Impecunious road traffic accident claimants who benefit from the rule allowing them to claim full credit hire costs must provide pre-action disclosure of financial records, a circuit judge has ruled.
His Honour Judge Robert Harrison in Cardiff said this would help the defendant insurer make realistic settlement offers.
He said: “Granting pre-action disclosure of documents that in the ordinary course of events would remain private, is both unusual and a step that should not be taken lightly.
“However, in my judgment the documents sought are different in nature to a full set of medical records and their disclosure is significantly less intrusive.”
HHJ Harrison went on: “Bearing in mind the normal rule that the costs incurred in providing the documents are payable by the applicant, there is some force in the submission that an injustice could arise.
“However, I remind myself of the limitation of what is being sought in this case. Obtaining bank statements and wage slips for a three-month period is generally speaking something that will require little if any input from a solicitor and frankly is not onerous.”
The position on credit hire was established by the 2002 House of Lords ruling in Dimond v Lovell, which said the claimant was limited in their recovery to the basic hire rate (BHR), which has subsequently been defined as “the lowest reasonable rate quoted by a mainstream supplier”.
This meant a claimant is not entitled to recover that element of the charge represented by the cost of additional services, such as the provision of credit and case management.
However, two years later, in Lagden v O’Connor, the House of Lords created an exception to the rule if the claimant was impecunious.
Where a claimant was unable to afford to hire a car without making unreasonable sacrifices, the limiting rule did not apply.
This means an impecunious claimant is entitled to claim the full credit hire charges, not limited to the BHR, so long as those charges are not unreasonably high compared to other providers of credit hire services.
HHJ Harrison said defendants who wanted to make realistic offers should know the “potential strength” of any argument that damages should be based on the impecuniosity exception.
The court heard in EUI v Charles and others  EW Misc B7 (CC) that EUI, a subsidiary of the Admiral Group, sought pre-action disclosure against seven accident victims, who had each hired a car or motorbike after the crash from Direct Accident Management (DAM).
HHJ Harrison said the seven had all “intimated claims” to EUI for significant credit hire charges, ranging from £3,145 to replace a motorcycle for 13 days, to £37,800 to replace a Mercedes car for 45 days.
They all used the same solicitor, Bond Turner (formerly known as Armstrongs), which like DAM is part of recently listed Anexo Group plc.
HHJ Harrison said that allowing the defendant to make the applications before filing either an acknowledgment of service or a defence was consistent with the overriding objective to deal justly with the issues at proportionate cost and the documents were relevant to an issue likely to arise.
HHJ Harrison said the issue of impecuniosity went “directly to the basis of the assessment of damages” and the court, when considering whether to exercise its discretion, must have regard to all the circumstances, including “the reality of this type of litigation”.
He went on: “It might be said that from the very moment that the accident occurs the financial means of the claimant are relevant. DAM want impecunious motorists as clients because they fit their business model.
“Certainly, when a claim is intimated they become relevant to the insurer because their impecunious status is central to the basis of valuation of the claim.”
Anexo’s admission document to the London Stock Exchange made clear that impecunious customers were its core market, and HHJ Harrison said this was because “their impecuniosity unlocks the recoverability of charges not otherwise recoverable”.
Against that background, HHJ Harrison said that to suggest that evidence was needed to show that the BHR was lower than the credit hire charge was “to suspend reality”.
“If I stand back and look at these applications as a whole, I have concluded, in the exercise of my discretion, that the overriding objective to deal justly with these matters at proportionate cost is best served by allowing informed offers to be made at the earliest stage.”