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Cite as: [1994] 1 AC 142, [1993] 3 All ER 321, [1993] UKHL 2, [1994] AC 142

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JISCBAILII_CASE_TORT

    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.

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

    2. 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.

    3. 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 -

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

    2. 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 K.B. 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 -


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