Kindertons Ltd v Georgina Murtagh

Hearing date: 8 December 2023

Approved Judgment

This judgment was handed down remotely at 10.30am on 5 th March 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

THE HONOURABLE Mr Justice Turner

“For those who believe that most civil litigation does not end up being about the costs that were incurred in pursuing that same litigation in the first place, look away now.”

INTRODUCTION

This is an appeal against a decision of Mr Recorder Gallagher of 6 March 2023. The issues raised relate to an order for costs which he made against a non-party. In short, Kindertons Limited (“Kindertons”), against whom the order was made in favour of Esure Services Limited (“Esure”), challenges the Recorder's decision and contend that no such order ought ever to have been made.

Esure is a company which provides motor insurance. Kindertons describes itself as “a specialist in accident aftercare and mobility solutions to the insurance industry and related sectors”.

So opens yet another chapter in the continuing war of forensic attrition between motor insurers and credit hire companies.

BACKGROUND

On 20 February 2019, a minor collision occurred on the A13 in London when one Georgina Murtagh carelessly drove her Volkswagen Polo into gentle contact with the rear of Serhat Ibrahim's Audi A5.

His claim for the cost of repairs of the damage caused was in the sum of £2,543.80.

The combined legal costs claimed by the parties to this appeal stand at nearly £100,000.

I will now deal with the history of this litigation in order to explain how what should have been a straightforward claim came to such spectacular grief.

FIRST CONTACT WITH KINDERTONS

Within two days of the accident, a representative of Kindertons telephoned Mr Ibrahim to discuss providing him with a replacement vehicle. He returned the call on the afternoon of 22 February and spoke to a representative by the name of Rachel. The call was recorded. He described the damage to his vehicle, somewhat cryptically, as:

“… not a lot of damage. It's just basically the back bumper. It looks a bit out of line…and when I open the boot they don't close and where with the key you could open the boot where it pops automatically open…it won't do that time to time.”

Upon this slender basis, Mr Ibrahim was readily persuaded that he should not be driving the car and that he ought straightaway to hire an alternative vehicle from Kindertons. It is to be noted that in a report later provided by JP Morris assessors on behalf Kindertons the author concluded that Mr Ibrahim's Audi had suffered no damage in the accident which would have rendered it unroadworthy. The repairs would take four to five days to complete.

Rachel told Mr Ibrahim:

“Just so you are aware…we are gonna be providing you with the replacement vehicle. Now the vehicle that we do give to you, it is a hire car, not a courtesy car, which we provide for you on a credit hire basis, now all this means is that the charges are recovered from the negligent driver's insurance company, and the agreement between you and us is there's no cost to you. So you do not have to pay for any hire or repair aspect of things”

She went on to pre-empt any attempt by Esure to offer to provide Mr Ibrahim with a less expensive alternative hire car:

“If the other person's insurance company should happen to call you, I would just ask you to please ignore their call or any advice that they provide, just 'cause they will try and reduce what you're entitled to in respect of your vehicle value and your legal entitlement to a hire car, err, the other company is called Esure, so if you hear erm, of or get a phone call from Esure just tell them that Kindertons are dealing with the claim and end the call from there, OK?”

THE AGREEMENTS BETWEEN MR IBRAHIM AND KINDERTONS

On 23 February 2019, Mr Ibrahim duly entered into a credit hire agreement with Kindertons for the hire of a Jaguar XF at the rate of £345.08 per day (later replaced with a Mercedes Benz C250 on the same terms). The total period of hire was 33 days.

The terms and conditions of hire included the following:

i. Deferment of the obligation to pay the hire charges until the conclusion of the claim for damages against the third party (Clause 7(a));

ii. The right on Kindertons' part to appoint an ‘external contractor’ to assist with that claim (Clause 7(a));

iii. The right on Kindertons' part to pursue an action in the hirer's name against the third party (Clause 7(b));

iv. The right on Kindertons' part to pursue an action through the County Court and/or High Court coupled with an obligation on the hirer's part to co-operate in the conduct of the action (clause (7(c));

v. A provision that any default of condition 7 would result in termination of the agreement forthwith and repayment of the hire charges being immediately due in full (Clause 8).

Also on 23 February, Mr Ibrahim entered into a credit agreement with Kindertons in respect of repair, recovery and storage facilities. The terms and conditions provided:

i. The obligation to pay the repair, recovery and storage charges would be deferred pending conclusion of any claim against the third party (clauses 1.2, 1.4);

ii. A right on Kindertons' part to instruct repairers on Mr Ibrahim's behalf (Clause 1.7);

iii. A right on Kindertons' part to instruct an engineer and agree repair costs on Mr Ibrahim's behalf (Clause 1.8);

iv. A right on Kindertons' part to pursue a claim in Mr Ibrahim's name against the Third Party (Clause 2.3);

v. An obligation on Mr Ibrahim's part to pursue a claim against the Third Party (Clause 2.3);

vi. A right on Kindertons' part to appoint an Authorised Representative to pursue the claim in Mr Ibrahim's name (Clause 2.4);

vii. An obligation on Mr Ibrahim's part to provide all reasonably necessary co-operation and assistance for the pursuit of the claim (Clause 2.5);

viii. An obligation on Mr Ibrahim's part not to agree any settlement proposals without Kindertons' agreement (Clause 2.6);

ix. An obligation on Mr Ibrahim's part to pay any settlement cheque to Kindertons' from which Kindertons' would be entitled to deduct sums due to it (Clauses 2.7 and 2.8);

x. An immediate liability on Mr Ibrahim's part to pay all sums due if he were to breach the terms of the agreement in any significant respect (clauses 2.9 and 2.10);

xi. A retaining lien on Kindertons' part to retain the Claimant's vehicle if the agreement were terminated until all sums due to it under the agreement are paid (Clause 2.10).

During the course of the hearing, I raised with the parties an issue as to the potential impact which the provisions of the Consumer Rights Act 2015 may have upon the enforceability of the terms of these agreements. The point had been neither pleaded nor raised below or before me but under section 71(2) of the Act:

“…the court must consider whether the term is fair even if none of the parties to the proceedings has raised that issue or indicated that it intends to raise it.”

In the event, I pressed the issue no further and, with the encouragement and agreement of the parties, was prepared to proceed on the assumption that the terms were enforceable against Mr and Mrs Ibrahim. Fortunately, in the particular circumstances of this case, I am satisfied that the outcome of this appeal will be the same regardless of the operation of the 2015 Act and it would be inappropriate for me to speculate as to what impact (if any) it may have upon future credit hire claims.

ESURE'S APPROACH TO MR IBRAHIM

On 25 February (two days into the initial hire period and before Mr Ibrahim entered into the second credit hire agreement) Esure sent him a letter offering an equivalent replacement vehicle at no cost at all to him but at a cost to Esure of £63.45 per day (the cost to Esure was identified so as to enable Esure to argue that if Mr Ibrahim did not take advantage of the offer and incurred higher costs then this amounted to a failure on his part to mitigate his loss).

In the light of the warning he had earlier been given by Rachel to have no truck with Esure, her reassurance that he would not be paying any hire costs anyway and the terms of the hire agreement he had already entered into, it is not surprising that Mr Ibrahim did not take up the offer.

THE CLAIM

Proceedings were brought by Mr Ibrahim and his wife, Silvia, against Miss Murtagh on 19 September 2019 limited in value to £20,000. Mrs Ibrahim was alleged to have been a passenger in the car at the time of the accident. Mr Ibrahim's claims for credit hire, repairs, recovery charges and additional charges came to a total of £16,757.75. All but £50 (airily attributed to “undocumented miscellaneous expenses”) arose under the credit agreements. Mrs Ibrahim also claimed in respect of such undocumented expenses in an identical sum.

In addition, Mr and Mrs Ibrahim both claimed general damages in respect of personal injury but the combined alleged value of these claims, even if they had been made out, could not have exceeded £3,192.25 without exceeding the £20,000 limit of the value of the claims as a whole.

Miss Murtagh denied liability and the matter proceeded to trial.

THE TRIAL

The matter came before Mr Recorder Berkley QC (as he...