Following on from the recent appeal case of Bent v (1) Highways & Utilities Construction Ltd and (2) Allianz Insurance Plc (2010) Langley’s successes show that savings can really be made in credit hire cases
Credit hire cases have traditionally been an area despised by Insurers as they are notoriously difficult to defend. Normally if the case goes to court then it is very hard to prove that the Claimant should not have used credit hire and should have used spot hire instead.
There are many evidential hurdles that a Defendant has to overcome when defending a credit hire claim and it can be seen to be difficult to succeed. The main issues include; proving the need for hire, spot hire and ABI rates verses credit hire rates, length of hire, impecuniosity and mitigation.
Defendants can take steps to try and make significant savings in credit hire cases which have proven to be successful in recent cases.
In the recent case of Bent a highly paid footballer used credit hire and not “spot hire” rates. The Defendant argued that the Claimant had not mitigated his loss as he should have used the spot hire rates rather than the credit hire rates. They also maintained that spot hire rates should apply because the Claimant was not impecunious. Neither the rate of hire nor the type of vehicle that the Claimant hired were reasonable because the total hire costs amounted to nearly as much as his own car was worth. On appeal the Court confirmed that often when assessing valuation evidence it is for the court to make appropriate adjustments and the matter has been ordered for a re-trial in which it would be open to both sides to adduce what evidence they chose about spot rates and equivalent rate.
In a recent case, Langleys acted for the Defendant in a claim where liability was admitted by the Defendant for the accident at the outset and the issue in dispute was the credit hire charges. The Claimant was involved in an RTA on the M25 London due to the fault of the Defendant and chose to use a repairer and credit hire company in Yorkshire. The Claimant claimed storage and recovery charges to take the vehicle to Yorkshire in the sum of £2500, credit hire charges for a like-for-like vehicle (taxi) for 119 days in the sum of £13,559 and repairs in the sum of £902.
On closer inspection of documents and correspondence, a chronology of events revealed that one reason for the excessive length of hire was that the Claimant solicitors simply failed to request payment for the minimal repairs to the Claimant’s vehicle from the Defendant Insurers for 75 days. The Claimant’s solicitors were unable to provide any explanation for this and therefore it was successfully argued that 75 days should be deducted from the total length of hire. Furthermore the engineers report had anticipated that the repairs should have taken no more than 2 days depending on the availability of parts. Successful negotiations lead to a reduction the period of hire from 119 days to one month.
The rate of hire and additional charges were in line with ABI rates but wholly disproportionate to the minimal repairs in the sum of £902. The Defendant put the Claimant to strict proof to support his claim of impecuniosity but the Claimant was unable to provide any adequate documentation because he was a taxi driver and was paid in cash. The Defendant maintained a robust stance until eventually the Claimant was forced to concede that there was a risk the Court would probably not allow the full sum claimed without proof of his income which were so clearly disproportionate.
The recovery and storage charges were also reduced on the basis that there was no good reason for the Claimant to chose to use a repairer and hire company many miles from his home town and that the Claimant’s solicitors had caused significant delays. Settlement was ultimately agreed in the sum of £4250 and significant costs reductions were also made on the basis that had the Claimant’s solicitors not delayed matters and given that an early admission of liability was made, it was questionable whether proceedings were necessary in the first place.
In another recent case liability for damage to the vehicle was admitted at the outset and the credit hire itself was not in dispute. The period of hire was only 19 days and the Claimant hired a similar vehicle to the one that was being repaired. The point in issue was the 90 day penalty charges.
The Defendant disputed the fact that they should have to pay the penalty charges which were incurred through no fault of their own. Once liability was admitted, repairs for his vehicle were paid to the Claimant and the Defendant Insurers awaited documents in support of hire in order to dispose of the claim. Initially the notification of hire was sent to the incorrect Insurer office and the Defendant Insurer notified them of the correct address requesting sight of the credit hire payment pack. No documents were received and the Defendant Insurer regularly chased the credit hire company and Claimant’s representatives for details by telephone, fax and snail mail. No response was ever received and no documents forthcoming.
Proceedings were issued and again the Defendant requested documents in support at which time they were eventually received and included penalty charges incurred after the Defendant Insurer’s chasing correspondence. The Defendant maintained a robust Defence in relation to the penalty charges but made an offer to pay the original hire charges for 19 days. This offer was rejected and the claim proceeded to a Small Claims Hearing.
At the Hearing, the Defendant presented the Court with a chronology of events and copy correspondence showing the regular chasing attempts the Defendant Insurer had made to obtain documentation in order to achieve early settlement. The Claimant argued that they had provided one copy of the payment pack but were unable to show any evidence of forwarding a further copy as requested by the Defendant. The District Judge found in favour of the Defendant and found that the Claimant would have to bear the cost of the penalty charges. In relation to costs, the District Judge agreed that on the findings he had made, the claim was issued prematurely and in the circumstances, the Claimant was not awarded small claim costs (issue fee, fixed costs, hearing fee and allocation fee). Submissions were also made for the Claimant to pay the Defendant’s costs on the basis that the Claimant had acted unreasonably but unfortunately the District Judge did not accept that this amounted to unreasonable conduct, as the bar for unreasonable conduct is set high in the small claims track.
The Courts do not always sympathise with a Claimant regarding credit hire charges even when liability is admitted. If Defendants carry out a thorough investigation of documentation provided, draft a chronology of events and put the Claimant to proof, often gaps in the Claimant’s evidence appear and provide Defendants with the opportunity to significantly reduce unreasonable and disproportionate charges claimed.