A very helpful overview by Helen Rutherford of Exchange Chambers
My involvement in this area largely began with the case of Lewis Hillier v Southern Rock Insurance Company in 2019. Since then I’ve found abuse of process arguments in credit hire cases have been a regular battleground. Perhaps when the Court of Appeal refused to allow that matter to be considered further they had not appreciated how many cases could be affected by this issue.
The situation briefly is as follows. After a road traffic accident the injured party hires a car on a credit basis whilst their own is off the road. That may organised via their insurance company or repairing garage, or they may source it themselves. Once their car is repaired or written off (and the pre-accident value cheque received) they will give the hire car back.
In the meantime they may have suffered injury. They instruct solicitors to deal with their personal injury claim, which if a low value claim will proceed on the MOJ Portal.
And it’s there that the problems start. In some cases pre-medical offers are made to resolve the personal injury claim quickly and efficiently. In other cases the matter proceeds further but settles at stage 2.
Of course, there is no requirement to include vehicle related damages at that stage. Paragraphs 7.51-7.54 of the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents from 31 July 2013 make that clear.
Paragraph 6.4 of the Protocol is also important:
“A claim for vehicle-related damages will ordinarily be dealt with outside of the provisions of this Protocol under industry agreements between relevant organisations and insurers. Where there is a claim for vehicle-related damages, the Claimant must:
(1) State in the CNF that the claim is being dealt with by a third party; or
(2) (a) Explain that the legal representative is dealing with the recovery of these additional amounts in the CNF; and
(b) attach any relevant invoices and receipts to the CNF or explain when they are likely to be sent to the Defendant.”
In Hiller, despite those provisions (and para 6.4 had been complied with), and despite the fact that the insurer had deliberately siphoned off the credit hire by appointing a separate entity to negotiate that part of the claim, an agreement on the Portal for general damages for PSLA was deemed to be a compromise in full and final settlement of the entire claim/claims. Thus proceedings to recover the credit hire charges were deemed to be an abuse of process. His Honour Judge Murdoch QC, on appeal, concluded that the judge at first instance had considered all of the relevant information and was entitled to make that finding.
In the concluding paragraph of that Judgment, HHJ Murdoch QC agreed with the first instance judge that the outcome may have been different if the Portal documents had said “Is car hire being pursued? Yes, but it is being pursued outside of the Protocol”.
Fundamentally, however, Hillier was very deliberately limited to its facts by HHJ Murdoch QC. It therefore shouldn’t have been relied upon by Defendants seeking to run these arguments. And yet, it was.
In October 2020 Her Honour Judge Backhouse heard the appeal in Isaac Osei-Wusu Poku v Abedin. The grounds of appeal in this matter actually pre-dated those in Hillier, but this took longer to get to court.
In this case the Claimant was injured on 2nd May 2017. She instructed solicitors to pursue a claim for damages for those injuries. On the 10th May 2017 Auxillis, the hire company, informed Eldon Insurance (the tortfeasor’s insurer) that they had supplied the Claimant with a credit hire vehicle. They therefore knew to expect the claim.
On 23rd May 2017 Eldon sent an intervention letter to the Claimant, offering to provide a vehicle (suggesting again that they were aware of the hire claim).
At the end of hire in July 2017 Eldon introduced Validus, their agent to negotiate the hire charges. Validus sent a letter confirming their instruction and requesting details of the hire claim. The same day Auxillis responded with a request for payment. That was the 8th August 2017.
On the 4th September Eldon paid for the vehicle damage. The following day the Claimant’s PI solicitors submitted a CNF. Liability was admitted on the Portal and the stage 2 pack was submitted on 25th October. The only head of loss was PSLA; an offer was made for £1,700 and that was accepted.
On 27th November Auxillis sent a letter before action to Eldon, for the hire charges. On the 30thNovember Eldon responded saying they will not be making any offers because it had been compromised on the Portal. The hire charges were for in excess of £26,000.
Paragraph 6.4 in this case was not complied with – the PI solicitors had ticked boxes to say that the Claimant did not need and had not in fact had a hire car.
The Defendant’s position was that the failure to comply with paragraph 6.4, and the failure to bring the hire claim at Stage 2, meant that the Claimant had failed to adhere to the rules, failed to act with reasonable diligence and therefore the bar on the present action was absolute. Their witness statement confirmed they were aware of the hire claim. They did not claim to rely upon the representations in the CNF or on the stage 2 pack; they did not believe that no hire claim was being pursued. They were not taken by surprise by the hire claim and there was no allegation of oppression, beyond Respondent counsel arguing that the mere bringing of the claim was oppressive.
Her Honour Judge Backhouse stated at paragraph 48 that it must have been clear to the Defendant that the CNF and stage 2 pack were wrong; they knew there was a hire claim.
“The balancing exercise to be conducted by the Deputy District Judge was whether compliance with the protocol, given that it is a self-contained code, trumps all other considerations, or whether the Defendant should, in fact, benefit from the Claimant’s failure, for whatever reason, to include the hire claim in the CNF”.
Further, “The letter from Eldon of 30th November 2017 smacks very much of exploiting the Claimant’s solicitors’’ error. That fell, in my judgment, to be balanced up, which the DDJ failed to do”.
The appeal was granted, and the application for strike out of proceedings was reconsidered and refused. It was not an abuse of process to bring these proceedings.
These cases are clearly fact specific, but Poku made it perfectly clear that the Defendants should not exploit errors which they are fully aware of; this accords very well with other parts of the CPR, such as applications for relief from sanction. Opportunism is strongly discouraged.
It is important, if considering a similar case in the future, to not only look at the contents of the CNF or Portal documents, but also at the surrounding correspondence. It seems particularly inequitable for an insurer to deliberately siphon off the credit hire element of a claim to a different agent, and then assert that a settlement of the other heads of loss is “full and final”. Of course, the issue of compromise was not fully considered in Poku, since it was not a matter raised in the original hearing or the grounds of appeal. That is, perhaps, a question for another day.
Since Poku there have been two joined appeals heard by HHJ Godsmark QC involving the same hire company. These were small claims: Griffiths v Rust and Anderson v Samuel-Higgins. Both had been dismissed for abuse of process where the PSLA claims had settled on the Portal and Part 7 proceedings issued for the credit hire.
The appeals were consented to (some would say at the eleventh hour). They stated with regards Griffiths, there was a document which was not put before the court which they agreed demonstrated there was no abuse of process.
With regards Anderson they agreed the judge had not given correct weight to correspondence which confirmed which heads of loss were being compromised (hire not being among them).
£20,000 wasted costs were awarded against the Defendant. Perhaps going forward more caution will be taken in raising arguments of abuse of process in these situations. Only time will tell. Personal experience so far is suggesting that while these issues were raised in pleadings, or even the subject of strike out applications, they are being dropped before the final hearing.
This is not to say there are no cases where a subsequent action will amount to an abuse. Of course, those cases exist. However, the lesson is to consider the facts of the specific case.
Also, to be on the safe side, confirming settlement with a letter detailing the terms (eg. Settlement of PSLA only, settlement of PSLA and vehicle repairs etc) should ensure that arguments that such settlements were “full and final” and covered all potential heads of loss should fail. Communication between personal injury and credit hire representatives is also key – once each representative is aware the other exists of course!