Non-Party Costs Orders and Credit Hire Companies

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This article discusses a recent case where I was instructed to act on behalf of an insurer defendant in an application for a non-party costs order against a credit hire company which had provided a claimant with a vehicle on credit hire.  The matter of Ionut Georgian Meirosu -v- (1) ERS Claims Limited (2) Crystal Car Hire Limited (Third Party) reached a hearing on the 8th of September 2023.  It was heard by District Judge Ross, sitting in the County Court at Brentford.  Crystal Car Hire were added to the proceedings for the purposes of costs only.  I have used this case to explore some of the jurisprudence behind non-party costs orders and to consider what conclusions can be drawn, if any, from the facts of this case.

The courts have long had the power to order costs against a person or company that is not party to proceedings.  Today the jurisdiction can be found in section 51 of the Senior Courts Act 1981 and section 46.2 of the Civil Procedure Rules.  The 1981 Act simply provides that the costs of and incidental to all proceedings in any civil court, up to and including the Court of Appeal, shall be in the discretion of the court.  CPR 46.2(1) sets out the procedure for an application for a non-party costs order (NPCO).

Background to the claim

The claim arose out of a road traffic accident that occurred in June 2021.  It was alleged that an occupant in the Defendant’s insured’s vehicle had opened a door into collision with the Claimant’s vehicle, which had been passing by.  Liability was resisted by the Defendant on the basis that its insured had not opened the door, but a passenger in that vehicle had.  The Defendant insurer averred that any liability for the accident should rest with the passenger, and not their insured, although it did acknowledge its statutory obligations under the Road Traffic Act 1988.

The Claimant claimed £26,730 for credit hire, storage and recovery charges.  All of which were owing to the credit hire company.  There was also a claim of £30 for telephone and postage costs etc.  His claim for vehicle repairs in the sum of £4,807 had been settled pre-issue.  There was no claim for personal injury.

The proceedings continued until the matter reached trial in November 2022.  The Claimant did not attend trial.  His legal representative informed the court that “it is not the Claimant’s case that the Defendant’s insured was negligent”.  He also informed the court that the Claimant was unwell with Covid and therefore requested an adjournment, which was refused.  The Defendant made an oral application for the credit hire company that supplied the Claimant with a hire car (“Crystal Car Hire”) to be added to the proceedings for the purposes of costs only (pursuant to CPR 46.2), which was acceded to by the court.  Directions were given and the application for a non-party costs order (“NPCO”) against CCH reached a hearing on the 8th of September 2023.  The matter was heard by District Judge Ross, sitting in the County Court at Brentford.

The Law

The jurisprudence has developed significantly over the past 25 years or so, with each authority adding its own particular layer.  Above all, two things stand out.  Firstly, that each case will be determined upon its own facts and merits.  There isn’t a one-size-fits-all formula.  Secondly, as had been said repeatedly throughout the authorities, the only immutable feature of the discretion to make a NPCO is that it must be just to do so.

The higher courts have warned that the jurisprudence is at risk of being overcomplicated by authority.  The simple position, it is suggested, is that a NPCO order will be appropriate where:

  • a non-party has a financial interest in the litigation, and
  • either stands to benefit from it, or substantially controls it, or is the real party to the litigation.

Guidance regarding NPCOs is found in the Privy Council decision of Dymocks Franchise Systems v Todd (Costs) [2004] UKPC 39 at 25, per Lord Brown:

  • Though such orders are “exceptional”, this only means that the case is outside the ordinary run of cases which parties pursue or defend for their own benefit and at their own expense. The ultimate question in any such exceptional case is whether in all the circumstances it is just to make the order.
  • Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party’s costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is “the real party” to the litigation, a concept repeatedly invoked throughout the jurisprudence-see, for example…Millett LJ’s judgment in Metalloy Supplies v M.A. (UK) Ltd [1997], Court of Appeal, 1 WLR 1613…

In Metalloy it was said that the jurisdiction to grant a NPCO may be considered in a wide variety of circumstances where the third party is considered to be the “real party” interested in the outcome of the suit (at 1620, per Millett LJ).

Other notable decisions from the Court of Appeal (and this is not intended to be an exhaustive list) include Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23 and Farrell & Anr v Direct Accident Management Services Ltd & Anr [2009] EWCA Civ 769.

In Deutsche Bank, the Court of Appeal stressed that the crucial factor was the nature and degree of the non-party’s connection with the proceedings, as ultimately that will determine whether it is appropriate to adopt the summary procedure envisaged in the authorities.

In Farrell, a clause of the hire agreement demonstrated that the initiation and prosecution of the claim were the direct consequence of the hire of a car to the claimant, and that the hire company was in a real sense the instigator of the litigation.  The claim was prosecuted by the solicitors at the behest of the hire company, because that was what the clause provided.  If and insofar as the hire company left it to the solicitors to get on with the claim, that was not inconsistent with the control of the litigation by the hire company, for which the hire agreement provided (see, in particular, the judgment of Sir Andrew Morritt, at paragraphs 14 and 17)


It is important to note that the CPR expressly includes claims for credit hire as examples of claims made for the financial benefit of a person other than the claimant (44PD 12.2).  This rule is in the context of exceptions to the QOCS provisions (CPR 44.16(2)(a)), however there is no suggestion that it applies only to claims caught by QOCS.  Indeed, that was the decision of Turner J in Select Car Rentals (North West) Ltd v Esure [2017] EWHC 1434 (QB) where it was held that the jurisdiction to make a NPCO had not materially been altered by the QOCS rules.

It was said that ‘In a conventional credit hire case, the claim for the hire charges will be made for the financial benefit of the credit hire organisation. In this regard the Practice Direction, in my view, amounts to little more than a statement of the obvious. The party making the claim for costs against the credit hire organisation does not have to prove that the actual agreement was a profitable one as District Judge Avent appears to have held to be the case. The financial benefit is made out because, however good or bad the original deal, it is to the financial benefit of the credit hire organisation to recover the monies due under the hire agreement through the process of the claimant’s litigation. Some money is better than no money’ (at para 32).

The County Court has also yielded results for NPCO applications against credit hire companies, notably Watson v Nationwide Accident Repair Services & Progress Vehicle Management (unreported, 04 January 2018, County Court at Stockport), a claim where the credit hire charges claimed were £17k out of a total claim of £25k.  District Judge Lettall approved of the judgment in Select Car Rentals and found that, in exercising the discretion under section 51 of the Senior Courts Act 1981, the court should take into account 2 features: (1) Does the non-party have a financial benefit from the proceedings, and (2) Whether it is just to make an order for costs against the non-party?

In relation to (1) he said that ‘…the answer is inevitably, yes. The second defendant in this case has a significant financial benefit from these proceedings, seeking to recover in excess of £17,000 in respect of its credit hire charges. The suggestion that essentially, those are damages that have been recovered by the claimant in respect of the claimant’s liability to the second defendant, in respect of those credit hire charges, in my judgment, flies in the face of reality. The true nature of the agreement that exists between the claimant and the second defendant, is demonstrated by the terms of that credit hire agreement…’ (at paras 6-7)

(2) ‘…which I now turn to, because the second limb that I should consider is whether or not it is just to make an order for costs against a non-party? In this context, in this particular case, those features which, in my judgment, are of particular significance are the extent to which the non-party has control of the litigation and control of the damages. Consideration of the agreement that existed between the claimant and the second defendant, demonstrates that the second defendant had ultimate and indeed, total control, both of this litigation and of the damages.’ (at para 7).

The Index Case

The insurer defendant argued that a NPCO should be made against CCH for the following main reasons:

  • The case was outside the ordinary run of cases which parties pursue or defend for their own benefit and at their own expense.
  • The Third Party stood to benefit from the proceedings as, essentially, 100% of the damages claimed were payable to it (excluding the £30 for telephone and postage etc, which was likely to be irrecoverable in any event).
  • The Third Party substantially controlled the proceedings.  This was premised on the following facts:

(a) The signed hire agreement between the Claimant and CCH contained a term providing that “I authorise CCH Ltd and/or its nominated solicitors to act on my behalf to pursue a claim for my uninsured losses.  I further authorise that any cheque in settlement of my claim should be utilised to discharge any outstanding accounts incurred by me and thereafter CCH Ltd shall account to me for the balance of any unrecovered losses.  I have read and understood this agreement and agree to be bound by the terms and conditions therein.”

(b) There was a mitigation questionnaire/statement, where the Claimant verified that he understood his duty to mitigate, that he had no choice but to hire the car, and that there were no other vehicles available for his use. This, the Defendant submitted, was a condition precedent of the hire – without it, there would be no hire and so, without it, there is no claim (or no viable claim, at least).  The document was signed by the Claimant and by CCH as well.

(c) Basic hire rate evidence was supplied by CCH itself in order to support the claim.  Clearly, the provider of this evidence (CCH) was the party that potentially stood to gain by its production.

(d) It was likely that there was a nexus between the Claimant’s solicitors and CCH: If it was to be accepted that CCH was instructed to provide basic hire rate evidence organically by the Claimant’s solicitors, then it was unusual that there was no invoice for the service in evidence.  Nor was there any mention of a charge having been levied in the statement in support of CCH’s resistance to the NPCO. The most likely reason for CCH providing the BHR evidence was that it stood to benefit financially by doing so.

It was more likely that CCH had an ongoing relationship with the Claimant’s solicitors. CCH is based in Barking (IG11 0HE) and Kingdom Law in Ilford (IG1 2JF), less than two miles away.  The Claimant lived in Hounslow, clear on the other side of London, 33 miles away from his solicitors.  The Defendant submitted that the chances of the Claimant organically selecting CCH to hire him a car, and organically instructing Kingdom Law to pursue his claim, and there being no connection between CCH and Kingdom Law, were vanishingly small.

(e) Pursuit of the litigation was an essential component of CCH’s agreement with the Claimant: CCH could not have expected to recover the £26,730 of charges from the impecunious Claimant. Rather, it always intended to pursue the Defendant for recovery of those charges and to maintain a contractual right to control the litigation, as reflected by the terms of said agreement.

The Decision of District Judge Ross

District Judge Ross acceded to the application for a NPCO against the credit hire company (CCH)

In consideration of the guidance from Dymocks, the District Judge directed himself that, firstly, the ultimate question was whether it was just to make the order sought, and that this would be fact specific.  Secondly, that the discretion was not exercised against pure funders (those who do not stand to benefit from the litigation).  Thirdly, that if the non-party not only funds, but also controls the litigation, it was not so much facilitating access to justice but, rather, gaining it for themselves.  In those circumstances, the non-party would be the real party.  Fourthly, a non-party should not be ordered to pay costs if those costs would have been incurred even without their involvement.  The District Judge held that it was not a pre-requisite, nor a jurisdictional requirement, for a non-party to be a funder.

The District Judge considered the evidence from CCH, resisting the application for the NPCO.  Its case was that: CCH had acted professionally throughout, that they were not a party, that they did not fund the litigation, and that the solicitors were the Claimant’s solicitors, and not CCHs.  CCH averred that the “Statement of Facts” (part of the hire agreement signed by the Claimant) meant that CCH could not be liable for the Defendant’s costs.  CCH submitted that it had been instructed by Kingdom Law (the Claimant’s solicitors) to provide basic hire rate evidence, which was part of the services they offered.  That all hire charges were recoverable from the Claimant, as were any recovery/storage charges.  They did not seek payment of those charges from any other party.  CCH said that they had received no financial benefit from the claim and that it would be unjust for them to be ordered to pay the costs.

Taking into account all the evidence and the submissions, the District Judge held that a NPCO should be made for 100% of the costs assessed as payable.  His reasons were that:

(1) It was an exceptional case – there was no benefit for the Claimant.  The District Judge recognised that the ultimate question was whether it was just to make the order, but on the facts he found that it would be just.

(2) The District Judge accepted the argument that CCH stood to benefit to the tune of 100% of the damages claimed.  If the trial had gone ahead, and damages recovered, any damages paid, were payable to CCH under the terms of the hire agreement – a contractual term required any cheque in settlement to be paid to CCH, who would pay any balance to the Claimant.

(3) The evidence showed that CCH substantially controlled the proceedings – this was evident from the contract clause in the hire agreement authorising CCH to act on the Claimant’s behalf.  Insofar as CCH relied on the “Statement of Facts” to assert that it was not possible for CCH to be liable in law for the Defendant’s costs, this was incorrect.  Firstly, the statement of facts did not alter the contractual obligations and rights under the hire agreement, nor vary them.  Not least because no consideration had passed from one party to the other.  The Statement of Facts document had no effect on the contractual position.  Although CCH was not a party, the hire agreement authorised CCH to nominate solicitors to act on behalf of the Claimant – the inference was that those solicitors were nominated by CCH.  It was also relevant that CCH provided basic hire rate evidence on behalf of the Claimant.

(4) The District Judge concluded that it was just to make the order because the facts were stark – there was no personal injury claim or repair claim.  In addition, pursuit of the litigation was an essential part of the business model as CCH could not recover charges from the impecunious claimant.  The authority to control the litigation, granted by the hire agreement was a substantive tool.

(5) The funding of the claim: CCH denied that it had any knowledge of how the claim was funded.  The District Judge decided that he did not need to find that CCH did, in fact, fund the litigation.  However, he nonetheless found that it was likely that CCH were part of a business relationship where fees were paid to Kingdom Law by one means or another.  He held that it was likely that there was a nexus between them both, on the balance of probabilities.  This inference arose due to Kingdom Law instructing CCH to provide basic hire rate evidence, which the District Judge found to be extremely strange, if not bizarre, evidence.  Not least because such evidence would be seen as self-serving.  The location of CCH was very close to the Claimant’s solicitors.  That coincidence was too great.  The Claimant was based in Hounslow.  The proximity led to the conclusion that there must be a nexus between CCH and the solicitors.  Finally, the Claimant was impecunious, and his court fees were paid by “Help With Fees”.  There was no evidence of a CFA agreement, however, it was likely that this was part of the business model for the solicitors, that if the claim for credit hire was successful, they would obtain their fees. After all, they were nominated by CCH.


  • Credit hire companies are not immune from non-party costs orders.
  • The fact that credit hire companies are specifically referred to as examples of claims made for the financial benefit of a person other than the claimant is relevant in NPCO applications.
  • It is immaterial whether a particular claim falls within the QOCS regime.
  • Contractual terms giving a credit hire company the right to conduct litigation, or nominate solicitors on behalf of a claimant, or have control over the apportionment of damages, is likely to be powerful evidence to support the contention that the credit hire company controlled the litigation.
  • Facts indicating a nexus between the credit hire company and a claimant’s solicitors might also be persuasive evidence in establishing the same conclusion.
  • Where the non-party is the “real party” to the litigation, a NPCO is likely to be made.
  • If the the claim is for credit hire only, it is persuasive evidence that the credit hire company is the real party to the litigation.  The same may be true even where there are other claims, say for repairs and/or personal injury, but the claim for credit hire makes up the lion’s share.
  • Funding of the litigation is not essential, in the sense of being a jurisdictional pre-requisite to the exercise of the court’s discretion (per Longmore LJ in Petromec Inc v Petroleo Brasileiro SA Petrobras (No 4) [2006] EWCA Civ 1038, at para 10).

The ultimate question in determining whether a NPCO order should be made will always be whether, on the specific fact of the case, it is just to do so

Featured Counsel

Bernard Pressman

Call 2004

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