In Tescher v Direct Accident Management Ltd; AXA Insurance UK Plc v Spectra Drive Ltd [2025] EWCA Civ 733, the two cases involved road traffic accident (RTA) claims for personal injury and credit hire costs. Costs orders were made against the claimants, but these could not be enforced due to the qualified one-way costs shifting (QOCS) scheme. The defendants applied for non-party costs orders against the credit hire company, but were refused.
Therefore, the question before the court was: if a credit hire case fails, when should the credit hire company be liable for the defendant’s costs?
Lord Justice Birss, giving the main judgment, said: ‘Anecdotally, credit hire RTA cases represent a significant volume of the trial work of district judges, outside the small claims track.’ He gave guidance on credit hire RTA cases—a staple of the district judge diet.
Birss LJ suggested judges approach the use of their discretion on QOCS in two steps. First, should a non-party costs order of some kind against the credit hire company be made? Second, how much?
Birss LJ said that ‘absent some reason why not, when a claimant has been ordered to pay the costs and QOCS applies, a non-party cost order against the credit hire company is likely’. He stated that a non-party costs order will usually be made ‘absent special circumstances’.
The court granted Tescher’s insurer Admiral a non-party costs order for all the defendant’s costs, and AXA an order for 65% of defendant’s costs.
Graeme Mulvoy, partner at HF, acting for Admiral, said: ‘It was right for us to leapfrog this case to the Court of Appeal and this decision will hopefully see more discipline from credit hire organisations when pursuing unmeritorious claims given the risks associated with that approach.’
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