able to satisfy any adverse costs order in any event, then this is a factor which the court may take into account when considering whether it is just for the credit hire company to pay costs. It will be noted, however, that even claimants otherwise protected under QOCS are not entirely immune from the enforcement of an order against them under CPR 44.16 even though it will usually be the case that it is the relevant non-party who has sought a financial benefit who will be first in line".
(2) Furthermore, a claim can be made for "the financial benefit" of the non-party even if the original hire agreement was not profitable: "The financial benefit is made out because, however good or bad the original deal, it is to the financial benefit of the credit hire organisation to recover the monies due under the hire agreement through the process of the claimant's litigation. Some money is better than no money".
(3) The recorder had applied the correct test. One factor which he had taken into account was that Select had been in direct email contact with the insurers about the progress of the claim. Turner J held that it did not matter that direct communications between a credit hirer and an insurer is standard practice under the ABI general terms of agreement between subscribing insurers and credit hire organisations: "even if these terms and this practice are to be taken as standard in the industry, this does not provide Select, or for that matter any other credit hire company, immunity from a non-party costs order".