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Accident Exchange test case – blow for insurance industry
3 September 2007
The first round of the long running battle
between the insurance industry and Accident Exchange has now been
decided in favour of Accident Exchange, following the decision by
His Honour Judge Charles Harris QC in the matter of Corbett v
Gaskin.
Since mid to late 2006 some insurers have been
withholding payments to the credit hire organisation arguing the
contracts governing them were unenforceable.
It was the insurers' case that companies
providing insurance and finance were either dormant (as in the
AXI/AEFL, "A" terms and conditions) or simply did not exist (as in
the AEFL/AEIL "X" terms and conditions). The insurance industry
argued that if the companies had no standing then they could not
effectively enforce the contract against the claimant and in turn
the claimant could not enforce the contract against the defendant.
The Court deemed that this was not the case and that the agreements
were enforceable.
The case of Gaskin involved the AXI/AEFL "A"
terms, which are believed to make up the majority of the
outstanding claims. The AEFL/AEIL "X" test cases remain outstanding
for now, but a reserved judgment will be handed down shortly by the
Leeds County Court in relation to these cases in the matter of
Barker v First West Yorkshire.
The future?
Of course Gaskin is a first instance decision,
and it remains to be seen whether the insurance industry wishes to
appeal, (the defendant in Gaskin has not at the present time sought
leave to appeal). However this decision from a Designated Civil
Judge sitting in the County Court is likely to influence the
outcome of the cases involving type "A" terms listed before
District Judges in the County Court where the enforceability
defence has been pleaded.
The parties await the first instance decision
in relation to the type "X" agreements.
For more information please contact Steven or Susan.
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