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.