Insurers hail ruling that credit hire company was the 'real instigator' of claim

Insurers have hailed a county court judgment on credit hire - the provision of a temporary vehicle by a claims management company in an RTA claim - as a significant turning point on costs liability.

Ruling in Perreira & Ors v Chambers & Ors, His Honour Judge Saunders recognised that the credit hire organisation involved was the ‘real party’ to claims for hire charges. That company, Direct Accident Management Ltd, is part of the listed Anexo Group, which also includes the law firm Bond Turner, which had been in each of the four cases considered in the rolled-up claim.

Saunders said: ‘I do not consider it beyond reason that the real instigator of the proceedings is the credit hire company because, often impecunious, a claimant will simply not consider or launch such a claim without the CHC’s assistance.’

The judge added a note that his ruling was fact-specific. However the decision is being hailed as significant by insurers and their lawyers, who argue it sets a precedent for making credit hire organisation liable to pay the legal costs for unsuccessful claims.

‘The judgment squarely places CHOs “on the hook” for defendant insurers’ legal costs,’ said Gary Herring, partner and head of credit hire at national firm Keoghs. ‘This is not only a victory for the industry but the consumer as well who are often indirect victims. The reality is that the credit hire organisation is the primary beneficiary of and controlling influence over the claim, with the claimant often having little real choice about or influence over the proceedings being pursued in their name.’

Defendants in the four cases were able to show that the credit hire organisation and its holding company were the true drivers and beneficiaries of the claims and exerted a substantial degree of control over the process.

Herring said that he expects credit hire companies to voluntarily agree to meet a defendant insurer’s costs in future wherever a liability issue arises.

James Driscoll, senior claims manager for motor damage and credit hire at insurer Aviva, added: ‘This ruling is significant in that it will hold CHOs to account for driving unnecessary cost and litigation into the motor claims process, and should ensure that the customer is the primary beneficiary of services provided. Enabling insurers to recover legal costs from CHOs for bringing unmeritorious claims should cut the number of such cases, reducing pressure on insurance premiums.’