Giles v Thompson [1993]: What It Settled

§ 01What was the case about?

Two conjoined appeals in which non-fault drivers had been supplied with replacement cars by credit hire companies, with the charges to be recovered from the at-fault drivers' insurers. The insurers argued the arrangements were champertous — that the hire companies were improperly funding and controlling litigation for a share of the proceeds — and alternatively that the claimants had suffered no loss, since they had paid nothing and might never be pursued.

§ 02What did the court decide?

The House of Lords rejected both attacks. On champerty: the hire companies had a legitimate business interest in supplying vehicles and recovering their charges; the arrangements did not corrupt or commodify litigation, and public policy did not condemn them. On loss: the claimant's liability to pay the hire charges under the agreement was genuine, so the claim was for a real loss, and the motorist could recover the charges for the benefit of the hire company. Lord Mustill gave the leading speech.

§ 03What did it change in practice?

It gave the credit hire model its legal foundation. Every subsequent credit hire claim rests on the two propositions confirmed here: the arrangement is lawful, and the hirer's contractual liability is a recoverable loss. The battleground then moved — permanently — from whether credit hire charges are recoverable to how much of them is, which is the subject of the later authorities.

§ 04Which later cases applied it?

Dimond v Lovell (2000) took the model's legality as settled and fought instead over enforceability and the recoverable rate; Lagden v O'Connor (2003) built the impecuniosity exception on the same foundation. Giles remains the answer to any suggestion that credit hire is itself improper.

§ 05Related reading on this site

Is credit hire safe? The catch · How much does credit hire cost?