[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	United Kingdom House of Lords Decisions
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Giles v Thompson [1993] UKHL 2 (26 May 1993) URL: http://www.bailii.org/uk/cases/UKHL/1993/2.html Cite as: [1994] 1 AC 142, [1994] AC 142, [1993] 3 All ER 321, [1993] UKHL 2

[New search] [Buy ICLR report: [1994] 1 AC 142] [Help]

Parliamentary Archives,
HL/PO/JU/18/253

Giles (Respondent) v. Thompson (Appellant)
Devlin (Respondent) v. Baslington (Appellant)

(Conjoined Appeals)

JUDGMENT

Die Mercurii 26° Maii 1993

Upon Report from the Appellate Committee to whom was
referred the Cause Giles against Thompson and Devlin against
Baslington, That the Committee had heard Counsel as well on
Monday the 22nd as on Tuesday the 23rd, Wednesday the 24th and
Thursday the 25th days of February last upon the Petitions and
Appeals of Vanessa Thompson of 32 Bexfield Close, Allsley
Village, Coventry and Roy Baslington of 7 Edgeway Road, Hawkley
Hall, Wigan, praying that the matter of the Orders set forth in
the Schedules thereto, namely Orders of Her Majesty's Court of
Appeal of the 11th day of January 1993, might be reviewed before
Her Majesty the Queen in Her Court of Parliament and that the
said Orders might be reversed, varied or altered or that the
Petitioners might have such other relief in the premises as to
Her Majesty the Queen in Her Court of Parliament might seem meet;
as upon the case of Christine Giles and Janice Ann Devlin lodged
in answer to the said Appeals; and due consideration had this day
of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and
Temporal in the Court of Parliament of Her Majesty the Queen
assembled, That the said Orders of Her Majesty's Court of Appeal
of the 11th day of January 1993 complained of in the said Appeals
be, and the same are hereby, Affirmed, except that in the case
of Devlin v. Baslington that part be set aside which affirms the
Judgment of His Honour Judge Hardy of the 6th day of October 1992
which declared the respondent entitled to recover interest on the
car hire charges, and that the said Petitions and Appeals be, and
the same are hereby, dismissed this House: And it is further
Ordered, That the Appellants do pay or cause to be paid to the
said Respondents the Costs incurred by them in respect of the
said Appeals, the amount thereof to be certified by the Clerk of
the Parliaments if not agreed between the parties.

Cler: Parliamentor:

Judgment: 26 May 1993

HOUSE OF LORDS

GILES
(RESPONDENT)

v.

THOMPSON
(APPELLANT)

DEVLIN
(RESPONDENT)

v.

BASLINGTON

(APPELLANT)

(CONJOINED APPEALS)

Lord Keith of Kinkel
Lord Ackner
Lord Jauncey of Tullichettle
Lord Lowry
Lord Mustill




LORD KEITH OF KINKEL

My Lords,

For the reasons given in the speech to be delivered by my noble and
learned friend Lord Mustill, which I have read in draft and with which I
agree. I would dismiss these appeals.

LORD ACKNER

My Lords,

I have had the advantage of reading in draft the speech prepared by my
noble and learned friend, Lord Mustill. I agree with it and for the reasons he
gives I too would dismiss these appeals.

- 1 -

LORD JAUNCEY OF TULLICHETTLE

My Lords,

I have had the advantage of reading in draft the speech prepared by my
noble and learned friend, Lord Mustill. I agree with it and for the reasons he
gives I too would dismiss these appeals.

LORD LOWRY

My Lords,

I have had the advantage of reading in draft the speech prepared by my
noble and learned friend. Lord Mustill. I agree with it and for the reasons he
gives I too would dismiss these appeals and make the order which he
proposes.

LORD MUSTILL

My Lords,

The crimes of maintenance and champerty are so old that their origins
can no longer be traced, but their importance in medieval times is quite clear.
The mechanisms of justice lacked the internal strength to resist the oppression
of private individuals through suits fomented and sustained by unscrupulous
men of power. Champerty was particularly vicious, since the purchase of a
share in litigation presented an obvious temptation to the suborning of justices
and witnesses and the exploitation of worthless claims which the defendant
lacked the resources and influence to withstand. The fact that such conduct
was treated as both criminal and tortious provided an invaluable external
discipline to which, as the records show, recourse was often required.

As the centuries passed the courts became stronger, their mechanisms
more consistent and their participants more self-reliant. Abuses could be
more easily detected and forestalled, and litigation more easily determined in
accordance with the demands of justice, without recourse to separate
proceedings against those who trafficked in litigation. In the most recent
decades of the present century maintenance and champerty have become
almost invisible in both their criminal and tortious manifestations. In practice,
they have maintained a living presence in only two respects. First, as the
source of the rule, now in the course of attenuation, which forbids a solicitor
from accepting payment for professional services on behalf of a plaintiff



-2-

calculated as a proportion of the sum recovered from the defendant.
Secondly, as the ground for denying recognition to the assignment of a "bare
right of action." The former survives nowadays, so far as it survives at all,
largely as a rule of professional conduct, and the latter is in my opinion best
treated as having achieved an independent life of its own.

It therefore came as no surprise when Parliament, acting on the
recommendation of the Law Commission, abolished the crimes and torts of
maintenance and champerty: section 14 of the Criminal Law Act 1967. After
this, it might be supposed that the ancient crimes and torts would have
disappeared from general view, of interest only to any legal historian who
might aspire to build on the foundations laid by Sir Percy Winfield and Sir
William Holdsworth. Remarkably, this has proved not to be the case, and we
find that twenty five years after the Act of 1967 they are being ascribed a
vigorous new life, in a context as far away from the local oppressions
practised by overweening magnates in the Fifteenth Century as one could
imagine: namely, the temporary provision of substitute private cars to
motorists whose own vehicles have been put out of commission by road
accidents. The possibility of contending that a recovery of a particular head
of damage in the most everyday running down case is barred by this ancient
doctrine has been opened up by the qualifying words in section 14(2) of the
Act of 1967 which stipulated that the abolition of civil and criminal liability
"shall not affect any rule of "[the law of England and Wales]" as to the cases
in which a contract is to be treated as contrary to public policy or otherwise
illegal".

The question has arisen in this way. A substantial proportion of motor
accidents take place in circumstances where there is little room for doubt that
one party is exclusively to blame: typically, where the car of one driver
(hereafter "the motorist") is stationary, for example at a traffic light, and
where a car driven by another person ("the defendant") is carelessly driven
into the back of it. There are two types of damages which may be awarded
to the motorist in any resulting litigation. First, there are damages for any
personal injury which the motorist may have suffered. These will usually
comprise general damages for pain, suffering and loss of amenity, and special
damages for past and future loss of earnings. Secondly, there are damages
related to the loss of or damage to the motorist’s vehicle. These will or may
have two elements: a figure representing the diminution in value of the
motorist's vehicle, and another figure representing the financial loss suffered
by the motorist because he or she cannot use the vehicle whilst it is either
being replaced (if written-off) or undergoing repairs. In practice these various
elements are dealt with in various ways. The damage to the car itself is
settled between insurers, apart from the excess on the motorist's policy, which
he may not trouble to pursue except as an appendage to a larger claim. The
motorist's claims for personal injuries may be substantial in amount, and will
be made the subject of an action, if the motorist can finance the action either
from his own resources, or from some form of insurance, or (if he is of very
limited means) by legal aid.

- 3 -

There remains the claim for loss of use of the car. In principle, if
such a claim is made it will often be quantified by reference to the cost of
hiring a substitute vehicle, and will be recoverable upon proof that the
motorist needed a replacement car whilst his own was off the road. I say "if
such a claim is made" for two reasons. First, because the loss of use is not
recoverable under a comprehensive policy, so that there are no subrogated
insurers to stand behind the claim, and in situations where there is no personal
injury claim and where the damage to the motorist's vehicle is dealt with as
between insurers there are few motorists who will have the time, energy and
resources to go to law solely to recover the cost of a substitute vehicle.
Secondly, because there are many motorists who lack the inclination or the
ready cash to hire a substitute on the chance of recovering reimbursement
from the defendant's insurers. Thus, there exists in practical terms a gap in
the remedies available to the motorist, from which the errant driver, and
hence his insurers, frequently profit.

In recent years a number of commercial concerns (hereafter "the
companies") have identified this gap and have sought to fill it in a manner
advantageous alike to motorists and to themselves, by offering to motorists
with apparently solid claims against the other parties to collisions the
opportunity to make use of the company's cars whilst their own are off the
road. The terms on which this opportunity is given are said to be, in broad
outline, as follows-

1. The company makes a car available to the motorist whilst the damaged
   car is under repair.

2. The company pursues a claim against the defendant, at its own expense
   and employing solicitors of its choice, in the name of the motorist for loss of
   use of the motorist's car.

3. The company makes a charge for the loan of the replacement car,
   which is reimbursed from that part of the damages recovered by the motorist
   from the defendant or his insurers which reflects the loss of use of the
   motorist's car.

4. Until this happens the motorist is under no obligation to pay for the use
   of the replacement car.

5. These arrangements are conditional on the co-operation of the motorist
   in pursuing the claim and any resulting legal proceedings.

6. The companies aim to confine the scheme to cases where the motorist
   is very likely to succeed in establishing the defendant's liability, without any
   contributory negligence on the part of the motorist.

Transactions on these general lines have been entered into in large
numbers, to the discomfort of the defendants' insurers, who have been faced



-4-

with claims of which an element reflects the cost of a replacement vehicle
which would not have been hired but for the existence of the scheme. The
insurers have counter-attacked by alleging that the hiring agreements are
champertous and accordingly unlawful, or otherwise contrary to public policy.
Whilst no longer contending that actions which include an element of damages
referable to the charges made, or said to be made, by the companies are an
abuse of the process of the court, and should be therefore be struck out in
their entirety, the insurers say that damages cannot be awarded for the hiring
charges, since to do so would enable the motorist to rely on an unlawful
contract.




The consequence has been a large number of contests in the county
court which have understandably led to differing outcomes in the various
jurisdictions. A substantial body of unreported and inconsistent precedent has
been built up, creating a degree of uncertainty which all concerned have been
anxious to avoid. The very sensible decision has been taken to obtain
guidance on the topic which it is hoped will eliminate the uncertainties; and
the size of the problem is shown by the fact that two "lead" cases have been
taken as far as your Lordships' House. They are lead cases, rather than test
cases, because there is no agreement, formal or otherwise, that the parties to
other disputes will be bound by the outcome of the appeals. Nevertheless, it
is hoped that these appeals will in practice enable most of the outstanding
cases in the County Courts to be settled without further proceedings.

Unfortunately, this sensible plan has to some extent miscarried, for two
reasons. First because, as will be seen, one of the two appeals (in the case
of Devlin v. Baslington) is not typical of the disputes of which these
proceedings are intended to dispose, and which are described in the Agreed
Statement of Facts and Issues prepared for the House. Secondly because the
arguments in the Court of Appeal proceeded on the basis that certain publicity
brochures issued by the company in one of the cases (Giles v. Thompson) had
some contractual relevance, whereas it is now accepted that the brochure was
never seen either by the motorist or anyone who could be regarded as her
agent, so that it is immaterial to the issues before the House. Perhaps in other
cases there may be grounds for saying the document did have some effect as
part of the contract between the company and the motorist, or as estopping the
company from asserting against the motorist certain liabilities which the
wording of the contracts might otherwise have created. In such an event, the
legal position might be different; but upon this hypothetical question the
House can express no opinion.

The position is further confused by the difficulty of interpreting the
standard forms of contract imposed by the two companies, and by the
disconformity between what appear to be the rights and duties which these
forms create as between motorist and company and what (according to the
agreed facts) actually happens in practice. These problems arise from the fact
that those who framed the contract terms plainly concentrated on situations
where (a) the action against the defendant was bound to succeed; (b) there was



-5-

no claim (or at least no disputed claim) of any substance against the defendant
other than the claim for hiring a substitute car from the companies; (c) the
claim for the cost of hiring was certain to succeed in full. No doubt these
assumptions are justified as regards many of the situations in which car-hire
companies operate schemes such as the present. There will, however, be
situations where these assumptions will be falsified. As in the present case
the motorist may have additional claims about which there may be a dispute.
The litigation will not always run smoothly, and issues may arise about (for
example) the responsibility of the motorist for unrecovered hiring charges, for
the conduct of the proceedings and any incidental negotiations, and for the
costs of the action. Unfortunately, it is plain that the draftsmen of the two
sets of terms did not envisage these complications, and to several questions,
of importance to a discussion of champerty, the contracts provide at best an
incomplete and uncertain answer. Furthermore - (a) there may be other forms
of contract currently in use in this trade which yield different results, and (b)
what actually happens in practice may not conform with the agreements.

For this reason, although your Lordships would wish to provide a
clear-cut answer, applicable without qualification to all schemes of this general
type, to the question whether the hiring agreements are lawful, I believe this
to be impracticable, and that the only proper course is to take each agreement
in turn, endeavour to understand it, and see how it fares in the context of a
modern law of champerty.

I. THE TWO APPEALS

1. Devlin v. Baslington.

The defendant drove into the back of the motorist's car in
circumstances which left no doubt as to liability. The motorist sustained
typical whiplash injuries, and her car was damaged. For three weeks whilst
the car was under repair a replacement vehicle was made available by 1st
Automotive Car Rental ("1st AutoMotive"). This company conducted its
scheme under standard terms which the motorist signed. The material
provisions were as follows

"1. . . .

2. Lessor agrees to rent and the Hirer agrees to take the
vehicle described overleaf on the conditions as set out in this
agreement.

3. ...
4. . . .

-6-

5. Where the hire is consequent upon the Hirer's own
vehicle being unroadworthy as a result of a road traffic
accident:

(i) The Lessor will allow the Hirer credit on the hire charges
until such time as a claim for damages has been concluded
against the party (hereinafter called the third party) that the
Hirer alleges is liable for damages, arising out of the said
accident, subject only to condition (6) hereunder.

(ii) The Lessor shall have the right to pursue an action in the
Hirer's name against the third party.

(iii) The Lessor shall have the right to pursue such action
through the County Court and/or High Court and the Hirer
must co-operate in the conduct of the action and, if required by
the Lessor, attend any hearing that the Court appoints.

(iv) PROVIDED THAT notwithstanding the credit facility
referred to above the hirer will discharge any indebtedness as
soon as reasonably practicable, and shall take such action as is
necessary to obtain interlocutory judgement or payment of
damages for the purpose of discharging the said indebtedness.

6. If, and only if, the Hirer is in default of condition (5iii)
then the credit allowed by the Lessor to the Hirer shall be
terminated and the hire charges will be due from the Hirer to
the Lessor 28 days from the Lessor giving notice thereof to the
Hirer by reference to this Condition (6).

7. . . .

8. Except where condition (5) applies, the Hirer will pay
to the Lessor on demand all charges due under this agreement,
plus Value Added Tax at the rate appropriate at the time of the
hire.

. . . .
. . . .

18. This agreement may be terminated by either party
giving 24 hours notice of termination and the vehicle being
returned to the Lessor."

In addition there was a duplicated Form of Authority, in two parts.
The first made provision for the company to appoint a solicitor to act on the

- 7 -

motorist's behalf in connection with the accident, and went on to state- "I
understand I am at liberty to appoint any solicitor to act on my behalf. I have
no particular solicitor I wish to instruct." This part of the form was crossed
through. The second part read-

"I hereby authorise you, the Third Party Insurers in this matter,
to release to my Solicitors a separate cheque to be made
payable to 1st AutoMotive Car Rental in respect of hire
charges".

This part of the form was signed by the motorist.

In due course the motorist commenced proceedings in the County
Court. The solicitor who acted on her behalf was the one whom she had
originally consulted, and who had suggested that she approach 1st
AutoMotive. It was accepted in argument, although the point does not seem
to have emerged in the Court of Appeal, that (consistently with the deletion
of the first part of the Form of Authority), the solicitor was not chosen by 1st
AutoMotive.

As the action progressed the defendant admitted liability, and the
matter went to trial on quantum only. Two issues were raised. First as to the
amount of general damages for personal injury. This aspect of the case
proceeded in a perfectly conventional way, with oral evidence from two
consultants and submissions on the amount of the award, based on the
amounts award in previous cases. The trial judge fixed the figure at £4,500.
The second issue related to a charge of £652.05 in respect of the use of the
car, a charge which the motorist had not yet paid when judgment was given
in her favour. In addition to the challenge to this item of claim on the ground
that the agreement was champertous, the defendant also sought to challenge
the amount by showing that the motorist had no need for a replacement
vehicle, at least for part of the time in question. The judge rejected this
contention, and awarded the full amount of the claim.

Although the agreed facts do not say so, I assume that - (1) the
defendants' insurers have paid the amount of the personal injuries award; (2)
they have not paid the amount of the claim for the car hire; (3) the company
has not sought to recover the amount of the hire (pending this appeal)
notwithstanding that the award in respect of personal injuries has put the
motorist in funds. It was stated in argument that although the motorist
instructed her own solicitor the cost was borne in the first place by the
company.

2 Giles v. Thompson.

The accident took place on 22 August 1991. The motorist sustained
a whiplash injury. Her vehicle was damaged and needed repairs. After a



-8-

week a replacement was provided by Forward Hire Limited ("Forward Hire")
under a written contract, which read in part as follows-

"1. Where the hire is consequent upon the hirer's own
vehicle being unroadworthy as a result of a road traffic
accident the company will allow the hirer credit on the hire
charges until such time as damages, and statutory interest, have
been recovered from the party (hereinafter called the third
party) that the hirer alleges is liable for damages, arising out of
the said accident, subject only to condition (4) hereunder.

2. The company shall have the right to appoint its own
   solicitor to pursue an action in the hirer's name against the
   third party.

3. The company's solicitor shall have the right to pursue
   such action through the County Court and the hirer must co-
   operate in the conduct of the action and, if required by the
   Company's Solicitor, attend any hearing that the Court
   appoints.

4. If, and only if, the hirer is in default of condition (3)
   then the credit allowed by the Company to the hirer shall be
   terminated and the hire charges will be due from the hirer to
   the Company 28 days from the Company giving notice thereof
   to the hirer by reference to this condition (4)."

The motorist also signed a document addressed to Forward Hire in the
following terms-

"I confirm that you may appoint a Solicitor/Legal Agent on my
behalf to act in the recovery of the uninsured losses from the
Third Party Insurers.

They will also act on my behalf for the recovery of damages
for any personal injury or other losses involved.

They have my authority to commence proceedings, if
necessary, for recovery of the Car Hire charges and other
losses and to apply for any medical evidence they may deem it
necessary to obtain on my behalf for the purpose of a personal
injury claim.

I confirm that I have not instructed any other solicitors to act
on my behalf, nor do I have a solicitor whom I would wish to
instruct in this matter."

-9-

Five months later proceedings were commenced by the motorist in the
County Court, through the medium of solicitors instructed by Forward Hire.
The damages claimed were for personal injury, loss of earnings, and the
excess of her own insurance cover on the damaged vehicle. None of this was
in dispute, and general damages were agreed at £2,500. The defendant did,
however, challenge an additional claim for £540.31 in respect of hire charges.
It was not alleged that the charge was unreasonable, but the claim was denied
in principle on the grounds, first, that the hiring agreement was champertous,
and, second, that the motorist had suffered no loss from the immobilisation
of her car, since she had the use of the substitute vehicle provided by Forward
Hire. After argument, the County Court judge awarded the sum claimed,
together with interest.

These two decisions, together with another which raised similar
questions, were taken to the Court of Appeal, where all three appeals were
unanimously dismissed. The defendants in the two above-named cases (but
not the third) now appeal to this House.

II THE ISSUES

On these facts and documents the following issues arise:

A. As regards both appeals-

1. Are the agreements, or either of them,
   champertous and hence unlawful? It is
   unnecessary to consider the question whether the
   relationship between the companies and the
   actions is such as to amount to unlawful
   maintenance, since the defendants concede that
   in the absence of a champertous element
   maintenance would not be sufficient to provide
   the defendant with a defence to an action by the
   motorist, whatever might be the problem as
   regards a claim brought by the motorist against
   the company, or vice versa.

2. If so, does the unlawfulness furnish an
   answer to that part of the claim which relates to
   the hiring charges?

3. In any event, have the motorists suffered
   a recoverable loss, given that they have not yet
   paid the hiring charges?

B. As regards the Devlin appeal-

- 10 -

4. Has the motorist proved a sufficient need
   for a replacement car to justify an award of the
   cost of the replacement?

5. Is the motorist entitled to recover interest

on the sum awarded in respect of hire charges?




III ARE THE CONTRACTS UNLAWFUL?
1. Devlin v. Baslington

Although the arguments before the Court of Appeal, and initially
before the House, proceeded on the footing that the two appeals were the
same, it is I believe clear that there are significant differences between them,
and that they call for separate consideration. I will begin with Devlin v.
Baslington. An essential preliminary is to answer certain questions concerning
the rights and liabilities created by the hiring agreement. Since, however, I
believe that the resolution of this particular appeal admits of no doubt I will
deal with these questions quite briefly.

The first is this: What rights does the company possess in the sums
recovered by the motorist from the defendant? The answer is plainly : None.
Neither the contract nor the Form of Authority purported to create a charge
over the proceeds of the claim, either as regards the hiring charges, or the
damages for personal injuries, or any other item. Clause 5(iv) merely required
the motorist to press ahead with the recovery of sufficient funds to discharge
her indebtedness to the companies. Equally, there was no assignment of the
proceeds of the action or of the cause of action itself. As for the second part
of the Form of Authority, even if this was irrevocable (which I doubt) it was
no more than a mechanism designed to ensure that, once the motorist was put
in funds by the successful actions, the appropriate part of them reached the
company.

The next question is whether the motorist incurs a personal liability to
the company for the hiring charges. The defendant contends for a negative
answer, maintaining that what is dressed up as a hiring on credit is not a
hiring at all, but is a free loan of the substitute car, for the cost of which the
company looks to recovery solely against the fruits of the action. I can see
that this might be the position under some forms of contract; and indeed this
is how the scheme appears to be described in the company's brochure. But
we must look to the terms of the contract alone. Although these are defective,
they are sufficient to answer the question. The motorist does retain a
"residual liability" (as it was called in argument) for the hire charges, and this
will become enforceable, not only in the special circumstances contemplated
by Condition 6, but also under Condition 5(i) when "a claim for damages has
been concluded. "(Emphasis added). Naturally, the draftsman had in mind an
occasion when the claim would be concluded by the recovery in full of the
hiring charges, since this is the hypothesis on which the entire scheme is



- 11 -

founded; but there are numerous other ways in which the motorist's claim, in
its various elements, may be concluded, and in all of these Condition 5(i) will
terminate the period of credit and give the company the right to look to the
motorist for any unpaid balance of the charges.

At this stage I must mention one further question, namely whether the
contract gave the company the right to exercise control over the conduct of the
claim against the defendant. This will require closer scrutiny in relation to the
second appeal, but for immediate purposes need not be pursued, since the
deletion of the first part of the printed form coupled with the appointment by
the motorist of her own solicitor made it clear that she was in charge of her
own claim.

My Lords, on these simple facts it appears to me to make no difference
how precisely one expresses what is left of the law of champerty, for the
answer must inevitably be the same. It is sufficient to adopt the description
of the policy underlying the former criminal and civil sanctions, expressed by
Fletcher Moulton L.J. in British Cash and Parcel Conveyors v. Lamson Store
Service Company [1908] 1 KB 1006, at page 1014 :

"It is directed against wanton and officious intermeddling with
the disputes of others in which the [maintainer] has no interest
whatever, and where the assistance he renders to one or the
other party is without justification or excuse."

This was a description of maintenance. For champerty there must be
added the notion of a division of the spoils.

In my opinion it is perfectly clear that this description does not fit the
facts which I have summarised. One may take it by stages, imagining first the
case where the motorist simply hires a replacement car on credit. Obviously
there is nothing objectionable in this. Change the facts a little, so that the
motorist explains to a garage-owner that she needs a replacement, but cannot
pay until her claim against the colliding car has been recovered. The garage-
owner, needing the business and confident of his customer's honesty, grants
her credit. It is equally obvious that the transaction is harmless. Now take
the case where the garage-owner sensibly requires an undertaking that if the
claim succeeds the motorist will procure a cheque directly in his favour.
Again, no harm. Finally add the ingredient that the garage-owner agrees to
finance the action, which he believes certain to succeed, leaving the motorist
to employ her own lawyers at his expense. This may not often happen, but
if it does happen (as here) I am quite unable to see how it could be said that
the car-rental agreement is champertous. There is no "wanton and officious
intermeddling" in the dispute between the motorist and the defendant. The
company does not meddle at all, but allows the motorist to get on with the
claim, and merely awaits a favourable result. True, the company makes a
profit, but this comes from the hiring, not from the litigation. For my part,
I think it quite plain, without the need to go into any details of the law, that



- 12 -

this transaction is neither champertous nor invasive of any requirement of
public policy.

2. Giles v. Thompson.

As in the case of Devlin an essential preliminary is to ascertain the
rights and obligations created by the hiring agreement. First, one must see
whether the companies obtain any direct rights over the fruits of the claim for
the element of damages representing the hire charges. Here, the answer is
just as clear as it was before. The companies have no interest, whether by
charge or assignment, which give them any claim to the proceeds which they
can enforce against the defendant. Nor is any part of the recovery shared
with the motorist, in the sense (for example) that they have a preferential
claim to it against the other creditors of the motorist. The position is simply
that the success of this part of the claim will equip the motorist with extra
money, from which the hire charges can be satisfied.

Next, it must be asked whether the hiring agreement creates a residual
liability for the hiring charges. The point is the same as before, although the
wording of the agreement is different. Now, by virtue of Condition 1, the
credit is to continue "until such time as damages, and statutory interest, have
been recovered from the party . . . that the hirer alleges is liable for
damages." As before, it is probable that the draftsman of the agreement has
not envisaged that the proceedings would embrace claims other than those for
hire, or that they might not succeed in full, or indeed at all. Nevertheless,
one must go by the words of the agreement, and these make it clear, as in the
Devlin case, that on the conclusion of the proceedings the motorist becomes
liable to pay the charge, with the difference that in the Giles case liability does
not arise until there is a recovery of damages, whether or not complete, and
whether or not related to car hire.

I turn now to a question on which great stress was laid by the
defendants, namely the degree of control exercised by the companies over the
conduct of the litigation. Here, the position is different from that which
existed in the Devlin case, since the action was conducted by solicitors chosen
by the companies. Although we have no details, it is reasonable to assume
that the motorist did what the solicitors asked: and, of course, fared very well
in consequence. Nevertheless it is necessary to consider briefly what would
have happened if the interests of the parties had diverged. I say "briefly"
because it is not the function of the House to investigate in depth all the
situations, for which the agreement makes no express provision, which might
arise in circumstances absent from the present appeals. This would be a
complex and difficult enterprise, requiring in particular a consideration of the
possible analogy with cases of partial subrogation under contracts of
insurance, not opened up in argument; and it would in all probability be
wasted effort, since if the companies are well advised they will quickly work
out their schemes more fully and express them in a more adequate form of
words.

- 13 -

This being so, I need deal only briefly with three situations. The first
exists where the only claim in contention relates to the hiring charges. Here,
the ultimate control rests with the motorist, in the sense that he or she is free,
if disapproving of the way in which the claim is being handled, to give
instructions to the solicitor which contradict those of the company; but the
result under clause 4 of the Conditions is to make the hiring charge
immediately payable.

The second situation is one in which there is a dispute about the
personal injury element of the claim. Here, there is nothing which gives the
company any control, for clauses 2 and 3 are clearly addressed to the hiring
charges alone. Even if appointed by the company, the solicitor will be
obliged to act in accordance with the instructions of the motorist.

Finally, there is the case of the mixed claim, where an unappropriated
offer or payment into court is made in respect of both the personal injury and
similar claims, and the claim for hiring costs. In theory this could present
difficult questions of law, as to which party is dominus litis; and of legal
ethics, concerning the duties of a solicitor faced with conflicting duties
towards clients with differing interests. But only in theory, for the minimal
likelihood that a solicitor handling two claims, in one of which (for a few
hundred pounds) the company is interested and in the other of which (for
some thousands of pounds) only the motorist is concerned, will so prefer the
smaller to the larger as to put the motorist's interests at risk is a quite
insufficient basis, to my mind, for a general judgment on the unlawfulness of
the arrangement a" a whole.

There remains one further aspect of the relationship, namely the
responsibility for the cost of the litigation. Again the agreement is silent. In
the simplest case, where only the hiring charge is the subject of claim, there
is no problem. Since the action is brought at the company's request there is
clearly an implied obligation not only to finance it, but also to cover the
motorist's liability to the defendant in the event of failure. The position will
be, at least in theory, less straightforward where there is a mixed claim, for
personal injury as well as hiring charges, and where the action wholly or
partially fails. It may be that in practice the company will bear all the costs
involved, but the agreement does not say so, and in the event of dispute some
difficult questions may arise. These may perhaps be solved by recourse to the
analogy with subrogation, and if so the authorities collected in The Law of
Insurance Contracts, Dr. M.A. Clarke, 31-6B3 may be germane. The point
was not, however, explored in argument, and I do not think it profitable to do
more than suggest that under this particular form of contract the motorist
cannot be confident of a complete cover in respect of costs.

Against this background I turn to the defendant's submission that the
agreement is unlawful. This posits an enquiry in three stages. At the first the
agreement is analysed to see whether the company, a stranger to the dispute
between the motorist and the defendant, agrees to involve itself in the



- 14-

litigation in a way which yields a financial benefit from a successful outcome.
If so, the agreement is champertous and prima facie unlawful. At the second
stage it is considered whether the third party has an interest in the transaction
which legitimates what would otherwise be unlawful. Finally, it is asked
whether, aside from special rules concerning champerty, the relationship has
features which make it contrary to public policy, and hence unenforceable.

For my part I prefer to approach the question more directly. I accept
that, as Steyn L.J. expressed it in the course of his valuable historical
analysis, there have evolved crystallised policies in relation to solicitors'
contingent fees and the assignment of bare rights of action for tortious
wrongs. I also accept that in relation to these aspects of the law of champerty
it is necessary first to consider whether the transaction bears the marks of
unlawful champerty, and then enquire whether it is validated by the existence
of a legitimate interest in the person supporting the action distinct from the
benefit which he seeks to derive from it. For this purpose close regard must
be paid to Trendtex Trading Corporation v. Credit Suisse [1982] A.C. 679,
and to the considerations which led to a difference of analysis between the
members of the Court of Appeal in the present case. But the tests there laid
down were addressed to transactions of the kind then before the House; they
are not to be understood as if they had statutory force; and I see no reason
to impose the procedure thus evolved on situations which are entirely
different. As Steyn L.J. has demonstrated, the law on maintenance and
champerty has not stood still, but has accommodated itself to changing tunes:
as indeed it must if it is to retain any useful purpose (see Danckwerts J., at
p. 382 of his important judgment in Martell v. Consett Iron Co. [1955] Ch.
363). It is possible, although I believe rather unlikely, that new areas of law
will crystallise, with their own fixed rules which are invariably to be applied
to any case falling within them. Meanwhile, I believe that the law on
maintenance and champerty can best be kept in forward motion by looking to
its origins as a principle of public policy designed to protect the purity of
justice and the interests of vulnerable litigants. For this purpose the issue
should not be broken down into steps. Rather, all the aspects of the
transaction should be taken together for the purpose of considering the single
question whether, in the terms expressed by Fletcher Moulton L.J. in the
passage already quoted from in the British Cash and Parcel Conveyors case,
there is wanton and officious intermeddling with the disputes of others in
where the meddler has no interest whatever, and where the assistance he
render to one or the other party is without justification or excuse.

My Lords, for my part I am unable, any more than in the case of
Devlin v. Baslington, to accept that there was anything officious or wanton
about the intervention of the hire company in the motorist's litigation. The
question must be looked at first in terms of the harmfulness of this
intervention, which in turn calls for separate consideration of the risks to the
administration of justice and to the interests of the motorist. Is there any
realistic possibility that the administration of justice may suffer, in the way in
which it undoubtedly suffered centuries ago? None, so far as I can see, or at



- 15 -

any rate none with which the skills and coercive powers of the contemporary
judge are unable to grapple. Only two areas of the litigation might be
regarded as imperilled. First, the witnesses. It is said that those called for
the motorist may be encouraged to try too hard. Frankly speaking, this idea
seems to me fanciful. On the merits of the claim, in the minority of cases
which are undisputed, the county court judge is uniquely well equipped to
weigh the performance of the motorist and the defendant. And can it
seriously be said that because the claim is backed by a garage the medical
evidence will be seriously in danger of exaggeration?

The other danger to the administration of justice, of which the
defendants and their insurers urge the court to beware, is that the existence of
the scheme will encourage motorists to hire cars which they do not really
require, at inflated rates, which have to be paid for by the insurers. As to
rates of hire, shrewd and experienced insurers will be well equipped with
information about local tariffs for the hire of cars of the same type as the
motorists' damaged vehicles, with which they can expose any exaggeration.
And as to the possibility that the scheme will encourage motorists to hire cars
which they do not need, at the ultimate expense of the insurers, I am confident
that resourceful lawyers are well able to press by interlocutory measures for
a candid exposure of the motorist's true requirements, and, if all else fails, to
fight the issue at an oral hearing, as happened in the present case. If the
motorists are found to have been tempted by the hire-companies into the
unnecessary hiring of substitute vehicles, the claims will fail pro tanto, with
consequent orders for costs which will impose a healthy discipline upon the
companies.

In these circumstances I find the perils to the proper administration of
justice much exaggerated.

A second argument is deployed, namely that the schemes put at risk,
not the defendants and their insurers, but the motorists who hire the cars.
Even if sound, this argument could not lead to the application of the law of
champerty, and can be relied upon only in relation to broader considerations
of public policy. The solicitude of the defendants and their insurers for the
interests of their potential opponents may fairly merit a measured, if not
sceptical, regard. Nevertheless, the point is there and must be faced. Do the
standard terms of Forward Hire create such an imbalance of rights, such a
risk of exploitation, that the courts ought to treat the hiring contract as
outlawed, incapable of creating any rights as between the motorist and the
company? That there is some possibility of muddle, that the motorist may fall
out with the company and be left with a liability for the hiring charges, and
perhaps for costs as well, may be plain from the sketch which I have given
of this unsatisfactory form of agreement. But these are reflections of the fact
that the agreement is, to my way of thinking, a real hiring and not a sham.
Is it then so wholly outrageous that the law should turn its back on it? I
cannot say so. On the contrary, the balance of advantage is overwhelmingly
in favour of those who receive professional and financial assistance to recover



- 16 -

a valid claim which would otherwise go unsatisfied. Moreover, although as
I shall briefly suggest at a later stage, the publicity material of the two
companies leaves a good deal to be desired, any potential abuse which may
exist is much better tackled through the consumer protection legislation than
by employing the law of champerty to give a windfall, not to the exploited
motorist, but to the defendant's insurers.

Accordingly, if one looks at the agreement in terms of persons other
than the company it appears unobjectionable. Returning to the company, is
it wantonly or officiously interfering in the litigation; is it doing so in order
to share in the profits? I think not. The company makes its profits from the
hiring, not from the litigation. It does not divide the spoils, but relies upon
the fruits of the litigation as a source from which the motorist can satisfy his
or her liability for the provision of a genuine service, external to the litigation.
I can see no convincing reason for saying that, as between the parties to the
hiring agreement, the whole transaction is so unbalanced, or so fraught with
risk, that it ought to be stamped out. The agreement is one which in my
opinion the law should recognise and enforce.

IV UNLAWFULNESS AS A DEFENCE

In the light of the conclusions so far expressed it is unnecessary to
explore the question whether, if the hiring agreements had been champertous
or otherwise unlawful, the effect would have been to deprive the motorists of
any recovery for loss of use, whether based on the agreement or on a
reasonable rate of hire, and since this question, which is by no means easy,
may be of some general importance, I prefer to reserve it for decision as and
when it arises.

V HAVE THE MOTORISTS SUFFERED LOSS?

I now turn to the wholly distinct question whether the motorists have
proved that they have suffered a recoverable loss through the unavailability of
their own cars pending repairs. The defendants say that they have not,
because the cars were replaced by substitute vehicles which the motorists were
able to use free of charge. In essence, it is said that the motorists have
mitigated what would otherwise have been a valid claim for general damages
reflecting their loss of the opportunity to make use of their own vehicles.

On the opinion which I have formed of the obligations created by the
obscure and incomplete terms of the two agreements this contention admits of
a very short answer. In my judgment the motorists do not obtain the
replacing vehicle free of charge. If the motorist had simply persuaded a
garage to hire her a substitute on credit, without any of the superstructure of
the present transaction, it would be no answer to a claim for damages
equivalent to the sums due to the garage that these sums would not in practice
be paid until a judgment in the motorist's favour had provided the necessary
funds: for the amount of the outstanding liability represents the loss suffered



- 17 -

by the motorist, and the question whether the motorist intends to apply the
damages recovered in satisfaction of the debt, or in some wholly different
way, cannot affect his right of recovery.

To distinguish that case from the present the defendants are forced to
contend that the consideration for the provision of the cars consisted solely of
a right to recoup themselves from the damages for loss of use. As will have
appeared, I do not accept this interpretation. The hiring company has no
direct right to the damages. The company is not an assignee or chargee of
the cause of action or its fruits, although it expects that the damages for loss
of use will form part of the assets from which the motorist will in due course
pay for the substitute. The liability for the car hire, although suspended as
regards enforcement, rests upon the motorist throughout. It is a real liability,
the incurring of which constitutes a real loss to the motorist. Whatever the
publicity material may have conveyed, the provision of the substitute cars was
not "free".

In the light of this conclusion I find it unnecessary to discuss the
question, by no means easy, what the position would have been if the use of
the substitute car really had been free; as, for example, if it had been lent by
a kindly friend. To do so would require a reconciliation of cases such as
Harlow & Jones v. Panex (International) [1967] 2 Lloyd's Rep. 509, Donnelly
v. Joyce [1974] QB 454, McAll v. Brooks [1984] R.T.R. 99 and The Mathew
[1990] 2 Lloyd's Rep. 323. This question, which is of much general
importance, is in my view far better left for decision when it actually arises,
rather than as a by-product of two schemes which have not, as I suggest, been
fully worked-out.

VI PROOF OF NEED

In the Devlin appeal it has been questioned whether, even if all the
issues of law are decided in favour of the motorists, there is sufficient proof
that the motorist acted reasonably in hiring a replacement vehicle to justify an
award in full of the company's hire charges - or, indeed, it would seem any
award at all. The question is before the House because the County Court
judge held that:

"As a matter of principle ... if you deprive me of an article of use
to me, you have no complaint whatever if I hire another to replace it
... If I have a car simply for my own pleasure, I regard it, in
principle, [as] wrong that I should be required, before being able to
hire a car and charge it to the wrongdoer, to prove that I need it as
opposed to merely desire the use of it."

Whilst I have sympathy with this point of view I think it too broad.
The need for a replacement car is not self-proving. The motorist may have
been in hospital through the accident for longer than his vehicle was off the
road; or he may have been planning to go abroad for a holiday leaving his car



- 18 -

behind; and so on. Thus, although I agree with the judgments in the Court
of Appeal that it is not hard to infer that a motorist who incurs the
considerable expense of running a private car does so because he has a need
for it, and consequently has a need to replace it if, as the result of a wrongful
act, it is put out of commission, there remains ample scope for the defendant
in an individual case to displace the inference which might otherwise arise.

Further than this I am not prepared to go. It is not the function of
your Lordships' House to re-try an issue of fact on the judge's notes. It may
be, although I do not say that it is, that the award in the Devlin case was too
generous. Against the perspective of the amounts involved in the numerous
cases now coming before the County Courts the sum is trifling. What matters
is that the judges should look carefully at claims for hiring, both as to their
duration and as to their rate. This will do much to avoid the inflated claims
of which the defendants' insurers are understandably apprehensive, and will
also discourage the promotion of over-optimistic claims by motorists, who if
the present forms of agreement are enforced in accordance with their terms
may be left with residual liabilities for hiring charges. The discipline imposed
by judges who have the acumen and experience to detect greed and slapdash
claims procedures will in my opinion do much more to forestall abuse than a
dusting-down of the old law of champerty.

VII INTEREST

In Devlin v. Baslington the County Court judge awarded interest on the
amount of damages referable to the hire charges. This decision was upheld on
appeal. In this respect alone I must differ from the Court of Appeal.

The argument for the motorist proceeds on the basis that the motorist's
cause of action against the defendant, and the financial loss resulting from it,
came into existence at the moment of the accident, and was later quantified
as special damage when the hiring period came to an end. At this time, so the
argument runs, the defendant should have recompensed the motorist for her
loss. Thereafter, she was "kept out of her money", a detriment for which she
should be recompensed by am award of interest.

Although this argument seems logical at first sight, it ignores the fact
that the power to award interest is discretionary, and that the exercise of this
power should correspond with reality. In the present case, although the
motorist incurred a genuine liability for the hire charges day by day, it was
not a liability capable of immediate enforcement by the hire company. In both
practical and equal terms the financial position of the motorist was wholly
unaffected by the defendant's failure to make immediate payment, since the
terms of the contract meant that until judgment was given she was not obliged
to pay the hiring charges and also that as soon as the claim was "concluded"
and the period of credit came to an end the damages provided the necessary
funds. In reality she was not "kept out of" any money of her own whilst the
claim was being assessed and litigated.

- 19 -

It is, however, contended that this is an over-simplification, because
the motorist was from the outset under a duty to pay to the company interest
on the amount of the hiring charges for which she was receiving credit. I find
this argument quite unsustainable. There is no provision in the contractual
terms requiring the motorist to pay interest on money which he or she does
not presently owe and may never owe; and the idea that such a provision may
be implied runs counter to the central feature of the scheme, as presented to
the House, which is that if all goes well the motorist will have the use of the
substitute car without reaching for his or her credit card.

I should mention one further point for the sake of completeness. If the
agreement had, expressly or by implication, given the company a direct right
against the proceeds of the claim, the position of the hiring company might
have begun to resemble that of a subrogated insurer. It would then be
necessary to examine H. Cousins & Co. v. D. & C. Carriers [1971] 2 Q.B.
230 and Harbutt's "Plasticine" v. Wayne Tank & Pump Co. [1970] 1 Q.B.
447, the outcome of which is that if the relationship between the insured and
his insurer creates an obligation on the insured to account to the insurer for
any interest recovered as well as for the capital sum, the court has a discretion
to award interest to the insured on any damages which he recovers against a
third party, in order to avoid a windfall to the third party and hardship to the
insurer. These cases, which were not explored in argument, bear a superficial
resemblance to the present; but in my view only superficial, because a
subrogated insurer does have an interest in the insured's cause of action and
in its fruits of a kind which the hiring companies do not possess.

Thus, although an award of interest is always discretionary, I am
unable to detect any grounds on which, in the circumstances of the present
case, the discretion could properly be exercised in favour of the motorist. To
this extent, therefore, I would allow the appeal in Devlin v. Baslington. I
must, however, emphasise the qualification "in the circumstances of the
present case". If the effect of the hiring agreement, or the general shape of
events, were on some other occasion to be different from those now before the
House it is possible that the exercise of the discretion might be less
straightforward. But this is a hypothetical question upon which the House
cannot enter.

VIII CONSUMER PROTECTION

Finally, I must return briefly to the publicity material issued by the two
companies. This is wholly irrelevant to the outcome of the appeals, since it
did not form part of either contract, and there is no reason to believe that the
benefits which the motorist actually received were any different from those
which the brochures had promised. Nevertheless, there is in each case a
conspicuous discrepancy between the brochure and the conditions of contract.
This ought to be put right. For example, one of the brochures refers to "free"
car hire, whereas it is plain that the hire is not free: as indeed the company
asserted in order to make good its case on champerty. Similarly, in the case



- 20 -

of the other company, the motorist is told that "at no time are you out-of-
pocket" , whereas the existence of a residual liability for hire shows that in law
this may not be so, whatever may be the features of the scheme as actually
practised.

My Lords, it may well be that there is nothing sinister about these
discrepancies, but that they are simply another consequence of a failure by the
promoters to give sufficient thought to the details of their schemes.
Nevertheless, unless the words of the contract, the words of the publicity
material and the actual practices of the companies are brought into conformity
there is scope for the customers to be misled. Whether in such circumstances
the authorities responsible for the operation of the consumer protection laws
will think it appropriate to intervene is not a matter upon which the House can
express any opinion. Nevertheless, I believe that if there is any abuse this
will be the proper means for putting it right, rather than an invocation of the
law relating to champerty.

IX CONCLUSION

In the result I would dismiss both appeals, save only that in Devlin v.
Baslington I would allow the appeal in respect of interest.

- 21 -