Singh v Yaqubi Court of Appeal (Civil Division)

A property developer (whose claim for a replacement Rolls Royce Phantom was dismissed due to lack of evidence of an actual need for a replacement), has seen the decision upheld by the Court of Appeal. In a controversial area of law, it is a significant case highlights that the burden of proof for credit hire need is the responsibility of the claimant.

The facts of the case

In August 2009 the claimant, Mr Singh, a successful property developer whose clients included celebrities, royalty and famous sports people, was involved in a road traffic accident with the Defendant, Mr Yaqubi, causing Mr Singhs Rolls Royce Silver Phantom to be damaged.

Whilst his car was being repaired, Mr Singh hired a replacement vehicle from Accident Exchange, accruing hire charges of £99,439.06 e later reduced to £92,953.90 due to his VAT status. A Bentley was used for the first five days, subsequently replaced with a Rolls Royce Phantom. This was despite the fact that the claimant’s company owned a fleet of prestigious cars, including; a Rolls Royce Phantom convertible, a Mercedes CL600, a Bugatti Veyron, a Range Rover Overfinch, a Mercedes S320 and a Porsche later traded for a Range Rover Sport HSE.

The arguments

The defence put the claimant to strict proof over his need to hire a replacement vehicle at all, and sought evidence as to why none of the company’s other prestigious vehicles could have been used rather than hiring a replacement.

First instance decision

In February 2012, liability was found in favour of Mr Singh. However, when considering the claim for hire charges, HHJ Cowell at Central London County Court dismissed the claim on the basis that the Claimant had not provided sufficient evidence as to his need to hire to successfully discharge the burden of proof.

The Judge had taken his starting point at the speech of Lord Mustill in Giles v Thompson: “The need for a replacement car is not self proving.“ He also noted that, one of the great problems in this case is really the absence of detailed evidence. He took the hypothetical case of a self employed plumber whose car is damaged. He asked: “What evidence would anyone acting for him tell him to put together in order to prove his need of the hire car. It seems to me that, properly advised, he would give evidence about two things: first...his actual use of his vehicle prior to the accident...perhaps by reference to his diary that he would exhibit....  Then, secondly...what use he made of the hired vehicle. For example, where did he go during the course of the hire. It is the equivalent of all that which is completely missing in this case. That is why it is a particularly difficult one.“

In this case, Mr Singh had been out of the country during the hire period and could not give any indication as to what use the hire vehicle was put e either whilst he was out of the country, or at all. The Judge felt that it would have been appropriate for evidence to be adduced as to the use of the accident damaged vehicle and also the hire vehicle. Such evidence would, he said, have been easy to obtain and readily available.

Upon the claimant’s explanation that he needed a replacement Rolls Royce, “to maintain the correct impression in such circles,“ the Judge commented: “...what a testament that is to the superficial, if not false, nature of the warped values of society, or, as the claimant himself put it, “that is how these people see it,“ ...That is a very subjective view which, as I shall explain, is unsupported by detailed evidence.“

He also commented that; “this case raises the moral question... whether the ever increasing insurance premiums of the ordinary motorist, particularly one struggling to make ends meet and needing a modest car to go to work, should, in some part, be used so that the rich may continue, at no expense to themselves, to be filled with good things that they think they need.“

The Judge went on to say however, that had the claimant successfully discharged the burden of proof, he would have awarded the sum of £21,428.57 which represented the lowest of the alternative basic hire rates as adduced by the defendant. This was due to the fact that the location of this particular hire company was closest in locality to the claimant and his business. As the claimant had failed to beat a Part 36 offer of £30,000 the appropriate costs order followed. Immediately following the judgment the claimant requested permission to appeal which was granted.

The Issues

In December 2012, the Court of Appeal was asked to decide if:

1. The Judge was wrong to place such a high burden of proof upon the claimant in terms of proving the need to hire a replacement vehicle.
2. The Judge was wrong in his finding as to the appropriate sum to be awarded if need was established.
3. There was a serious irregularity by reason of the Judges apparent bias.

During the course of the appeal, the appellants conceded that, if the Court were not with them on ground 3, then ground 2 would fall away on the basis that a fair minded Judge would be perfectly entitled to award the hire rate as indicated. Ground 3 was in fact dealt with first. The test is whether the circumstances described would lead a, fair minded and informed observer to conclude that there was a real possibility that the Tribunal was biased. Counsel for the appellant submitted that the comments made by the Judge were unfair as Mr Singh was not trying to profit at the expense of another and he merely wanted an equivalent vehicle whilst his Rolls Royce was being repaired. A fair minded and informed observer would conclude from the references to the rich being ⁄filled with good things, l and to the⁄warped values of society that the Judge was objectively unable to make a sound judgment upon a claim by a rich man for a large hire charge. It was submitted that these comments indicated active hostility towards the appellants claim.

The Court of Appeals Decision

The Court of Appeal dismissed this ground of appeal on the basis that the Judge had expressed views on the values of society openly and frankly, citing the appellants own evidence that, “it is materialistic but that is how these people see it.“ In light of this, the appeal as to the rate of hire which could be awarded fell away. In terms of ground 1 of the appeal ie. whether the Court had correctly assessed the evidence in terms of the appellants need to hire, the appellant argued there was a burden on the respondent to show that the appellant had acted unreasonably in replacing the Rolls Royce. Emphasis was placed upon the burden of proof resting with the respondent.

The Court however, found that:

1. There was a burden on the appellant to show a reasonable need for a replacement Rolls Royce during the period of repair.
2. The required need was the need of the partnership.
3. Such need is not self proving.

It was submitted that Aikens LJs judgment in Pattni sought to alter the position but this was rejected. Indeed, it was noted that, when the questions to be asked in considering a credit hire claim are set out, the very first question should be, did the claimant need to hire a replacement car at all?

It was held that the Judge was entitled to find that need had not been established. It was stated that: ‘very large hire claims such as this one should be scrutinised carefully by the Court and particularly when the business partnership, which was required to establish the need, had a fleet of seven prestigious cars on the same insurance. For such a business claim to succeed, the Judge was entitled to require specific evidence of need...“ Accordingly, the appeal was dismissed.

Zaker Ali v Spirit Motor Transport Limited

Background

Mr Ali, a taxi driver, had an accident with the defendant’s driver on 30 November 2011. Negligence was not in dispute however the quantum of damages was strongly disputed. The claimant’s vehicle was written off in the accident and it was assessed as having a pre-accident value in the sum of £3,900.

Rather than purchase a replacement vehicle, he hired a replacement plated taxi for 113 days at a daily rate of £293.58 per day amassing a total hire claim in the sum of £33,211.75. Hire only ceased when the hire provider indicated they were no longer prepared to continue with the hire albeit the reason they came to this decision is unknown.

Around the same time the claimant had repairs carried out to his vehicle at a cost of £2,000 for which it appeared he paid cash. Although he contended that these were temporary repairs there was nothing to suggest this from the invoice produced. When questioned as to why he did not have his vehicle repaired earlier his response was that he had to borrow the money from two friends who were not in a position to lend it to him earlier. Although witness statements were produced they did not disclose when they were asked to lend the claimant the money.

The Defendant argued that the contract fell within the ambit of the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc. Regulations 2008. It was not disputed that the hire agreements, of which there were two, were entered into at the claimant’s home. Whilst one of the agreements included a right to cancel it did not strictly comply with the regulations and the other agreement had no right to cancel at all.

Furthermore, the defence argued that the claimant was a consumer for the purpose of the regulations as he did not only use the vehicle for earning a living but for social domestic and pleasure purposes too.

In addition to the above, it was submitted that the claimant may only recover the lesser of either the cost of hiring a replacement or the loss of profit which would have been generated. A passage from Clark and Linsell (20th edition) was relied upon, namely:

“It is generally reasonable for the owner of a damaged chattel to avoid any loss of profit by hiring a substitute for the period during which his own is under repair, in which case he is entitled to recover the cost of hiring as damages for loss of use, subject to two qualifications, namely, that the actual hiring of a substitute must be strictly pleaded and proved as special damage, and that the hiring must be reasonable.

“The principle is that the claimant may recover what his chattel would have earned if it had not been damaged – not that he may recover such out-of-pocket expenses as he may actually have incurred ; and if, for example, the cost of hiring exceeds the profit which could have been earner, only the latter may be recovered.”

Finally, the period of hire was disputed on the basis that the claimant had failed to mitigate his loss and that only a ‘reasonable’ time for the claimant to source a replacement vehicle could be allowed.

JUDGEMENT

The matter came before Judge Saffman in the Leeds Combined Court Centre on 24 January 2014.

The court was of the view that in order to ascertain whether the claimant was entering into the contract as a consumer rather than for business purposes one must look at the proportion of use of the vehicle. Only if the business use were ‘negligible’ could the claimant be said to be a consumer. Extensive financial accounts had been disclosed which showed that the claimant’s use of the vehicle as a taxi accounted for 75% of the time. Additionally the court looked at the definition of ‘consumer’ contained in the regulations themselves: “a natural person who, in making a contract to which the Regulations apply, is acting for purposes which can be regarded as outside his trade or profession.”

The judge therefore found that the regulations did not apply to the contracts for hire as the claimant was not a consumer for the purpose of this transaction.

As regards the recoverable amounts, the judge formed the view that the claimant could only recover the loss of profit for the vehicle whilst it was off the road (calculated at £52.20 per day) plus an additional £15 per day for the loss of use of the vehicle for social, domestic and pleasure purposes.

In respect of the period of hire the judge expressed some cynicism as to the timing of the ability of the claimant’s friends to lend him the funds to enable him to repair his vehicle. He found that the claimant could have sourced the funds earlier and that the vehicle was only repaired as hire had ended. As such, the judge held that the period of loss ceased one month after it was known that the vehicle was a total loss, a period of 42 days.

In addition to this award, the claimant’s loss of the vehicle was limited to the £2,000 spent on repairing the vehicle. Damages were therefore awarded in the total sum of £4,822.40.

Additionally the court awarded small claims track fixed costs as the judge felt that had the claim been presented in its proper form the matter would have been allocated to the smalls claims track.

We are seeing more part-time taxi drivers supplement their other income in the current economic climate so it may be that judges will be persuaded to follow these lines where the facts are similar. The judge followed the reasoning in Singh v Aqua De-scaling Ltd and it should be remembered that Mr Singh operated a number of taxis. It is not clear whether the claimant here was in a similar position. If he was, then the application of this case may be more limited than might first appear.

It is not clear how the court would view an argument that the claimant had no option but to hire a replacement in order to maintain cash flow and/or fulfill contracts.

The point with regards to small claims track costs only being awarded is not a new one and is in fact one which we have raised for many years. It reaffirms our stance that in the event the claimant only recovers damages which are less than the small claims track limit despite the original claim being over that limit, then the claim must have been overstated.

In Summary

• Where the accident damaged vehicle has a dual purpose seek disclosure of the split between work/business and social/domestic/pleasure purpose. This can be in the form of work diaries, mileage records etc.
• Consider whether the claimant operates a number or fleet of taxis. If they do, then the argument for loss of profit rather than hire of a replacement vehicle has better prospects.
• If the amount recovered is below the small claims track limit by however much, then argue that small claims track costs only will be recoverable.

The claimant’s application for permission to appeal was granted by the Court of Appeal however reports suggest that the appeal has been conceded by the respondents and settlement agreed. Unfortunately therefore, we do not know on what exact basis the appeal may have been conceded therefore we do not have any definitive answer to the questions posed by this decision.

Original article can be found here.

McBride v UKI - Appeal by Melanie Mooney

Background

The claimant, Mr Neil McBride, was involved in a non-fault accident on the 13th November 2012.

As a result of the accident he brought a claim for hire charges incurred via Accident Exchange in the sum of £40,215.11.

Although there were many issues raised in the defence of the claim and pursued to trial, the issue which remained contentious was that of the judge’s assessment of the rate of hire at the trial, which took place on 4th March 2015.

Rates evidence was adduced by both parties, however due to the nature of the vehicle hired (a Jaguar) a nil excess/deposit/collision damage waiver (CDW) were simply not available on the conventional hire market.

As such, at the trial the judge considered the rates evidence relied upon by the claimant. He selected a rate based upon an assessment pursuant to the guidelines which had been laid down in the then, very new, Court of Appeal case of Stevens v Equity.

After considering the evidence, the judge awarded the sum of £19,900.

The Appeal

The Claimant submitted an appeal and in accordance with the rules, the respondent (represented by Keoghs and Steven Turner of Counsel) submitted a statement in response to the appeal. That statement set out the fact that Stevens v Equity was treated as a test case by all concerned and if the applicant was unhappy with the decision, the correct course of action was to apply to the Supreme Court.

The applicant’s request for permission was considered by LJ Kitchin (who delivered the lead judgment in Stevens v Equity) and permission was refused.

He refused permission on the following grounds on 4th June 2015 (order drawn 22nd June 2015):

1.   There is no inconsistency between the decision of this Court in the Stevens case and the earlier decisions of this Court in the Bent and the Burdis case.

2.    The district judge considered the evidence before him and identified the lowest reasonable rate charges by a reputable supplier, mainstream or local. He made no error in so doing.

3.    As the respondent says, it would have been open to the district judge to consider adding the cost of an excess reduction product to the basic hire rate or £270 (including VAT) had that course been urged upon him.

The applicant, as is their right, requested that the matter be listed for an oral permission hearing. At that hearing the proposed respondent had no permission to make submissions.

The hearing proceeded before Lord Justice Underhill who advised the parties that he had been giving the matter some thought. He gave his views on the grounds of appeal in reverse order.

Ground 3 – whether the claimant is entitled to a nil excess via the availability of cdw products

The advocates notice on behalf of the applicant had been filed a matter of days before the hearing and asserted that Lord Justice Kitchin’s reasons for refusal were incorrect, as claimant’s counsel (Mr Willetts) had in fact urged the trial judge to allow £20 per day for cdw charges. Upon review of the transcript, and upon it being pointed out by the proposed respondent’s representatives, it was accepted that that course of action had not in fact been urged upon the judge.

Lord Justice Underhill surmised that this case cannot be the only one where the issue of cdw and excesses is an issue and so it seemed to him that it would be useful, in this very contentious arena, for the court to give some guidance on the point therefore, subject to some amendment of the Grounds of Appeal (to be provided within seven days) permission was granted.

Ground 2 – What does “mainstream” and “local reputable” mean?

At the trial, the judge had commented that he had never heard of the conventional hire companies contained within the report.

It was then contended that in fact there was a higher rate within the report from a company which was considered mainstream. LJ Underhill commented that the ground as it was currently drafted was “very dodgy” and the applicant was asked whether they wished to amend their Grounds of Appeal to reflect what they now said was the correct position. Having taken instructions, it was confirmed that permission to amend was sought and granted. Permission to appeal however, was not granted and was adjourned to be decided by a full Court when Ground 3 came to be determined.

Ground 1 – Stevens is inconsistent with the Court of Appeal’s previous decisions in Burdis v Livesey and Bent (No. 2)

Lord Justice Underhill could not be more clear as to his views of this ground. He stated that in his view there was no inconsistency with Stevens and previous decisions. Stevens had been fully argued and the decision clear. If there had been no authority then he could have seen there was an argument to be made, however he expressed no view on the merit of that, but Stevens was there and this Ground of Appeal had no merit whatsoever.

He interestingly commented that his lone decision in this court at this time would not be authoritative so he considered that three Lord/Lady Justices should hear the application for permission therefore he allowed the applicant to renew their request for permission to the date of hearing Ground 3 arguments.

Lord Justice Underhill was at pains to make it clear that the course of action which he has taken should not be seen as a covert comment on the merit of Ground 1, he does not think it has any merit at all.

For the avoidance of doubt, he asked that it be noted that Stevens v Equity remains good law.

Original article can be found here.

CPR Quick Reference Guide

Part 1- Over riding objective

Part 2-6 General Rules for parties & ADR.

Part 7-20 - Preaction protocol (starting a claim)

• Part 7 and Part 8 explain how to start a case by filing a claim form and that certain claims require different forms.
• Parts 9-11 explain how the defendant will need to respond to the claim form.
• Part 12 deals with default judgments — this is where the defence has failed to file an acknowledgment of service; or has failed to file a defence.
• Part 13 deals with setting aside default judgments.
• Part 14 deals with admissions (e.g., of liability, guilt, etc).
• Part 15 explains how the defendant should file and serve a defence (if applicable) and how the claimant should file and serve a response.
• Part 16 explains the rules governing the “statements of case”, which includes the claim form, the particulars of claim, the defence and maybe a reply.
• Part 17 explains how to correct mistakes made with documents in the statements of case.
• If either party wants to make a request for further information they must follow the rules set out in Part 18.
• Part 19 explains when and how you can bring additional parties into the case.
• Part 20 deals with counterclaims (additional claims against each party). 
• 
  
• Parts 21-22: Litigating the case
  Part 21 provides general information about children and protected parties.
  Part 22 deals with the statement of truth and lists the documents that must contain a statement of truth when filed with the Court.
• Part 23 deals with general rules about how and when to file applications for a court order.
• Part 24 deals with summary judgment, this is where a party asks the judge to make a decision where they believe the other party has not has no real prospect of succeeding on or defending the claim or issue, and there is no other compelling reason why the case or issue should be disposed of at a trial.
• Part 25 provides information on interim decisions and how to secure your costs.
• 
  
• Parts 26-30: Allocation to a Track
• 
  
• Part 26 deals with how the case will be managed. Your case will be allocated to one of three ‘tracks’. Each track has a distinct set of procedural rules and timetables to govern a case. Allocation to a particular track depends on the case’s financial value (i.e., how much you or your opponent claim in damages).
• The small claims track (Part 27) is for claims with a financial value of not more than 5,000. The procedure is intended to be fast, cheap and informal.
• The fast track (Part 28) is for claims not falling within the small claims track and with a financial value of not more than 15,000.
• The multi track (Part 29) is for claims of greater value (over 15,000) or which are considered complex.
• Part 30 deals with how to transfer your case to a different track.
• 
  
• Part 31-35: Evidence
• 
  
• Part 31 explains how and when information should be disclosed to the other side, and what information is protected (i.e., does not need to be disclosed).
• Part 32-33 explains how the court controls evidence and other miscellaneous information.
• Part 34 explains how to summon witnesses and carry out depositions.
• Part 35 explains the rules surrounding expert witnesses.
• Part 36 Offers of settlement 
• Part 37 explains how to make payments into court.
• Part 38 governs how to discontinue a case and the consequences of taking this action.

• Part 39- 40: Hearing and judgment
  • Part 39 explains rules as regards to timetables and court bundles.
  • Part 40 deals with judgments and court orders.
  • 
    
  Parts 43-79: Post-judgment (key parts only)
  Parts 43-48 provide lots of information about costs, including the amount you hope to receive from the other side for your legal costs if you win, or what you have to pay if you lose.
  • CPR 52 deals with the appeals process (i.e., if a party disagrees with a decision)..
  • CPR 70-79 provides information on different methods of enforcing a judgment.

10% Increase in General Damages by Joanna Hastie and Helen Rutherford

Background to the Increase

The 10% increase in general damages is one of the key elements of the Jackson Reforms, which aim to rectify disproportionate costs in civil litigation.

Those behind the reforms felt that escalating costs had come to be at the forefront of decision-making in civil litigation, to the detriment of fairness and access to justice considerations. Consequently, the reforms concluded that the proper course was to abolish recoverability of success fees and after the event (ATE) insurance premiums.

Thus, the 10% increase in general damages was introduced to assist Claimants in meeting additional risks and costs arising from the introduction of such measures.

Implementation

Some of the key reforms recommended by The Jackson Report, such as the abolition of conditional fee agreement (CFA) success fees and ATE premium recovery, are encapsulated in the Legal Aid, Sentencing and Punishment of Offenders (‘LASPO’) Act 2012 which came into force at the beginning of April 2013. 

However, the 10% increase in general damages did not appear on the face of this Bill. The government held firm that this matter was for the judiciary.

Simmons v Castle

Consequently, the 10% increase in general damages was confirmed by the Court of Appeal in Simmons v Castle [2012] EWCA Civ 1039. The original judgment in this case was given in July of last year – this stated that general damages will increase by 10 per cent where judgment is given after 1 April 2013 – whether or not a CFA is in place and irrespective of when the agreement was signed.

That original decision was widely criticised, both for the manner in which it came about, without giving affected parties the opportunity to make submissions, and the uncertainty that it created:

Litigants were left not knowing how the courts would treat Part 36 offers that would potentially only be beaten by virtue of the 10% increase. Others argued that the decision would be unfair in that Claimants who had entered into CFAs pre April 2013 would still be able to recover success fees AND would now also have the windfall of the 10% increase.

Consequently, following an application of the Association of British Insurers (ABI), the Court heard arguments from the ABI, Association of Personal Injury Lawyers (APIL) and the Bar and subsequently handed down a revised decision of the Simmons judgment in October 2012

Revision of Simmons

In this revision the Court stated as follows:

“20. Accordingly, we take this opportunity to declare that, with effect from 1 April 2013, the proper level of general damages in all civil claims for (i) pain and suffering, (ii) loss of amenity, (iii) physical inconvenience and discomfort, (iv) social discredit, (v) mental distress, or (vi) loss of society of relatives, will be 10% higher than previously, unless the claimant falls within section 44(6) of LASPO. It therefore follows that, if the action now under appeal had been the subject of a judgment after 1 April 2013, then (unless the claimant had entered into a CFA before that date) the proper award of general damages would be 10% higher than that agreed in this case, namely £22,000 rather than £20,000”.

In effect this revision means that the Court broadly accepted the ABI’s submissions and held that the 10% increase in cases where judgment is given after 1 April 2013, should not apply to claimants who fall within the ambit of section 44(6) of LASPO. Therefore, claimants who have already entered into a CFA or CCFA before 1 April 2013 and will be able to recover a success fee from the defendants, will not be eligible for the 10% increase in general damages.

original article: http://www.zenithchambers.co.uk/site/the_jackson_corner/articles/10_percent_increase_in_general_damages.html 

A New Approach to Basic Hire Rates: Karl Stevens v Equity Syndicate Management Ltd [2015] EWCA Civ 93 by Steven Hogarth

Introduction

In arguably the most important decision on the calculation of the basic hire rate (BHR) in credit hire litigation since Bent v Highways and Utilities Construction (No. 2) [2011] EWCA Civ 1384, the Court of Appeal has provided a new, simple and Defendant-friendly method for the calculation of BHR. The decision is likely to change fundamentally the way in which credit hire claims are fought.

The Facts

On 10 February 2011, the Claimant’s Audi A4 S Line Tdi 140 was struck by the Defendant’s insured. Liability was admitted. The Claimant entered into a credit hire agreement with Accident Exchange Ltd (‘AEL’) for a period of 28 days. The rate was £140 per day in addition to an excess waiver fee of £22.50 per day and windscreen cover of £3.00 per day. The total rate was therefore £162.50, exclusive of VAT.

At first instance, the Recorder awarded a hire rate based on an average of the rates quoted by four mainstream hire companies for vehicles in the relevant group.

The First Appeal

The First Appeal in this case was heard by Burnett J (as he then was), and was reported as [2014] EWHC 689 (QB), [2014] RTR 34.

Much of the Judge’s reasoning was based upon the following passage from Lord Hoffman’s speech in Dimond v Lovell [2002] 1 AC 384 at 403G:

“How does one estimate the value of these additional benefits that Mrs Dimond obtains? It seems to me that prima facie their value is represented by the difference between what she was willing to pay 1st Automotive and what she would have been willing to pay an ordinary car hire company for the use of a car. As the judge said, 1st Automotive charged more because they offered more. The difference represents the value of the additional services which they provided.”

Referring to that test, Burnett J provided practical advice on identifying the BHR(at [29]):

“… the search must be for the figure which the claimant was willing to pay [to use Lord Hoffmann's formulation] on the basis that he had in fact gone into the ordinary car hire market to find a temporary replacement for his vehicle. In doing that the evidence of a claimant that he would be disinclined to spend more than necessary on a car would be relevant. There might be evidence of how the claimant has sourced hire cars in different contexts. Some might be fortunate to have access to discounted rates through membership of motoring or professional bodies. As was recognised in Burdis a claimant hiring a vehicle to replace one damaged by a tortfeasor would be under a duty to take reasonable steps to mitigate his loss. That does not mean that a claimant would be expected to telephone every last car hire provider in the locality to seek details of various deals that might be available. But the reality today is that almost anybody seeking to hire a vehicle in any particular locality would be likely to investigate the market by doing a simple comparative search on the internet. The full panoply of different hire rates available to the credit hire industry through specialist websites (and regularly produced in credit hire litigation) would not be available to an ordinary driver, but one way or another it is not difficult for anyone wishing to hire a car to discover the rates offered by the major hire companies. Cheapest is not necessarily best and for all sorts of reasons anyone may reasonably choose to hire from a company that is not the cheapest available.” (emphasis added)

The test was based on an assessment of what a particular claimant would have been willing to pay. In practice, this required counsel to ask hypothetical questions to a usually mystified Claimant on what he would have done had he gone into the ordinary hire market. The Court of Appeal’s new approach indicates a shift from a subjective to an objective approach, and will remove the need for such counterfactual questioning by Counsel.

The Second Appeal

The Claimant appealed the judgment of Burnett J, raising the following arguments:

(a) The exercise of finding a basic hire rate is an objective one and cannot depend on what a particular claimant would have been willing to pay;

(b) The law has moved on since Lord Hoffman’s speech in Dimond v Lovell, and Burnett J paid too little attention to Burdis v Livsey [2002] EWCA Civ 510, and Bent (No. 2);

(c) As the burden of proving a difference between the credit hire rate and BHR rests on the defendant, and as some of the basic rates in evidence were higher than the credit hire rate, the Judge was incorrect to find that the credit hire company charged an additional amount in respect of irrecoverable benefits.

Giving the only reasoned judgment (with which Floyd and Jackson LJJ agreed), Kitchen LJ set out the legal background in detail and gave the following judgment:

“[34] … I do not understand Lord Hoffman to have been saying that it was necessary to consider what Mrs Dimond would herself have been prepared to pay. The attitude of the driver who is not at fault must be irrelevant to the analysis. For example, it may be that, as in the present case, the person would never have hired at all. The analysis it, as Aikens LJ said in Pattni, an objective one and it is to determine what the BHR would have been for a reasonable person in the position of the claimant to hire a car of the kind actually hired on credit.

[35] Here I think one finds the answer to the questions I have posed. The rates quoted by companies for the basic hire of a vehicle of the kind actually hired by the claimant on credit hire terms may vary. No doubt some are offered on very favourable terms. So also those at the top of the range may reflect particular market conditions which allow some companies to charge more than others. But it seems to me reasonable to suppose that the lowest reasonable rate quoted by a mainstream supplier for the hire of such a vehicle to a person such as the claimant is a reasonable approximation to the BHR. This is likely to be a fair market rate for the basic hire of a vehicle of that kind without any of the additional services provided to the claimant under the terms of the credit hire agreement.

[36] It follows that a judge faced with a range of hire rates should try to identify the rate or rates for the hire, in the claimant’s geographical area, of the type of car actually hired by the claimant on credit hire terms. If that exercise yields a single rate then that rate is likely to be a reasonable approximation for the BHR. If, on the other hand, it yields a range of rates then a reasonable estimate of the BHR may be obtained by identifying the lowest reasonable rate quoted by a mainstream supplier or, if there is no mainstream supplier, by a local reputable supplier.” (emphasis added)

Therefore, the Court of Appeal found that although Burnett J erred in his reasoning (by failing to apply an objective approach), the result on the facts of the case was sound. The appeal was dismissed.

Comment

The approach set out by Kitchen LJ is new and highly favourable for defendants. It provides sensible and straightforward guidance on the issue of the determination of the BHR. It appears that all defendants need do is survey evidence from mainstream suppliers (or if there are none, local reputable suppliers) for the type of care hired and in the claimant’s geographical area. The applicable rate will then automatically be the lowest reasonable rate.

What this means for defendants is that so long as they source well-prepared rates reports, containing all the relevant terms and conditions, excess waiver cover, and where appropriate, daily rates from major hire companies for cars of the appropriate type, then such evidence is likely to ensure that the Court awards only the lowest reasonable rate. Likewise, in cases such as Equity, where AEL attempts to rely on a report generated by a large database of rates, the evidence may well prove to be extremely helpful to defendants.

This article has just been published on the PI Brief Update Law Journal.

http://www.pibriefupdate.com/content/pibulj-sec/2938-a-new-approach-to-basic-hire-rates-karl-stevens-v-equity-syndicate-management-ltd-2015-ewca-civ-93-isaac-hogarth-12-king-s-bench-walk