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Credit Hire in the MOJ Portal – Post Holt v Allianz


Does it still work and is it still fit for purpose?


We are at the eight-month anniversary of the Court of Appeal’s decision in the joined appeals of London Borough of Islington v Bourous and Davis v Yousaf [2022] EWCA Civ 1242. The decision largely focused on the issue of impecuniosity in the context of the RTA Protocol (MOJ).

In the case of Yousaf more specifically, the Court of Appeal held that the claimant proved their impecuniosity by way of a signed witness statement with no requirement for any financial disclosure to support such a pleading. There was simply no scope for investigation on the issue in the confines of Stage 3 MOJ hearing (often limited to 15 minutes oral submissions with no cross-examination of the claimant) and if there was a requirement for the issue to be investigated beyond the bare assertion, it was then incumbent on the defendant to take steps at the appropriate juncture to remove the matter from the RTA process and transfer the matter to CPR Part 7.

It goes without saying that taking such action comes with an increased risk of exposure insofar as costs are concerned. Therefore, while always a key consideration, economics play an even more prominent role in the decision process in terms of whether to proceed to a Stage 3 hearing or ultimately remove such a claim from the process.

Impecuniosity has, of course, always been a common issue raised in respect of credit hire claims. Up until this decision, in our experience, it was at least arguable to suggest that a claimant had not discharged their burden in respect of proving impecuniosity within the confines of the MOJ and at Stage 3. In the vast majority of courts, we certainly saw some considerable success where either no financial documentation had been disclosed, or there were clear and obvious gaps in such disclosure. In such circumstances the court would commonly find that the claimant was “pecunious” – in which case BHR would be applied.

Present Position

Since the decisions in Bourous and Yousaf, we have seen a reduction in terms of the average savings now available at Stage 3 of the MOJ process. While there is still scope for successful arguments to be pursued within the MOJ and amicable agreements reached based on the same at Stage 2, we have certainly seen in the last quarter of 2022 and the first quarter of 2023 that more claims than ever are proceeding to Stage 3. Also, when such matters proceed to a Stage 3 determination hearing, the courts are very likely to award the claim for credit hire close to the sum pleaded, if not in full. We have seen average savings drop by circa 13% post Bourous and Yousaf.

In our experience, save for clear and obvious period reductions, there appears little appetite from the judiciary to scrutinise a claim for credit hire within the confines of the MOJ and at Stage 3. These decisions have, therefore, perhaps inadvertently promoted the wrong behaviours and even in cases where there appears to be a sound argument on need and/or intervention, without the ability to cross-examine the claimant on such issues, despite the documentary evidence, we often find that such arguments are dismissed.

The time constraints and the courts’ ability to scrutinise such claims is clearly, therefore, hindering defences to credit hire within the MOJ and, unfortunately, there does not appear to be any obvious prospect of that position changing in the foreseeable future.

Further, since the decisions in Bourous and Yousaf and based on Keoghs data, we have seen a sizable increase in the number of credit hire cases now actually presented via the MOJ. It would appear that certain CHOs have now shifted focus. While it is fair to say that legal costs recovery is more limited than what is potentially available via CPR Part 7, there now appears a much more concerted effort focused on maximising recovery of damages with a more bullish approach adopted at Stage 2, especially in the context of a ‘one-stop shop’ business model where both CHO and claimant solicitors co-exist under the same corporate umbrella.

This is perhaps unsurprising, since there is no doubt that Bourous and Yousaf makes the MOJ portal a far more attractive proposition for CHOs, especially for certain claimant types – for instance taxi drivers. Given the regularity with which loss of profit is now awarded within the Part 7 environment following Hussain v EUI, usually resulting in substantial reductions to the credit hire claimed, it is easy to see why refuge may be sought within a process where there is no mechanism to extract disclosure of the documentation to enable the amount of profit to be discovered in the first place. Conversely, insurers will be understandably keen to ensure that taxi – and indeed any – credit hire claimants are not substantially overcompensated solely as a result of the procedural straightjacket of the MOJ process.

Holt v Allianz Insurance plc [2023] EWHC 790 (KB) 

With that in mind, the recent Keoghs success in Holt v Allianz Insurance plc provides an alternative strategic approach to the handling of these claims. As highlighted above, the obvious risk in removing such a claim from the MOJ process was then shortly followed by CPR Part 7 litigation and the associated increased costs. However, the decision in Holt has made it clear that pre-action disclosure of financial evidence in the context of a claimant pleading to be impecunious should in most cases be a formality. Holt, therefore, provides the defendant insurer the opportunity to ‘see what’s under the bonnet’ before they are faced with CPR Part 7 proceedings.

Ordinarily, impecuniosity will be asserted by a claimant within a witness statement at Stage 2 of the MOJ process, along with some BHR evidence from the defendant insurer. If, therefore, the claim is withdrawn from the MOJ process, this gives an immediate basis on which to launch an application for pre-action disclosure of financial documents (subject, of course, to proper notice having been given along with an opportunity to confirm the documents will be provided voluntarily).

We at Keoghs are adopting a streamlined and efficient process whereby the correct credit hire cases are identified within the MOJ process and removed at the appropriate junctures. At which point, the matter and focus will be shifted to immediately invoking the guidance provided in Holt whereby financial disclosure is sought prior to proceedings being issued. Such actions need to be swift as the chance to pursue the same may only have a small window of opportunity.

Once in receipt of such documentation, there will be a clear ability to make an informed decision pre-litigation based on actual documentary evidence as opposed to a mere assertion. There will, of course, be scenarios where the claimant can sufficiently evidence their pleading. Although, our experience is that this is often not the case.

The above summary is not an exhaustive list of issues and should you require any further guidance, please do not hesitate to contact Scott Croft on 01204 678705 or scottcroft@keoghs.co.uk.


Scott Croft

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