Keoghs Wins Credit Hire Case, CHO Hit With 86% of Costs

The latest case report from Keoghs, as a judge finds against a credit hire organisation;

Keoghs counter-fraud team and client, esure, have won an important judgment against a credit hire organisation (CHO). Keoghs and esure brought a non-party costs order (NPCO) against a CHO ( Direct Accident Management Ltd (DAML)) after it was deemed to be the driving force behind a claim involving an impecunious claimant, with the sole aim to boost its own profits.

The decision, which saw the CHO ordered to pay 86% of the assessed costs of £8,436 plus esure’s costs of the application, is of real significance for insurers, as the industry seeks to combat the growing trend of CHOs seeking out impecunious claimants to boost profits.

As Damian Ward, Head of Counter-Fraud at Keoghs explains: “This case underlines once again that where a CHO drives the litigation, exercises control of it, and benefits significantly from it, they face the very real risk of paying the defendant’s costs where the claim does not succeed. This is established law and I am pleased that this CHO’s attempt to create new precedent did not succeed.”

The initial claim was made after esure’s insured driver had knocked over a parked moped when gently reversing their vehicle whilst parking. Further investigations by Keoghs and esure revealed inconsistencies which led to the claim being defended on grounds of fraud and allocated to the small claims track, meaning that only very limited fixed costs applied.

After the claimant’s original solicitors removed themselves from proceedings, and the claimant failed to serve evidence that would lead to the claim being automatically struck out, it was clear to Keoghs the role the CHO had to play. Keoghs advised esure on the prospect of bringing an NCPO against the CHO on the basis that the claim was clearly generated by the CHO, made at its instigation and brought for its benefit. Therefore the CHO was the real party in the case and its involvement was causative of esure’s loss of costs.

Finding for esure, the judge ordered the CHO to pay 86% of the assessed costs of £8,436, plus esure’s costs of the application, assessed at £6,000. He refused the CHO permission to appeal.

Andrew Nixon, esure’s Fraud Operations Manager, stated: “This is an extremely welcome outcome which endorses our approach to tackling unmeritorious hire claims driven by the CHO.” 

The result of the case follows the recent decision of Mr Justice Martin Spencer in Kindertons, and stepped away from XYZ v Travelers, reinforcing the industry’s stand against CHO’s deliberate business strategies to drive up costs for insurers with no benefit to claimants.

Last year, Keoghs led a successful six-year strategic initiative culminating in a landmark High Court judgment (Holt v Allianz) requiring CHO’s to evidence impecuniosity at pre-litigation stage, dramatically reducing litigation volumes and costs.

REMITLY FUNDS OUTFLOW, REPLACEMENT MOTORCYCLE & MORE

Another case from earlier in 2024 highlights how a Deliveroo rider concealed cash being sent to Brazil via Remitly, plus a credit hire claim for 511 days of bike hire. If claimants are hiding wealth overseas how can any court determine hardship on any claims, assets lost, repairs to vehicles, loss of earnings, treatment for injuries and more?

Here’s a link for further reading.