Credit hire organisation found to be the Dominus Litis: a double-headed victory for DAC Beachcroft Credit Hire, Scotland

Published 16 enero 2020

The Dominus Litis is a person whom, while not being a named party in an action, has a direct interest in it and has control and power over the proceedings and therefore has liability for the expenses of the action.

Defenders have long held the view that that credit hire organisations are the ‘true’ Pursuers in court actions raised to recover credit hire and credit repair costs, claims which are not infrequently viewed as inflated. The argument that credit hire organisations are in fact the Dominus Litis has not previously found favour with the courts in Scotland: things have changed following the acceptance of arguments raised on behalf of the Defenders in this action by DAC Beachcroft.

Joining a Third Party into an action brings with it the risk of the Defender being liable for their costs.  The result of the decision in this case is that the court has accepted that there are circumstances in which a Defender having reasonably joined a Third Party to the action will not be responsible for their costs.

Moles v Cook, Chubb European Group and Moles (Third Party) EDI-A542/18, Sheriff McGowan.

An action was raised by the Pursuer for credit repairs and credit hire following a collision involving her vehicle and one driven by the First Defender, Mr Cook. The Second Defenders, the insurer, served a Third Party Notice and a Specification of Documents on the Pursuer’s husband who was driving his wife’s vehicle at the time of the collision.  Once served, Mr Moles contacted the Defenders and wished to make it clear that he had received the hire car on a ‘no win no fee’ basis and that he had been told he did not need to pay for it. He was advised by the Defenders to instruct solicitors.  Having done so defences were lodged on his behalf, reitering his position.

DAC Beachcroft on behalf of its clients mounted a defence on issues of impecuniosity, hire rates, duration and enforceability of the hire agreement. They maintained that the hire agreement had been entered into by Mr Moles, who had signed it and taken receipt of the hire vehicle.  Mrs Moles was referred to as a ‘non driver’ on the hire agreement and signatures were illegible as well as incorrectly placed to constitute an agreement.

Following the evidence of Mr & Mrs Moles in which they averred that they had not knowingly entered into a hire agreement and had been advised that there would be no fee (and other witnesses) at Proof, Counsel for the Pursuer was asked to take instructions on a potential conflict of interest between the Pursuer, her agents and the Credit Hire Organisation.  They confirmed that there was no conflict and continued to take evidence from employees of the Credit Hire Organisation (or closely connected companies).  Those witnesses, presented by Accident Exchange, gave evidence which was of no real assistance to the court.

With one day complete a second diet was assigned to take evidence from the First Defender on liability only and submissions to be made to the court.  Prior to the continuation the Pursuer abandoned the action, expenses being granted to the Defenders.  However, with no finding on liability, the Defenders found themselves liable for the Third Party’s costs. The Third Party’s involvement in the case concluded and they made no further appearance thereafter.

Given the circumstances of the claim DAC Beachcroft lodged a motion seeking to hold the Credit Hire Organisation as the Dominus Litis in the litigation. The motion also sought to find the Credit Hire Organisation liable to the Defenders for their liability for the Third Party’s expenses. The Credit Hire Organisation sought separate representation and at the hearing on the Motion admitted that they were the Dominus Litis and agreed that the Sheriff had discretion to grant expenses against them.

Sheriff McGowan noted that it was clear from the commencement of the action that the Pursuer was not in control of the proceedings but rather that it was the Credit Hire Organisation. The content of the credit hire and repair agreements clearly pointed to them meeting the description of Dominus Litis and that the agreements were therefore unenforceable and improperly executed.

The decision confirms that credit hire companies can no longer hide behind a Pursuer.  It also provided clarity on situations where it should be within the contemplation of a pursuer that the Third Party procedure may be invoked and the possibility therefore arises that they may have to meet both the Defenders and the Third Party’s costs.

This welcome and significant decision lays down a number of important points to be taken into account in future cases;

1. Credit Hire companies’ involvement in claims may be scrutinised by the courts, especially their relationship to the hirer and the advice they provided when the hire agreement was entered into.
2. Cases where the hire agreement is incorrectly constituted should be studied closely. DAC Beachcroft have recently won a number of cases where the hire agreement has been held unenforceable due to the content and manner of execution. 
3. Clients of DAC Beachcroft, both insurers and their insureds have taken a hard line in defending credit hire actions. By carefully selecting, on the basis of advice received from DAC Beachcroft, cases to push to proof they have sent out a clear message that they will not ‘roll over’ on claims for highly inflated charges of which Pursuer is commonly unaware. In this they have been highly successful.
4. Credit hire organisations ought to be aware, before claims such as this are embarked upon, of the substantial costs risks that they now face.

Our credit hire team deal with cases such as this on a regular basis. For more information or advice, please contact one of our experts.