In EUI Ltd v Charles & Ors [2018] EW Misc B7 (CC) HHJ Robert Harrison made an order that claimants give pre-action disclosure of documents relevant to the issue of impecuniosity.  The practical consequences of this decision could be enormous.  Given that a potential defendant can, potentially, apply for pre-action disclosure on this issue there may little justification for a would-be claimant to refuse to disclose the information.  The judgment notes that attempts at premature issue in an attempt to avoid an application for disclosure could lead to adverse costs consequences.


The applicant insurer was facing  actions by seven individuals whose car had been damaged in an accident . In each case those individuals had hired alternative vehicles from credit hire companies. The defendant sought disclosure of bank statements and wage slips for a period of three months prior to the hire.

The reason this was important is that a claimant can normally only claim a “basic hire rate” for the hire of an alternative vehicle. There is an exception – an “impecunious” claimant is entitled to claim the full credit hire charges not limited to the basic hire rate, provided those charges are not unreasonably high.  Impecuniosity is also relevant to the period of hire. The question of a claimant’s finances is therefore often central to the issues to be determined in these cases.


The applicant insurer argued that it should be able to assess if a potential claimant is impecunious in order that it could value the claim and settle it without litigation.


The judge noted that there was a two-fold requirement on a defendant: a jurisdictional threshold and a “discretionary” threshold.

18.               CPR 25.2 (2) (c) provides thus:
“Unless the court otherwise orders, a defendant may not apply for any of the orders listed in rule 25.1 (1) before he has filed either an acknowledgment of service or a defence.”
19.               The rules of court anticipated by section 52 are now contained in CPR 31.16. The discretion to make an order for PAD arises when the jurisdictional threshold criteria in CPR 31.16 (3) a) to d) are met. The requirements are:
a)                  the respondent is likely to be a party to subsequent proceedings;
b)                  the applicant is also likely to be a party to those proceedings;
c)                   if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and
d)                  disclosure before proceedings have started is desirable in order to –
(i) dispose fairly of the anticipated proceedings;
(ii) assist the dispute to be resolved without proceedings; or
(iii) save costs.


The judge considered the detailed arguments in relation to disclosure (both parties instructed leading counsel – it was clear that the issues went beyond this particular case).  He held that the
38.               The provisions of CPR 25 (2) serve to underline the unusual nature of these applications. It is however not submitted that its provisions are fatal because permission was not sought at an earlier stage. The court can permit such applications to be made and for the reasons set out below I am persuaded that, in the circumstances of these cases, the Applicant being permitted to make the applications is consistent with the overriding objective to deal justly with the issues at proportionate cost.
The Jurisdictional Test
39.               CPR 31.16 (3) (a) and (b) being conceded the first question that the court must consider is whether (c) is established. In my view the Applicant is right to invite my attention to section 52(2) of the County Courts Act 1984;
“ any documents which are relevant to an issue arising or likely to arise out of that claim. 
In my judgment these words allow the court to look at the reality of this litigation in the context of what is known about the business model of DAM.
40.               Having regard to the same, and a claim having been intimated on the basis of charges that include the cost of credit hire, I am driven to the firm conclusion that the documents are relevant to an issue likely to arise out of these claims. I am not persuaded by the suggestion that there is an obligation on the Applicant first to disclose BHR (rates) before the issue of impecuniosity becomes relevant. I understand the submission made by the Respondents that the Pattni checklist should not be read as a statute, but in my judgment there is a very good reason why it reads as it does and that is that credit hire charges which include additional services are always likely to be higher than the BHR (rate), see for example the section of the Group’s prospectus summarised at paragraph 14 above.
41.               On the issue of desirability as required by (d), I prefer the submissions made on behalf of the Applicant. In my judgment the issue of impecuniosity goes directly to the basis of the assessment of damages. In my judgment it is desirable that a Defendant who wants to make a realistic offer should know the potential strength of any argument that those damages should be assessed in accordance with the impecuniosity exception established in Lagden rather than ordinary principles of assessment of loss.


42.               In the context of these applications, it seems to me that this stage assumes particular importance. Granting pre-action disclosure of documents that in the ordinary course of events would remain private, is both unusual and a step that should not be taken lightly. However, in my judgment the documents sought are different in nature to a full set of medical records and their disclosure is significantly less intrusive.
43.               In 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.
44.               In argument I used the word “target” and I don’t shy away from it. That is the whole point of the business model. I do not mean it in a pejorative way, it is just fact. Do the individual Claimants know that they are so targeted because they are impecunious? I suspect not, and perhaps it does not matter. However, the reason that they are so targeted is that their impecuniosity unlocks the recoverability of charges not otherwise recoverable. Against that background, to suggest that evidence is needed as a basis for these applications to show that the BHR is lower than the credit hire charge, is, in my view, to suspend reality.
45.               In argument Mr Hough QC submitted that it would be inconceivable that some consideration had not been given by DAM to the financial means of the Claimant at the outset and certainly before a claim is intimated. Whether or not such a failure to consider means is inconceivable is perhaps debatable, however, what in my judgment is not debatable is that if the relevance of their financial means is not explained to the individual Claimant’s then it should be. In other words, at the very outset of these claims, DAM know that the Claimants that they represent may well have to disclose their financial means if they are to comply with their contractual obligation to cooperate with the litigation process (see clause 5 (iii)). If they do not explain this to their clients, then they should do so.
46.               Against that background it is difficult to accede to the submission that to require disclosure is intrusive and premature. Rather it goes to an issue central to valuation and relates to documents that the Claimants should have been told that they may have to disclose at some stage in the process in any event.
47.               The submissions made by the Respondents regarding the provisions of CPR 44 and 45 are undoubtedly relevant to the exercise of discretion. Bearing in mind the normal rule that the costs incurred in providing the documents are payable by the Applicant, there is some force in the submission that an injustice could arise. However, I remind myself of the limitation of what is being sought in this case. Obtaining bank statements and wage slips for a 3 month period is generally speaking something that will require little if any input from a solicitor and frankly is not onerous. In my judgment if a more extensive or complicated request was made then there would be more force in this part of the Respondents’ argument.
48.               Similarly, I do not regard the fact that a potential Claimant might defeat a claim merely by issuing proceedings as a good reason not to make an order. Premature issue of proceedings for this reason alone would run the risk of an adverse costs outcome.
49.               If I stand back and look at these applications as a whole, I have concluded, in the exercise of my discretion, that the overriding objective to deal justly with these matters at proportionate cost is best served by allowing informed offers to be made at the earliest stage. In my view this is consistent with avoiding unnecessary litigation and “its attendant cost and delay”.
50.               In exercising this discretion, I have again reminded myself of the additional hurdle posed by CPR 25 (2).
51.               It follows that in relation to the matter of principle upon which I have been invited to rule then I am prepared to make the orders for pre-action disclosure sought.