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Court orders credit hire company to pay costs in fundamentally dishonest claim

07 October 2021

Credit hire companies cannot use fraudulent claims as a convenient 'camel' to 'ride the plains to the oasis of water' from defendant insurers.

Parvez v Calpe Insurance Company Ltd - XS Direct Insurance

The claimant, Mr Mohammad Masud Parvez, brought claims for personal injury, recovery, storage and credit hire following a road traffic accident in February 2018. His claim was pleaded up to a value of £17,000. Credit Hire was claimed in the sum of £14,706 and storage and recovery in the sum of £1,590 via Apex Recovery and Paloma Car Hire Ltd.

Liability, causation and quantum were all disputed by the defendant, and the matter proceeded to trial. Recorder Lambert QC dismissed the claimant's claim and found the claimant's personal injury claim to be fundamentally dishonest. This resulted in his whole claim being struck out - including the claims for credit hire, storage and recovery - with an order that the claimant pay the defendant's costs. 

As the claimant was unlikely to be able to afford to pay the defendant's legal costs, the defendant pursued the credit hire company for their costs. The matter proceeded to a further hearing where the car hire company was ordered to pay 90% of the defendant's costs rather than the claimant. The judge found that this type of litigation was "a convenient camel for hire companies to ride across the plains until they are brought to an oasis and can drink water from defendant insurers." However, as the majority of the claim was brought for the benefit of the credit hire company, the judge did not allow them to sit and hide behind the impecunious claimant, even where the dishonesty appeared to be solely attributed to the claimant.

Victoria Hughes, Fraud Manager at XS Direct Insurance, said:
"I want credit hire companies and others hoping to profit from claims to know, if they are bringing claims and hoping to profit and the case is in any way fundamentally dishonest, XS Direct Insurance will not let them simply walk away. We will pursue them for the underwriter's wasted costs on that case. We do not tolerate fraudulent claims, which are still a significant problem, and are determined to always take a robust stance for the sake of our genuine policyholders."

David Unwin, Chartered Legal Executive at DWF Law LLP who handled the case, said: "This was a useful decision as the judge found that the relationship between the credit hire company and the claimant did not have to be exceptional in order to find that the credit hire company should pay the defendant's costs pursuant to CPR 44.16. We will work with XS Direct and other insurers to pursue not only credit hire companies but anyone hoping to profit from litigation, including rehabilitation and storage and recovery companies. They are on notice as to what will happen when we encounter this situation again and should perhaps consider that walking away will not be an option in this scenario."


If you require any further information, please contact David Unwin.

Further Reading