Kindertons Limited v Georgina Murtagh & Anor

A non-party costs order is governed by the overriding requirement that it be just. In credit hire litigation, the court may consider the commercial benefit obtained by the credit hire company and the degree to which it controlled or influenced the claim. Strict “but for” causation is not an indispensable precondition where the non-party is effectively a real party to the claim for credit hire charges. Contractual obligations, threats of financial consequences and instructions intended to prevent engagement with the defendant’s insurer may demonstrate control. A claimant’s dishonesty does not necessarily make an order unjust where the non-party voluntarily assumed the risk of relying on the claim. Practice Direction provisions identify relevant circumstances but do not themselves create an independent jurisdiction.

Kindertons Limited appealed against an order made by Mr Recorder Gallagher requiring it to pay 80% of Esure Services Limited’s costs in proceedings arising from a road traffic accident. The underlying claimants had entered into credit hire and repair agreements with Kindertons. Their claim failed at trial, and they were found to have advanced claims which were not recoverable, including a dishonest personal injury claim.

Esure then sought a non-party costs order against Kindertons. The Recorder concluded that the proceedings included a claim made for Kindertons’ financial benefit and that the circumstances justified an order. The appeal raised issues concerning financial benefit, control, causation, notice, the effect of the claimants’ dishonesty, and the proper role of CPR 44.16 and Practice Direction 44.

1. Appeal dismissed. The Recorder had jurisdiction to make a non-party costs order under section 51(3) of the Senior Courts Act 1981. CPR 44.16 and Practice Direction 44 identified relevant circumstances in QOCS litigation, but the governing question remained whether an order was just.
2. Kindertons had a substantial financial interest. The credit hire charges greatly exceeded the value of the claimants’ residual claims, and the evidence indicated that the claimants were not expected realistically to pay the charges. The financial benefit therefore accrued principally to Kindertons.
3. Control is a matter of degree, not an all-or-nothing threshold. Kindertons’ contractual terms required the claimants to pursue the claim, imposed serious financial consequences for non-compliance and enabled Kindertons to direct the conduct of the litigation. Its representative also instructed the claimant not to engage with Esure. This was intended to protect Kindertons’ commercial interests and demonstrated a high degree of control.
4. Strict “but for” causation was not required. Total Spares v Antares and Turvill v Bird supported the conclusion that causation may be important but is not invariably a precondition. XYZ v Travelers Insurance Co Ltd concerned liability insurers and did not lay down general causation guidance for credit hire companies. Kindertons voluntarily entered the litigation for profit and was materially different from an involuntary liability insurer.
5. The claimants’ dishonesty did not make the order unjust. Kindertons voluntarily assumed the risk that the claim would prove dishonest and had chosen the level of scrutiny applied. The Recorder’s decision fell comfortably within the permissible discretionary range. The 80% order appropriately reflected the proportionate benefit Kindertons stood to obtain. The parties were invited to agree the consequential costs order.

• High Court (King’s Bench Division): Appeal from the County Court at Chelmsford dismissed. The non-party costs order requiring Kindertons to pay 80% of Esure’s costs was upheld.