Credit Hire Disclosure Ruling: Legal News From Keoghs

Landmark ruling requires financial disclosure at pre-litigation stage for credit hire claims says Keoghs, here’s the word;

Holt v Allianz

In a landmark judgment yesterday, the High Court upheld the ruling that requires credit hire organisations to properly address the issue of impecuniosity at the pre-litigation stage.

Today’s judgment represents the culmination of a six-year strategic initiative led by top 40 law firm, Keoghs along with its client, Allianz, to enforce requests for impecuniosity disclosure before litigation proceedings begin.

The relevance of a claimant’s financial means in a credit hire case dates back 20 years, when a rule was established by the courts that an ‘impecunious’ claimant was entitled to recover the full credit hire rate, rather than being restricted to recovering the rate available from a regular retail hire company, as is otherwise the case. The difference between the two is usually substantial, meaning that the question of financial means ordinarily has a significant impact on the amount that is recoverable in a credit hire claim.

This ruling means that for the first time financial disclosure is now, beyond doubt, part of the “key documents” that should be provided voluntarily upon a reasonable request, and therefore if not provided, the court can now order a pre-action disclosure.

By requiring credit hire organisations to evidence impecuniosity at pre-litigation stage, it will put a halt to the practice by some of avoiding the issue until the last possible moment, causing delays and increasing unnecessary litigation costs for insurers.

Gary Herring, Partner and head of credit hire strategy at Keoghs commented: “We’re extremely pleased with the decision of the High Court, which is likely to have wide ramifications for the credit hire industry. In particular, we would expect the unhelpful practice by some large credit hire organisations of avoiding addressing the issue of impecuniosity at the pre-litigation stage, to immediately stop.

A more transparent approach to this issue at an early stage, as is robustly endorsed by this judgment, should have a significant impact in terms of reducing the volume of contested litigation and remove a large element of cost from the process, for the benefit of all parties.”

Nick Kelsall, head of motor claims at Allianz Commercial, said: “We’re delighted that we’ve been successful in our bid to reduce friction and remove unnecessary legal costs from the process of settling credit hire claims.

“Personal injury claims have seen significant reform in the last decade, but credit hire remains a relatively unregulated field where opportunistic practices have added significant expense to motor claims and ultimately to motor insurance premiums in recent years.

“By requiring credit hire organisations to evidence impecuniosity, this court ruling will bring much needed transparency. This is excellent news for insurers and their customers.”