By: 17 June 2024
Landmark judgment won against credit hire organisation

Keoghs’ counter-fraud team and client, esure, have secured a judgment against a credit hire organisation (CHO) involving a non-party costs order (NPCO). The court found that the CHO was the main driver behind a claim aimed at increasing its own profits. The court has ordered it to cover 86% of the assessed costs of £8,436, plus esure’s application costs of £6,000.


An ongoing issue with CHOs

This judgment is significant for insurers as it addresses the practice of CHOs targeting penniless claimants to increase profits. Damian Ward, head of counter-fraud at Keoghs, stated: “This case underlines once again that where a CHO drives the litigation, exercises control of it, and benefits significantly from it, they face the very real risk of paying the defendant’s costs where the claim does not succeed. This is established law and I am pleased that this CHO’s attempt to create new precedent did not succeed.”


The initial claim

The initial claim arose after esure’s insured driver reversed into a parked moped. Keoghs and esure investigated further and revealed inconsistencies, leading them to defend the claim on the grounds of fraud. They then assigned the case to the small claims track, which limited the applicable costs. When the claimant’s solicitors withdrew and the claimant failed to provide necessary evidence, Keoghs identified the CHO’s role in the claim.

Keoghs advised esure to pursue an NPCO against the CHO. They argued that the CHO initiated and drove the claim for its own benefit, making it the party responsible for the litigation and costs. The judge’s decision to order the CHO to pay a substantial portion of the costs and deny them permission to appeal supported this view.



Andrew Nixon, esure’s fraud operations manager, remarked: “This is an extremely welcome outcome which endorses our approach to tackling unmeritorious hire claims driven by the CHO.”

This ruling follows the recent decision by Mr. Justice Martin Spencer in the Kindertons case, diverging from XYZ v Travelers, and reinforcing the industry’s position on CHOs’ practices.

Previously, Keoghs achieved a high court judgment in Holt v Allianz, requiring CHOs to prove impecuniosity at the pre-litigation stage, significantly reducing litigation volumes and costs.


Image: Provided by Keoghs.
Emma Cockings
Emma is a content editor for Claims Media. Emma is a experienced writer with a background in client-centric personal injury for a major firm. She has attended and reported on multiple brokerage events throughout her career.