Giles v. Thompson

The House of Lords considered whether commercial car‑hire schemes that provide replacement vehicles to motorists and finance litigation to recover hire charges are unlawful by reason of maintenance or champerty, notwithstanding the abolition of those crimes and torts by section 14 of the Criminal Law Act 1967. The court held that those ancient doctrines must be applied having regard to modern realities and public policy and that the individual terms of each hiring agreement must be scrutinised.

On the facts before the court the arrangements did not amount to champerty or unlawful maintenance: the companies had no proprietary interest in the proceeds of the cause of action and the motorist retained sufficient control over the litigation in the contracts examined. The House therefore upheld the general lawfulness of the agreements considered, but allowed the appeal in Devlin v Baslington only in relation to the award of interest on the hire‑charge element because, in those circumstances, an award of interest was not justified.

The appeals arose from county court judgments awarding damages for personal injuries and, separately, sums representing the cost of hiring replacement cars supplied by commercial companies while the motorists' vehicles were repaired. The defendants (insurers) challenged awards for hire charges on the ground that the hiring agreements were champertous or otherwise contrary to public policy, and argued that the motorists had suffered no recoverable loss because they had the use of replacement cars "free" in practice.

• Procedural posture: County Court judges awarded personal injuries and hire charges; Court of Appeal affirmed (orders of 11 January 1993); appeals to the House of Lords were heard in February 1993 with judgment delivered 26 May 1993.
• Nature of the applications: defendants sought to defeat recovery of hire charges by alleging champerty/illegality and by arguing lack of proven loss; in Devlin a subsidiary issue was whether the claimant was entitled to interest on the hire‑charge element.
• Issues framed by the House: (i) whether the standard agreements were champertous or unlawful under public policy despite the Criminal Law Act 1967; (ii) whether unlawfulness, if proved, barred recovery of hire charges; (iii) whether the motorists had proved a recoverable loss having benefited from replacement cars; and (iv) in Devlin, whether interest should be awarded on the hire‑charge element.
• Court’s reasoning: the Law Commission’s abolition of maintenance and champerty (Criminal Law Act 1967 s.14) left room for public‑policy analysis; the court declined to apply an inflexible test and required examination of each contract’s terms and the practical features of the arrangement. The companies in the two lead cases had no charge or assignment of the causes of action and no absolute proprietary interest in recoveries; motorists retained a residual personal liability for hire charges; and the companies’ profits derived from hire not from a sharing of litigation spoils. The court concluded there was no wanton or officious intermeddling that public policy sought to suppress. On loss, the court held the motorist did incur a real liability and therefore suffered a recoverable loss. On interest, the House considered the award discretionary and, in Devlin, held that interest was not appropriate because, practically, the motorist was not deprived of funds during the litigation given the contractual credit arrangements.

The court emphasised that different contractual forms might yield different results, recommended careful judicial scrutiny of duration and rate of hire claims, and suggested consumer‑protection measures rather than revival of champerty doctrines to police misleading publicity.

Appeals dismissed generally, but appeal in Devlin v Baslington allowed in part (award of interest in respect of hire charges set aside). The House reasoned that the particular hiring agreements examined were not champertous or contrary to public policy because the companies had no proprietary interest in the litigation proceeds, motorists retained liability and control in relevant respects, and the arrangements did not pose the historical dangers that champerty/maintenance were meant to prevent; however, awarding interest on the hire‑charge element in Devlin was discretionary and not justified on the facts.

County Court judgments (including an October 6, 1992 judgment of His Honour Judge Hardy in Devlin) awarded personal injuries and hire charges; appeals to the Court of Appeal resulted in orders dated 11 January 1993 affirming the county court decisions; appeals to the House of Lords (Appellate Committee) heard February 1993, judgment delivered 26 May 1993 (reported [1993] UKHL 2; [1994] 1 AC 142).