Yehuda Tescher v Direct Accident Management Ltd

Hearing dates: 7th and 8th May 2025

Approved Judgment

This judgment was handed down remotely at 10.30am on 13 June 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

If a credit hire case fails, when and in what circumstances should the non-party credit hire company be made liable for the defendant's costs? That is the question in these two appeals. In each case, following a road accident, a claim was issued which included (at least) damages for personal injury and for credit hire costs. In each case, for different reasons, a costs order was made in favour of the defendant and against the claimant. However the effect of the Qualified One-Way Costs Shifting (QOCS) scheme is that such a costs order will not be enforced. The defendants each applied for a non-party costs order against the credit hire company. The two orders under appeal each refuse to make that order. The defendants appeal to this court, submitting that a non-party costs order ought to have been made. In one of the judgments under appeal, given the frequency of credit hire cases, the judge suggested that general guidance on these issues would be welcome.

Anecdotally, credit hire RTA cases represent a significant volume of the trial work of district judges, outside the small claims track. The evidence in this case bears that out. It includes a 2023 statement by the corporate group, which includes the credit hire company Direct Accident Management Ltd (DAML) as well as the solicitors Bond Turner, that they have on average around 10 barristers in court each day representing the group's clients. That amounts to well over a thousand cases a year just for that group. Since there were about 1,700 fast trial trials in 2023, this data corroborates the anecdotal impression that handling credit hire claims is a substantial undertaking for the county court, supporting the idea that general guidance on this issue would be worthwhile.

Tescher v Direct Accident Management Limited (DAML)

On 19 November 2018 the car being driven by the defendant Yehuda Tescher came into contact with a motorcycle being driven by the claimant Luiz Francisco Povoa Quesada. On 21 and 24 November 2018 the claimant signed successive credit hire agreements with DAML. The claimant brought proceedings. Proceedings were issued by his solicitors Bond Turner. The Particulars of Claim dated 28 October 2020 included a claim for general damages for personal injury, including whiplash, and for special damages of just over £22,000 in total, including £19,633.36 for credit hire charges for a period of 88 days. The credit hire charges represent over 85% of the value of the special damages claim. Liability was denied and, amongst other things, the Defence puts all aspects of the credit hire claim in issue. In the Reply, amongst other things the claimant pleaded a positive case that he was impecunious in the sense of Lagden v O'Connor [2004] 1 AC 1067.

The matter came for a trial on the Fast Track before District Judge Swan in the County Court in Clerkenwell & Shoreditch on 8 December 2022. The judge dismissed the claim and directed that the claimant pay the defendant's costs, not to be enforced without permission of the court pursuant to QOCS. DJ Swan also directed that DAML be joined as a second defendant for the purposes of costs and gave directions to facilitate resolution of an application for a non-party costs order.

The application by the (first) defendant came before District Judge Jeffs on 10 May 2023. By then evidence had been served in the form of a witness statement of Nicole Edwards, a legal executive at the first defendant's solicitors, and a witness statement by Paula Levens on behalf of DAML. Ms Edwards' evidence exhibited a number of documents from DAML including a 2023 share prospectus for the AIM market for the Anexo group, of which DAML and Bond Turner are members. The prospectus describes the group as an integrated credit hire and legal services group focused on providing replacement vehicles and associated legal services to impecunious customers who have been involved in a non-fault accident. The reference to 10 barristers every day comes from this prospectus.

In his judgment DJ Jeffs dismissed the application for a non-party costs order essentially on the basis that he was not satisfied DAML was the “real party” and that the claimant had not established causation, i.e. that DAML had caused costs to be incurred which would not have been incurred as a result of its involvement. Mr Tescher sought permission to appeal. HHJ Saunders gave permission to appeal and transferred the appeal to this court.

AXA Insurance v Spectra

On 23 October 2019 a road accident took place in which the car being driven by the claimant Ms Nicola Smith was written off. On the day of the accident the claimant entered into a credit hire agreement with Spectra. The claimant, a district nurse, needed a car. On 28 October 2019 liability for the accident was admitted by AXA, the insurers for the driver responsible. The credit hire lasted for 89 days. On 13 February 2020 Ms Smith received a cheque for the value of the total loss of her vehicle (£2,550). On 24 August 2020 the claimant's solicitors DGM commenced proceedings directly against the insurers AXA under the European Communities (Rights against Insurers) Regulations 2002. The claim included general damages for whiplash and travel anxiety. As HHJ Gargan later held (at [22]) the claim for pain, suffering and loss of amenity (PSLA) was unlikely to exceed £3,800. Special damages of £16,160.94 were also claimed, the bulk of which was credit hire charges. The schedule of special damages includes a plea that the claimant is impecunious “and is therefore entitled to recover from the defendant the full credit hire rate”. The Defence admitted liability, did not contend that the claimant had not suffered some loss in the context of PSLA but required the claimant to prove the nature and extent of the loss. As in the DAML case, in relation to the claim for credit hire charges all aspects were put in issue.

On 18th November 2020, AXA made a Part 36 offer in respect of the PSLA claim only for £2,750. DGM replied stating that it could not settle the claim on a piece meal basis and asking for an offer to settle the whole of the claim.

On 25 May 2021 Keoghs, the firm now instructed by AXA, wrote to DGM pointing out that the claimant had insured another vehicle within 10 days of the accident. Keoghs argued that this proved that the claimant's assertion that she needed a hire car for almost three months was false as she had an alternative vehicle available to her. The letter demanded that the claimant discontinue her claim or face a plea of fundamental dishonesty. The relevance of such a plea is that fundamental dishonestly is one of the exceptions in the QOCS scheme.

The claimant discontinued her claim on 28th May 2021. She later explained that she had simply done what her solicitors “told her” to do. The usual costs order under CPR r38.6(1) followed, i.e. that the claimant pays the defendant's costs, subject to QOCS.

On 29 June 2021 AXA brought an application for two orders. One was an order setting aside QOCS protection on the grounds of fundamental dishonesty. The other was a non-party costs order against Spectra.

The application came before Deputy District Judge Carson on 18 February 2022. The claimant represented herself and each of Spectra and AXA were represented by counsel. The DDJ heard oral evidence from the claimant and Mr Louis Georgiou. Mr Georgiou is and was a director of Spectra. Mr Georgiou's cousins Michael and Sava Georgiou are or were also directors of Spectra and also directors of the company (Infinity) of which DGM was a trading name. In her oral evidence the claimant explained that she had felt pressured into discontinuing by DGM which had advised her that she risked going to prison at a time when she was experiencing personal difficulties. The DDJ decided that the claimant had not been fundamentally dishonest because the replacement car she had insured 10 days after the accident had not been available to her until she received the benefit of the total loss claim, and she had indeed used the hire car during the claimed period. The DDJ adjourned the non-party costs order. After a further hearing, further written submissions and a substantial delay in producing the reserved judgment, the DDJ circulated judgment on 1 March 2023.

An order was made in the defendant's favour requiring Spectra to pay 65% of the defendant's costs (amounting to £3,432). On appeal to HHJ Gargan, despite the sum at stake, the wider significance of the issues meant that the same leading counsel as appeared in this court also appeared below. The judge overturned various findings of fact by the DDJ, remade the decision and refused the defendant's...