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

RTA PI Claims Portal

The system supports the RTA PI Claims reforms process for low value personal injury claims (£1,000 - £10,000) agreed by Claimant and Defendant stakeholders with the Ministry of Justice (MoJ) by providing a secure medium for the electronic transfer between Claimant Representatives and Defendant Insurer/Compensators of the information necessary to process claims by individuals for personal injury following a road traffic accident.

The system has been designed in partnership with Claimant and Defendant stakeholders to take account of the internal working practices of both, whilst remaining fully compliant with the agreed reform protocols. It manages the communications throughout the stages defined by the protocols, validates the data defined as mandatory is fully completed, monitors the agreed times and provides reminders to avoid these periods being exceeded.

Q: Why were the PI reforms introduced in April 2010?

A: The reforms were introduced to streamline the current compensation system by speeding up the process of establishing liability and finalising payment of low cost RTA injury claims. Claimant lawyers now submit agreed information and insurers/compensators responding within specific time periods.

Q: Do the reforms apply to all PI claims?

A: The new process does apply to low cost personal injury claims from accidents that occurred on and after 30 April 2010 in England and Wales valued between £1,000 - £10,000 in damages – the majority of all motor personal injury claims affecting in the region of 500,000 claimants.

Q: Will the majority of motor claims go through the process?

A: It is anticipated the majority of motor claims will fall into the category covered by the new process. It is too early to judge how many of these will fall out of the process due to liability disputes. The technology system has the capacity and scalability to deal with the anticipated volume of claims covered by the new process.

Q: How long did it take to resolve low value RTA claims and how much did it cost?

A: Previously, it took several months to establish liability if the insurer/compensator has to request further information. Additional work by either side increases both legal and insurer/compensator handling costs. Streamlining the flow of agreed information on both liability and quantum between parties reduces the operational costs experienced and will enable the insurer/compensator to agree settlement more quickly.

Q: How does the new process differ from the previous RTA PI claims procedure?

A: The new process requires the use of standardised information passed between claimant lawyers and insurers through a secure electronic Portal, within specific time frames, which enables key decisions to be communicated more quickly and reduces duplication.

Q: How is the new process structured?

A: There are two definitive key stages involved in the new process with an optional third stage in the event of disagreement on quantum:

Stage One: The claimant’s solicitor completes the claim notification form and sends it to the insurer, who may admit or deny liability within 15 working days. There is a £400 fixed fee.

Stage Two: Where liability is admitted, the claimant solicitor completes and sends a Settlement Pack to the insurer/compensator. The insurer/ compensator has 15 working days to accept or a further 20 working days to negotiate via counter offers. There is an £800 fixed fee attached to this stage.

Medical evidence is gathered between stages 1 & 2 – there is no set time as medical reports must reflect the claimant’s injuries and recovery.

Stage Three: Comes into effect only when the relevant parties cannot agree a settlement figure, the claim then proceeds to a quantum hearing. Fixed costs of £250 for a paper hearing or £500 for an oral hearing will be met and there is no time limit involved.

A Successful Claim for Credit Hire

Guidance on making a successful credit hire claim was laid out in Clark v Ardington, Lagden v O'Conner.

1. Establish there is a valid, enforceable credit hire agreement that complies with the Consumer Credit (Exempt Agreements) Order 1989 (requiring the debt to be paid in no more than four installments in less than 12 months from the date of the agreement).
2. Show the Claimant was impecuniose (that he had no choice but to use a credit hire). The test being whether the Claimant had sufficient funds available without exposing himself and his family to greater loss or an unreasonable burden.
3. Mitigate their losses: it is paramount that a Claimant must take reasonable steps to mitigate their loss. There had to be a genuine NEED for a replacement vehicle and no offer of a courtesy car was made by the insurer. Although a claimant is not obliged to use their own insurance to benefit the claimant.

Road Traffic Accidents: Low Velocity Impact Claims

Low velocity impact (LVI) claims are claims for damages for injuries sustained in a road traffic accident in which the defendant (whilst often admitting negligently having caused the collision) asserts that the speed of impact was so low that the claimant cannot have sustained the injury complained of. Such a defence is often, but not always, accompanied by a plea of fraud – the claimant has made it up.

LVI claims most often involve whiplash injuries to the spine, usually the neck. They are mostly low value claims relating to relatively minor symptoms that resolve over a matter of weeks or months. The value of the claims are invariably such that they fall within the bracket to which, in terms of value, allocation to the fast-track is appropriate.

The fundamental premise of the LVI defence is that there is level of physical force upon a vehicle’s occupant below which no injury can be sustained by the occupant. This claimed threshold for injury is often calculated as between 3 or 5 mph ÄV.

Unlike in laboratory conditions, the actual speed of the impact in which the claimant was injured will rarely if ever be known with any accuracy. Witnesses’ descriptions of speed are notoriously unreliable. Therefore even if it were the case that an impact speed of less than x mph simply could not flex a human spine sufficient to inflict anything other than momentary symptoms, it will not often be the case that the evidence will be such as to compel the court to find that the impact speed was indeed less than x mph.

Vehicle damage is unlikely to be a reliable indicator of impact speed as parts of different cars absorb or transmit force differently to others. There will rarely be clear and detailed evidence as to the precise nature and extent of vehicle damage. Sometimes there will be no, or no obvious, damage, especially in many modern vehicles with absorbent bumper bars beneath the outer bumper. “Vehicle damage reports” are insufficient. They are prepared by insurance assessors simply enquiring into whether any damage is broadly consistent with the account given and whether the likely cost of repair exceeds the value of the vehicle. They do not involve an inspection intended to detect evidence indicative of impact speed. Repair estimates and bills are equally insufficient. Photographs mostly depict only superficial damage and cannot indicate the extent to which force has been transferred to the occupant.

In Armstrong v First York [2005] EWCA Civ 277, the defendant alleged that the impact force involved had not been enough to cause the claimants any injury and therefore their claims to have been injured were fraudulent. The claim was accordingly allocated to the multi-track and a jointly instructed forensic engineer permitted to give evidence. He concluded that the impact was insufficient to cause any injury to the claimants. However, the trial judge(5) unreservedly accepted the claimants as truthful witnesses but also found that the expert’s evidence was logical, consistent and without any apparent error. The judge relied upon the dicta of the Court of Appeal in Cooper Payan Ltd v Southampton Container Terminal Ltd [2003] EWCA Civ 1223 that:

There is no rule of law or practice in such a situation requiring the judge to favour oraccept the evidence of the expert or the evidence of a witness of fact. The judge mustconsider whether he can reconcile the evidence of the expert witness with that of the witness of fact. If he cannot do so, he must consider whether there may be an explanation for the conflict of evidence or for a possible error by either witness, and in the light of all the circumstances make a considered choice which evidence to accept. The circumstances may be such as to require the judge to reach only one conclusion.

The judge found that the claimants’evidence was to be accepted and that the engineer’s evidence involved “some error which has not been detected by this court and to which the court cannot point. The Defendant appealed on the basis that, in line with Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377, it was not open to a judge to reject the evidence of an expert without giving clear reasons why. The Court of Appeal dismissed the appeal as the judge had indeed given a reason for rejecting the expert’s evidence namely that it was inconsistent with that of the claimant’s whose evidence he preferred as he was entitled to.

In effect by basing their case on the impossibility of injury and thus alleging “fraud”, the defendant’s insurers had switched the burden of proof onto themselves. Defendants now no longer allege that injury was impossible and therefore the claim is fraud. Rather, as entitled (see Kearsley below), they now allege that injury was so improbable that the claimant simply cannot establish, on the balance of probabilities, the injury claimed.

Land Law -> A Valid Tenancy

There are three key legal requirements for a tenancy to be created, often known as the “Three Ps”:

· Tenancy created in a proper manner,

· for a stated period of time,

· granting exclusive possession.

Proper manner

There are certain requirements for a tenancy agreement to be considered to be created in a proper manner:

· Identifiable parties, i.e. an identifiable landlord and tenant.

· Identifiable premises, i.e. an identifiable full address for the premises being let, which should include the postcode for the avoidance of doubt.

In law tenancy agreements for a duration of less than three years can be created either in writing or verbally – however, we strongly advise against verbal contracts, since the terms agreed can be difficult to prove at a later date.

In the unlikely event that your tenancy is for a term of more than three years it will need to be created by Deed – this is a technical process and will involve a solicitor, so if you find yourself in this situation, get advice. Note that this does not include shorter contracts that are later renewed past three years – they can still be created by normal contracts.

Period of Time

A tenancy agreement must state the maximum or minimum length of time it is for, and this can be stated either as fixed term or periodic. See the information on fixed term or periodic contracts for details of the differences.

Exclusive Possession

If Exclusive Possession is not granted a Tenancy cannot be created, only a License. This is likely to be the case, for example, with Home Stay accommodation, where you rent a room in a landlord’s own home. Your rights as a Licensee will be substantially different to those of a tenant, so make sure you get advice beforehand.

Credit Hire Basics

Many road traffic accidents result in claims for credit hire, and many personal injury solicitors end up dealing with them. However, this is a complex area of law, with some quite unique rules, and there are many pitfalls for those new to the work. This article is aimed at those who are dealing with a credit hire case for the first time, or who have not been involved since before the major recent decisions.

Most credit hire law comes from two cases: Clark v. Ardington [2002] EWCA Civ 510 and Lagden v. O’Connor [2003] UKHL 64, to which frequent reference will be made.

Validity of agreements

The first and most important point decided in Clark was that a credit hire agreement could be valid, enforceable and exempt from the Consumer Credit Act. If a credit hire agreement complies with the Consumer Credit (Exempt Agreements) Order 1989, then it is likely to be valid. This will be the case if:

1. It requires the debt to be paid in not more than four instalments in less than twelve months from the date of the agreement.

Most challenges to the validity of credit hire agreements are generally unsuccessful, provided the agreements comply with the requirements laid down in Clark.

Duration of hire

The law on this point was set out at paragraphs 115 to 121 of Clark. For the hire period to be reduced, the court should consider whether there was a failure to mitigate on the part of the Claimant, which could be said to be an independent cause of the loss of use of the Claimant’s own vehicle for that period. In particular, if the Claimant acted reasonably in placing his vehicle with a reputable garage, and that garage delayed carrying out the repairs, then the Defendant remains liable for the full period -- but can seek a contribution from the garage.

When the vehicle is repairable, delays generally come in three types: delay in starting repairs, delay in carrying out repairs, and delay in returning the hire vehicle when repairs are complete. A delay in starting repairs may or may not be the fault of the Claimant (or his insurance company). But if the Claimant’s insurer delayed instructing an engineer to inspect the vehicle, or delayed authorising repairs, that period is unlikely to be awarded. On the other hand, if the Defendant’s insurance company was dealing with repairs, the period is likely to be recoverable.

Delay in the course of repairs is very likely to be recoverable, subject perhaps to a contribution from the garage. Most garages are reputable and most people simply leave the garage to get on with it, although some difficulty can arise if the Claimant did not chivvy or chase the garage. In most cases, delays in this period are recoverable.

Delay following completion of repairs is difficult to justify beyond (in some cases) a few days. Most of the time there is no reason a Claimant could not pick up his vehicle straight away, and any delay is likely to be his own fault – or sometimes an administrative error by the hire company. On the other hand, a Claimant who was unable to pick up his vehicle straight away for a specific, good reason – such as being away on business in the hire vehicle – is likely to succeed.

When the Claimant’s vehicle is written off, other complexities arise. If the Claimant did not have comprehensive insurance, then he would have to buy another vehicle himself – possibly with money provided by the Defendant’s insurer. In these circumstances a sort of impecuniosity is relevant, although not in the same way as referred to in Lagden (discussed below).

If the Claimant could afford to buy a new vehicle straight away, then a hire period longer than a few weeks is unlikely to be justified. With an inexpensive vehicle, most claimants would be able to afford a loan to buy a replacement. If the vehicle is more expensive, then this becomes less feasible – but someone who owns a more expensive vehicle is likely to have more money available to buy a new one.

If the Defendant’s insurer delayed payment of the pre-accident value, this can sometimes justify longer claims. However, the courts are generally sympathetic to the argument that the Claimant should have bought a replacement himself, especially if the delays are lengthy.

Hire rate and impecuniosity

In Clark, the Court of Appeal set out that the Claimant must adduce evidence of the rate charged by a car hire company. The burden of proof then passes to the Defendant to show that the Claimant could reasonably have used a different, cheaper hire company. The burden is normally discharged by way of a report on ‘spot hire’ rates: evidence (whether lay or expert) of a survey of the rates charged by local hire firms for an equivalent vehicle. Because these firms do not provide credit hire, they are generally cheaper.

Once the Defendant has discharged this burden, the Claimant must then show that he had no choice but to use credit hire (‘Need’). If so, he can still recover the full credit hire rate. This is the effect of Lagden. Normally, the Claimant had no other choice if he was impecunious: that is, he could not afford to pay spot hire charges up front.

There was no single test laid down for impecuniosity in Lagden. Lord Nicholls suggested (at paragraph 9) that it was a question of priorities: if the Claimant could not pay hire charges without making sacrifices he could not reasonably be expected to make. Lord Hope said (paragraph 36) that an impecunious Claimant could not pay the spot hire charges without exposing himself or his family to a loss or burden which is unreasonable. He also said (paragraph 42) that the dividing line was likely to fall between those who did and did not have a credit or debit card. With respect to the latter, the courts normally consider whether the Claimant had sufficient funds available through his credit or debit card as well.

Impecuniosity nearly always comes down to a question of fact for the trial judge. Each case is decided on its own merits.

Adv Crim - Initial Hearing at the Magistrates

Defendants aged 18+ charged with criminal offences will make their first appearance at the Magistrates (hence forth shall be referred to as the Mags...bcoz im cool like that).

Any Defendant charged with an indictable only offence ill immediately send the case to the Crown Court under s51 of the Crime and Disorder Act 1998. But all summary only and either way offences will be dealt with by the mags.

Once charged the defendant will either be refused bail or granted bail in which case the Defendant will attend court to answer his bail.

Depending on the case complexity and the Defendants likely plea the Defendants 1st appearance will either be an Early First Hearing (EFH) or an Early Administrative Hearing (EAH).

Early First Hearing: Used when the Defendant is going to enter a ‘simple guilty plea’ admitting all the elements of the offence.

Summary Offences – Defendant will appear before a full bench of 3 mags. The charges will be read out to the D & he enters a plea. CPS will state facts of the case & Defence solicitor will give a plea in mitigation. Mags will either sentence straight away or adjourn if they want a pre-sentence report from the probation service. If adjourned bail will be dealt with.

Either way Offences – Same as above, except once a plea has been entered into the mags will decide if they have sufficient powers to deal with it or pass it to the Crown Court for sentencing depending on the seriousness of the case. Mags will either sentence straight away or adjourn if they want a pre-sentence report from the probation service. If adjourned bail will be dealt with.

Early Administrative Hearing: Is essentially an admin hearing. Mags will check Defendant has legal representation or to obtain public funding. Or will be adjourned to allow defence to asses the strength of the case & the plea the Defendant should enter. Will need disclosure of the prosecutions case. Usually dealt by a bench of 3 mags but can sometimes be dealt with by a Clerk or Legal Advisor, unless the prosecution object to the Defendant being granted bail.

Prior to the next hearing the Defence should: at their first appearance before the mags, few will enter a plea just yet and will usually be adjourned for them to take advice from their solicitor.

The Defence Should:

1.      Obtain funding from the LSC.

2.      Take a statement from the client.

3.      Obtain details of the prosecutions case from CPS.

4.      Advise client on the strength of their case & his plea.

5.      If its an either way offence; inform client of the possibility of it being sent to the Crown Court and its pros & cons of each court.

 

Next hearing: entering a plea – At this point the court would expect the Defendant is in a position to enter his plea.

Summary offence – if entering a guilty plea, the mags will either sentence the Defendant straight away or adjourn for a pre-sentence report. If the Defendant pleads NOT guilty they will fix a date for his trail and issue case management directions. Mags will also deal with bail.

Either way offences – if however the Defendant enters a guilty plea or a not guilty plea. The Mags will have to decide if their powers are sufficient to sentence (if guilty) or to be tried (if not guilty). Or if they should issue to the Crown Court. This is known as the Plea before Venue & Mode of Trial Procedure.

 

Plea before Venue Hearing Procedure

1.      The charges will be read out to the D.

2.      The clerk will then ask the D to enter a plea. And if guilty he will be treated as if he he’d pleaded guilty before the mags who will then either sentence him or commit him to the Crown Court for sentencing.

3.      If the Defendant pleads guilty, the CPS will outline the facts of the case including previous convictions. Defence will give a plea in mitigation. At which point mags will determine if their sentencing powers are sufficient (anything from 6 months for an e/w and 12 months for a Defendant found guilty of 2 count of an either way offence). Depending on the seriousness of the office, with reference to Magistrates Sentencing Guidelines & any aggravating/mitigating factors.

4.      If mags powers are insufficient they will commit to the Crown for sentencing pursuant to the Power of Criminal Courts (sentencing) Act 2000, s3. The procedural rule which must be complied with when Defendant is committed to the Crown Court for sentence are set out in Part 43 of the Criminal Procedural Rules 05.

5.      Id the Defendant refuses to enter a pea or enters a not guilty plea we will advance to the ‘Mode of Trial’.

 

Mode of Trial

Mags will decide whether offence is suitable for summary or committal to Crown based on Prosecution and defence making representations. They must consider:

a)     The nature of the offence.

b)     Circumstances making the offence of the a serious character.

c)      Mags punishment powers are adequate for the offence.

d)     Any other circumstances why it should be tried at one venue or another.

 

Defendant will be informed he has the right to elect a venue if he so chooses, if he elects by summary, they will fix a trial date and issue case management directions. If the Defendant elects trial by Crown Court the case will be adjourned for a committal hearing.