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accident exchange test case

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.

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