Defendants are entitled to pre action disclosure of impecuniosity evidence

EUI Limited v Charles & Others [2018] Cardiff County Council

Executive summary

This update discusses the recent decision of His Honour Judge Robert Harrison in the Cardiff County Court when determining seven pre-action disclosure applications made by the applicant, EUI Limited, for disclosure of financial documents in credit hire cases involving DAML and Bond Turner.

Facts

Pre-action disclosure applications were made in each matter seeking bank statements and wage slips. Ordinarily, a defendant cannot apply for disclosure of documents prior to an acknowledgement of service or a defence being filed the exception to that rule being s.52(2) of the County Courts Act 1984 and CPR 25.1 which deals with interim remedies.

In these separate matters, EUI Limited utilised CPR 31.16 (3)(a)–(d) which sets out the criteria to be met for a pre-action disclosure application. EUI Limited met the jurisdictional requirements of CPR 31.16(a)–(d) as:

1. EUI Limited would likely be the defendant in any future proceedings issued by the respondents; and
2. The respondents would likely be the claimants in any proceedings issued against EUI Limited; and
3. If proceedings had been issued, standard disclosure would cover the financial documents sought as the claims involved credit hire; and
4. Disclosure would be desirable to dispose fairly of the anticipated proceedings, and assist in resolving the dispute without proceedings and save costs.

The application having met the jurisdictional threshold, the applicant maintained that the court should use its discretion to allow the applications because:

1. The documents sought were directly relevant to a key issue of financial significance in each case;
2. The applications followed the advice of Lord Nicholls in Lagden;
3. EUI Limited could not assess the claimants’ means at proportionate costs without this information;
4. Disclosure of the documents sought was not onerous and are simple to obtain;
5. Disclosure furthers the overriding objective in allowing informed pre-action offers to be made;
6. The overriding objective is served as allowing disclosure allows any defence in future proceedings to focus on the issues in the case; and
7. There were good reasons to order disclosure in DAML cases whose business model is based on the impecunious motorist.

His Honour Judge Robert Harrison, in granting the applications for pre-action disclosure accepted EUI Limited’s submissions that the jurisdiction test had been met and that the court had discretion as:

“Considering whether to exercise its discretion the court must have regard to all the circumstances including the reality of this type of litigation. The Claimants, whilst they remain individuals, have effectively entered into a contractual arrangement that allows DAM to manage their claims as evidenced in the terms and conditions of the agreements annexed to the witness statement of Ms Wong (see clause 5). From the documentation analysed above DAM’s aim is to pursue claims on behalf of impecunious Claimants. That is the basis upon which credit facilities are extended and to put it colloquially, that is the whole point of the exercise. It might be said that from the very moment that the accident occurs the financial means of the Claimant are relevant. DAM want impecunious motorists as clients because they fit their business model. Certainly, when a claim is intimated they become relevant to the insurer because their impecunious status is central to the basis of valuation of the claim”.

Comment

This is an important decision for defendants in credit hire claims, and one that supports decisions that Weightmans have obtained previously in lower courts when making similar applications for pre-action disclosure of the claimant’s financial records. A part of EUI Limited’s application used DAML’s own business model “that of the provision of credit hire vehicles to impecunious claimants” as justification for the court to order the pre-action disclosure of financial documents, as ultimately this would assist a defendant insurer in making an informed offer or obtain BHR evidence with which to challenge the claimed rate of hire.

This decision is applicable to any credit hire claim presented by a Credit Hire Organisation (“CHO”) that is not being dealt with under the ABI GTA agreement, the issues of need, period and rate always being at the heart of any credit hire claim. Typically, there is little or no negotiation by CHOs or their representatives on non-GTA claims and any requests for disclosure of financial documentation in support of an allegation of impecuniosity are either ignored or refused, the typical response being “these will be provided when ordered to by a court”

There is now a strong authority for defendants to refer to when requesting such documentation pre-issue and defendants should not avoid threatening, and then making, a pre-action disclosure application for disclosure of financial documentation to enable them to assess a claim presented for credit hire.

For further information or assistance on any of these issues please contact:

Charles Williams, Partner
charles.williams@weightmans.com
0151 242 7961

Adam Skelland, Solicitor
adam.skelland@weightmans.com
0151 242 6857