NORTHERN IRELAND UPDATE
Credit Hire and Northern Irish Procedure: Tescher v Direct Accident Management Ltd
By Jonathan Calvert, Partner – Defence Litigation, Johnsons Solicitors
The E&W Court of Appeal's decision in Yehuda Tescher v Direct Accident Management Ltd [2025] EWCA Civ 733 has generated considerable interest among those who deal with credit hire litigation. While the case originates in England and Wales, it prompts useful reflection on the procedural differences in Northern Ireland, particularly in the recovery of costs.
The Court in Tescher considered when a credit hire company can be made liable for a defendant’s costs under a non-party costs order (NPCO). The decision has significant consequences for the operation of Qualified One-Way Costs Shifting (QOCS), which does not apply in Northern Ireland, and for credit hire litigation more broadly.
The Tescher Decision
The claim in Tescher arose from a road traffic accident. The claimant sought damages primarily comprising credit hire charges. The claim was dismissed, and the defendant sought a non-party costs order against the credit hire company, Direct Accident Management Ltd.
The Court of Appeal introduced a two-stage test for non-party costs liability:
Is the non-party the “real party” to the litigation?
If so, what proportion of the defendant’s costs should the non-party bear?
The Court agreed with the trial judge that Direct Accident Management Ltd was the "real party" to the litigation. The company had a direct financial interest in the outcome, and litigation was the only realistic means of recovering its charges. The Court concluded that Direct Accident Management Ltd’s role went beyond that of a passive funder: it controlled and stood to benefit from the claim.
Accordingly, the Court made a non-party costs order. In one instance, 100% of the defendant’s costs were awarded against Direct Accident Management Ltd; in another, 65%, reflecting the extent of the hire charges within the claim.
The QOCS and Non-Party Costs Context: England & Wales vs Northern Ireland
In England & Wales, QOCS protects claimants in personal injury cases from paying defendants’ costs if they lose, unless exceptions apply. However, QOCS does not extend to non-parties, such as credit hire companies, which means defendants can pursue these entities for costs.
Northern Ireland has no QOCS regime, which in theory means that plaintiffs are personally exposed to costs liability, and defendants can (and often do) recover costs in failed or discontinued actions.
As many insurers and defence practitioners will be aware however, in practice, this is not so simple:
· Credit hire companies are effectively shielded by impecunious plaintiffs who have no means to satisfy costs orders.
· Even where the hire company drives and controls the litigation, defendants have no direct route to hold them financially accountable.
· This can therefore unfortunately encourage speculative or inflated credit hire claims, placing defendants at risk of unrecoverable costs despite winning.
Northern Ireland and Non-Party Costs Orders
While non-party costs orders are well documented in E&W, Northern Ireland lacks a “well-trodden”, equivalent procedural route.
Section 59 of the Judicature (Northern Ireland) Act 1978 provides that “the costs of and incidental to all proceedings… shall be in the discretion of the court and the court shall have power to determine by whom and to what extent the costs are to be paid.”
Arguably, this was a similar beginning to the framework used in England and Wales for non-party costs orders, however section 46.2 of the Civil Procedure Rules in England & Wales specifically deals with non-party costs orders, now assisting in their practical application before the courts. Whether the Northern Irish courts would be willing to adopt a similar approach considering the persuasive reasoning in Tescher, remains an open question.
What next for NI?
While the Tescher decision does not bind courts in Northern Ireland, it casts a spotlight on the current imbalance faced by defendants here. In the absence of QOCS, successful defendants can theoretically recover costs from unsuccessful plaintiffs in credit hire cases, but in reality, this is often illusory where the plaintiff is impecunious. In an era of increasingly commercialised litigation, there is need for:
Introducing express powers to make non-party costs orders in limited circumstances;
Ensuring greater transparency in litigation funding, especially in credit hire claims; and
Providing courts with the means to ensure costs liability aligns with commercial interest and control.
As I see it, there is a growing case for reform and/or judicial clarification in Northern Ireland. In the meantime, defendants and insurers must continue to closely scrutinise the role of credit hire companies in litigation and preserve evidence that might, eventually, support an application to pierce the procedural veil.
If you would like any further information or have any questions regarding credit hire claims in Northern Ireland, please contact Jonathan Calvert from our Litigation Team.
* This information is for guidance purposes only and does not constitute, nor should be regarded as a substitute for taking legal advice that is tailored to your circumstances.