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CHOs dealt legal blow in contribution claim
26 November 2009
The recent County Court decision in Tiller –v- Green
(Portsmouth County Court, 17th March 2009 & 5th November 2009)
demonstrated a shift in balance of favour towards defendants in
cases where Credit Hire Organisations (CHOs) themselves have
delayed matters, causing extended repair and hire periods. This
decision highlighted the risks to CHOs of making erroneous
allegations concerning repair delays and resulted in an indemnity
costs order being made against the claimant.
In Tiller, the claimant hired a vehicle from Accident
Exchange for a period of 52 days at the full commercial rate. It
was evident at the outset that the period of hire was likely to
become a disputed issue.
Accident Exchange (acting as the claimant’s agent) refused to
accept any reduction in the hire period and laid the blame for the
delay at the door of the repairing garage. In open correspondence
the CHO were adamant that they had swiftly authorised repairs and
it was the repairing garage who had delayed matters by failing to
accurately estimate for the repairs, omitting areas of damage and
quoting for the wrong parts. The CHO made it clear that if the
defendant wanted to dispute the period of hire they should seek a
contribution from the repairing garage within the scope of the
Civil Liability Contribution Act 1978 as envisaged by the Court of
Appeal in Clark –v Ardington.
In spite of the guidance from the Court of Appeal, it is
understandable that many defendants have been reluctant to embark
upon third party claims due to the obvious risks faced in respect
of costs. In what is understood to be one of the first cases where
such a stance has been taken, the defendant made the decision to
join the repairing garage to the proceedings as Part 20
defendant.
Despite the factual assertions made by the CHO, at trial the
repairing garage were able to establish that they had followed the
correct procedures and in fact it was the CHO who had caused the
delays by failing to instruct an engineer and authorise the repairs
in good time. The Court ruled that once the repairs had been
authorised by the CHO they had been carried out correctly and
within a reasonable timeframe.
In concluding that the CHO had failed to act “promptly and
within a reasonable period of time” in authorising repairs, the
period of hire was reduced substantially. In consequence of this
decision and a reduction to the rate of hire, the overall charges
of £9,303.25 were reduced to £1,790.78, requiring the CHO to repay
monies to the defendant. As a result of the findings of fact made,
the defendant’s Part 20 claim against the repairing garage was
dismissed.
Although it was not controversial that the claimant would face a
liability for the defendant’s costs, the defendant sought
assessment of its own costs on an indemnity basis. Moreover, the
defendant considered that the claimant should bear responsibility
for the costs of the third party claim against the repairing
garage.
In attempting to distance themselves from their earlier
assertions as to delay, it was argued on behalf of the CHO that the
defendant was the author of its own misfortune as it was the
defendant alone who had made the decision to join the repairing
garage into the proceedings. Since the defendant had been
unsuccessful in relation to the third party claim, it was inferred
that the costs liability should remain the responsibility of the
defendant and that the claimant should not be penalised, either by
an indemnity costs order, or by any liability in costs to the
repairing garage.
In deciding what order to make about costs, the trial Judge
considered the factors outlined at CPR 44.3(4) and commented that
when looking at the question of who had succeeded, it was a case
where “the defendant has succeeded in every real respect and the
claimant has failed in every real respect”. In the circumstances,
the Court was prepared to depart from the general rule and ordered
that the claimant not only pay the defendant’s costs on an
indemnity basis with indemnity interest but additionally those of
the repairing garage. The decision took into account the fact that
it was the CHO who laid blame for part of the delay on the
repairing garage.
It has to be acknowledged that often the only beneficiary in
cases of delayed repairs is the CHO itself. This case is a clear
example of the risks to CHOs in terms of both the recovery of hire
charges and costs where there has been a failure to properly
investigate and consider the reasons behind delay and the
implications of that delay, in respect of the validity of the claim
for hire being put forward.
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