Select Car Rentals (North West) Ltd v Esure Services Ltd

Part 44.16 of the Civil Procedure Rules 1998 does not create a separate or broader discretion to order a non-party to pay costs in QOCS proceedings. The governing principle remains that the discretion must be exercised justly, having regard to the nature and degree of the non-party’s connection with the litigation. A claim for credit hire is ordinarily made for the financial benefit of the credit hire organisation, whether or not the agreement is profitable. That finding is necessary but does not itself justify a costs order. Industry-standard contractual arrangements or communications do not confer automatic immunity, and exceptional involvement is not a prerequisite.

Personal injury claims arising from an alleged road traffic accident were dismissed after the County Court found that the claimants had failed to establish that the accident occurred. A substantial head of claim related to credit hire charges payable to Select Car Rentals (North West) Ltd.

The County Court ordered Select to pay 60% of Esure’s defence costs as a non-party. Select appealed, arguing that CPR Part 44.16 created no relevant jurisdiction, or alternatively that it imposed a distinct and broader discretion in QOCS cases. The central issues were whether the claim was made for Select’s financial benefit and what principles governed the exercise of the costs discretion.

1. Appeal dismissed. The Recorder applied the correct test and his order that Select pay 60% of Esure’s costs fell within the broad bounds of the discretion.
2. Section 51 of the Senior Courts Act 1981, CPR 46.2 and CPR Part 44.16 operate within a single discretionary jurisdiction. Part 44.16 does not introduce a bespoke or conceptually distinct discretion for non-party costs orders in QOCS proceedings. The immutable principle, reflected in Deutsche Bank v Sebastian Holdings [2016] 4 W.L.R. 17, is that the discretion must be exercised justly.
3. The critical consideration is the nature and degree of the non-party’s connection with the proceedings. The Recorder was entitled to find a close connection from Select’s involvement in the conduct and management of the claim, its contractual rights, its communications with the insurer and the substantial financial benefit associated with the hire claim.
4. In a conventional credit hire case, the hire claim is made for the financial benefit of the credit hire organisation. It is unnecessary to prove that the agreement was profitable. Recovery of sums due under the agreement through the claimant’s litigation is itself a financial benefit. The finding of financial benefit is necessary but not sufficient: the court must still decide whether a costs order is just.
5. Paragraph 12.2 of the Practice Direction to Part 44 validly identifies credit hire claims as examples of claims made for another person’s financial benefit. It requires no artificial qualification and does not create a different discretion. The fact that a credit hire organisation’s involvement resembles ordinary industry practice does not provide immunity, nor must the involvement be exceptional before an order can be made. The jurisdiction is fact-specific and concerns what is just in all the circumstances.

• High Court (Queen's Bench Division): appeal from the County Court dismissed. The order that Select pay 60% of Esure’s costs was upheld.