Home / Insight / CHO hit by non-party costs order as esure and Keoghs secure significant win

CHO hit by non-party costs order as esure and Keoghs secure significant win


Keoghs counter-fraud and esure have won an important judgment following the application for a non-party costs order against Direct Accident Management Ltd (DAML). The decision, made at an application hearing, found that DAML were the real party in the case in question and that the claim was brought by the CHO for their own benefit, with the judge stating that their involvement was “without a shadow of a doubt” causative of esure incurring costs.

The decision is important for insurers, reinforcing the recent judgment of Mr Justice Turner in Kindertons, and stepping away from the previous precedent set in XYZ v Travelers.


The initial claim was made after esure’s insured driver had knocked over a parked moped when gently reversing their vehicle. Despite the moped being in the possession of a male at the time of the incident, the claim was presented by a female who stated the moped was hers, and that it was knocked over and damaged. Proceedings were brought for the write-off value of the moped, recovery and storage charges, plus credit hire for a replacement vehicle.

The claimant was represented by Bond Turner solicitors and the hire was provided by DAML, both part of the Anexo Group plc.

Strike out

The claim was defended on grounds of fraud and allocated to the small claims track, meaning that very limited fixed costs applied. Shortly before trial, but after the exchange of evidence was due, Keoghs received notice that Bond Turner had removed themselves from the court record as acting for the claimant - despite the solicitor playing a very active part in the case up to that point. As such, the claimant served no evidence. However, they did turn up at court for the trial, which the judge adjourned on the basis that the claimant had one last chance to serve her evidence. None was forthcoming and so the claim automatically struck out.

Non-party costs order

At this point Keoghs advised esure on the prospect of bringing a non-party costs order (NPCO) against DAML on the basis that:

(a) They were the real party in the case
(b) The claim was generated by DAML, made at its instigation, and brought for its benefit
(c) DAML’s involvement was causative of esure’s loss (of costs)

As a small claims track case, costs would not ordinarily be recoverable. However, when applying to join DAML as a party to determine any costs liability, an order was also sought that that the usual costs rule be reversed, given the claimant’s conduct in bringing the claim and then allowing it to be struck out.

DAML consented to being joined as a party, with a hearing to determine their liability. An order was secured confirming that the claimant’s conduct amounted to unreasonable behaviour within the meaning of CPR r.24.14(2)(g) - lifting the usual costs recovery rule.

The court therefore assessed esure’s costs against the claimant at £8,436, plus the claimant was ordered to repay the without prejudice payment for the motorcycle (to stop hire ongoing) of £937 plus interest.

As such, the claimant’s liability for costs had crystallised and the only remaining question was whether DAML had any liability to pay some or all of those costs, and to what extent.

Contested application

The determination application was listed for hearing on 4th March 2024. Only a few days before this, DAML indicated that they intended to contest the application – not a surprise given they had been looking for cases to challenge which would set a new precedent. This was a prime candidate for such a strategy, given it was a small claim so costs should not usually apply, and Bond Turner had stopped acting for the claimant so it could not be said that DAML were the ‘real party’. Indeed, that was the basis of their defence i.e. DAML were not the real party, their involvement in the case was not causative of esure incurring costs, and esure were not entitled to costs anyway because this was a small claim.

While there were a number of clear authorities which supported esure’s position, there were also some conflicting authorities which Keoghs argued should be distinguished on the facts. In particular, those cases which involved a liability dispute or significant other heads of loss such as injury. In this case, there was no liability dispute and the hire claim constituted 86% of the whole.


Finding for esure, the judge:

  1. Broadly accepted the defence’s characterisation of the facts, in particular DAML’s business model which seeks out customers who are impecunious.
  2. Accepted its legal analysis to a significant degree.
  3. Accepted its argument that the absence of a PI claim was an important factor making the case for a NPCO stronger than in the general run of such applications against CHOs.
  4. Rejected, by reference to Gass, DAML’s argument that Farrell and Mee v Jones were no longer good law in light of XYZ v Travelers.
  5. Distinguished the case of Smithson produced by DAML on the day.
  6. Accepted the defence’s argument that the claim was generated by DAML, made at its instigation, and brought for its benefit.
  7. Found “with no hesitation whatsoever” that DAML was the real party.
  8. Found “without a shadow of a doubt” that DAML’s involvement was causative.

The judge ordered DAML to pay 86% of the assessed costs of £8,436, plus esure’s costs of the application, assessed at £6,000. He refused DAML permission to appeal.

It is also worth noting that costs were recovered on an hourly rate despite being a small claims track matter.

In terms of impact on future cases, this followed the recent decision of Mr Justice Turner in Kindertons and stepped away from XYZ v Travelers. This is helpful to defendants and follows both earlier precedent and the relevant Practice Direction.

DAML have paid the costs.


Keoghs Head of Motor and Counter-Fraud, Damian Ward, commented:

“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 DAML’s attempt to create a new precedent did not succeed”.


Andrew Nixon, esure’s Fraud Operations Manager, stated:

“This is an extremely welcome outcome which endorses our approach to tackling unmeritorious hire claims driven by the CHO.” 


Damian Ward

Damian Ward
Head of Motor and Counter-Fraud

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