Court Application In Hire Purchase Contract Dispute results in favourable outcome

Our client, a business, was on the receiving end of a £90,000 claim from a large financial institution. The claim related to a hire purchase agreement for a vehicle that our client was leasing and making monthly payments. The lender terminated the agreement due to a breach, specifically alleging that our client had missed instalments payments which were due under the agreement and then commenced legal proceedings against our client.

It was a significant sum, and understandably our client was worried. But when we looked at the paperwork, it quickly became clear that the claim had serious problems. There was no proper explanation of how the £90,000 had been calculated, nothing to show our client had breached the agreement, and no real legal basis for the termination in the first place.

In short, the other side had issued a claim without doing the work to back it up.

The claims

The claimant alleged:

• That our client had breached a hire purchase agreement, justifying its termination

• That as a result, they had suffered financial losses totalling £90,000

• That our client was legally liable for those losses

Our approach

Rather than getting drawn into back-and-forth correspondence trying to unpick a vague and poorly constructed claim, we took direct action.

We gave the claimant the opportunity to properly particularise their claim, however this did not materialise. We therefore made a formal application to the court to have the claim dismissed, pointing specifically to:

• The pleadings - the claim form and particulars were so poorly drafted they didn't meet the basic legal standard required to bring a civil claim

• The losses - there was no supporting evidence to explain or justify the £90,000 figure

• The liability - nothing in the claim established that our client was responsible for any of the losses being claimed.

Our view was straightforward, if the other side couldn't explain what they were claiming or why, the court shouldn't be asked to entertain it.

The outcome

The court agreed with us. The claimant was ordered to fully amend their claim and provide proper supporting evidence, by a strict deadline, backed by an unless order, meaning the court set a firm cut-off date by which they had to comply. That meant if they didn't comply, the claim would be automatically struck out without any further hearing.

On top of that, the court awarded our client their wasted costs, money that they had to spend dealing with a claim that should never have been issued.

The Claimant agreed to reinstate the hire purchase agreement, and our client continued to make payment for the instalments in accordance with the agreement. Our client was able to continue using the vehicle under the original agreement rather than losing it.

What this means if you're in a similar position

If you've received a claim that is exaggerated or simply doesn't add up, you don't have to just sit tight and wait for it to play out.

Early, targeted action can make a real difference:

• It forces the other side to actually justify what they're claiming

• It shifts the pressure and risk back onto them

• It can recover costs you've already had to spend

• And in some cases, it can stop a weak claim in its tracks before it goes any further

We know being on the receiving end of legal action is stressful especially when the claim against you doesn't seem to have much substance. That's exactly when it helps to have someone in your corner who'll look at it clearly and take decisive action.