Redressing the balance in Defending Credit Hire Claims – Victory in the Court of Appeal: Y Tescher and DAM Ltd & AXA Insurance and Spectra Drive Limited [2025] EWCA Civ 733
On Friday 13 June 2025 the Court of Appeal handed down a highly significant judgment for all credit hire practitioners.
The Judgment relates to situations where a credit hire claim fails and answers the question of whether the credit hire company can be made to pay the Defendant’s costs. Credit Hire companies are not named as Claimants in proceedings. Despite this they have been the main financial beneficiary of the claim. They have controlled and funded the claim whilst remaining at arms length when it came to the repercussions of an unsuccessful claim. Due to QOCS protection Defendant Insurers have been left in a position where, although successful, they have been unable to recover the costs of defending the claim.
The Court of Appeal has confirmed that CHOs are accountable as the ‘real party’ to the litigation.
It is now established that where a claim for credit hire fails the Defendant will be able to obtain a non-part cost order against a credit hire organisation as a matter of course. In instances where the credit hire claim is much larger than the claim for PI it is expected the CHO will be ordered to pay the whole of the Defendant’s costs.
The salient points for all credit hire practitioners:
- The CHOs are the ‘real beneficiaries’ of the litigation. The CHO exercises effective control over the litigation.
- QOCS protection only protects the claimant in respect of a claim for PI. This protection does NOT extend to a claim for credit hire as QOCS was never intended to afford protection to commercial non-parties.
- Litigation is the only ‘realistic means’ by which a CHO can get paid. The credit hire agreement is the ‘fundamental cause’ of the costs incurred by the Defendant.
- The CHO does exercise ‘effective control’ of the litigation. The hirer faces significant personal risk should they elect to discontinue or settle the claim against the wishes of the CHO.
Link to the full judgment: https://caselaw.nationalarchives.gov.uk/ewca/civ/2025/733
QGLaw’s experienced and dedicated Credit Hire Team can assist you and advise how to ensure your claims are conducted so as to take full advantage of this helpful judgment. Contact Joanne Felstead (Senior Associate Solicitor) on 01329 552226 / joanne.felstead@qglaw.co.uk for more details