Roadrunner

Courts throughout England and Wales are struggling to cope with a deluge of claims for credit hire charges, all implacably opposed. Advocates tote around seemingly limitless bundles of authorities that have spawned this commercial opportunity for car hirers and lawyers but which bedevil the courts and put a further squeeze on more urgent work.

I plead with the hire and insurance industries to find a better way, and, as we wait for them to do so, seek to assist those who have stumbled upon this area of modern litigation.

The claims arise out of road traffic accidents where liability is admitted. The claimant is put in contact with a company, possibly linked to their insurer or the repairing garage, offering to provide a hire vehicle while their own is repaired. The vehicle is provided on credit at an enhanced rate with payment being deferred while a claim is pursued against the insurer or the culpable motorist. The claimant signs a hire agreement and takes collection of a hire vehicle.

A credit hire claim is, in essence, a claim for the loss of use of a car while it is in the garage undergoing repairs. The injured party cannot claim reimbursement for expenditure that is unreasonable.

Currently claims are fought over a multitude of issues. The main questions are:

• Is there a need for a replacement vehicle? The need for a hire car is not self proving. While in the case of an ordinary motorist there will often be no issue as to need, the same may not apply where a large car dealership or commercial organisation has 'pool' cars available to them.
• Was the type of hire vehicle reasonable? The claimant is entitled to hire an equivalent vehicle. In Lagden v O'Connor [2003] UKHL 64, Lord Hope stated: 'If it is reasonable for him to hire a substitute, he must minimise his loss by spending no more on hire that he needs to do in order to obtain a substitute vehicle. If the defendant can show that the cost that was incurred was more than was reasonable '“ if, for example, a larger or more powerful car was hired although vehicles equivalent to the damaged car were reasonably available at less cost '“ the amount expended on the hire must be reduced to the amount that would have been needed to hire the equivalent.' The burden of showing a failure to mitigate lies on the defendant. Typically, the defendant will seek to show that the large 'spot' hire companies carry the same or an equivalent vehicle within their fleet in such numbers that their availability is not in question. The question of an appropriate and available vehicle becomes more difficult with prestige marques and expert evidence may be required in such circumstances.
• Was the period of hire reasonable? It will not be enough for the defendant simply to say the repair took too long. The defendant must show that the claimant has failed to mitigate, which requires a finding of some conduct on the part of the claimant or on the part of someone for whom he is in law responsible, or indeed of a third party, which can truly be said to be an independent cause of loss of his car for that period.
• What rate of hire is reasonable? Where the claimant can prove he is impecunious then he is entitled to recover the credit hire rate despite the additional services made available to him by the credit hire provider at an enhanced cost. If he is not impecunious and if the defendant can prove on the balance of probabilities that (a) there was an equivalent hire vehicle, (b) available to the claimant at the appropriate time, then (c) the additional services are not recoverable, and (d) only the 'spot' hire rate is recoverable. 'Impecuniosity' means an inability to pay for car hire charges without having to make unreasonable sacrifices. The availability of a credit or debit card may be a relevant factor.
• Is a claimant's refusal to accept the offer of a cheaper alternative vehicle a failure to mitigate his loss? A claimant may fail to mitigate his loss if he refuses to accept the offer of a suitable replacement car from the defendant on the basis that the rate of hire available to the defendant is less than the rate to which the claimant would otherwise be entitled (whether credit or 'spot' rate). If the claimant has unreasonably refused the offer of such a car then he will only be entitled to recover the rate of hire available to the defendant.

Other questions the court will have to deal with include:

• When is interest payable?
• Can the owner of a prestige car be impecunious?
• Is a charge for collision damage waiver claimable?
• Should a claim be allowed when the claimant's motor insurance policy entitled him to a courtesy car?
• Are facsimile electronic signatures on credit hire documentation evidence that the claimant read, understood and chose to be bound by the terms of the agreement?
• Are agreements signed at home cancellable as unsolicited visits under the Cancellation of Contracts made in a Consumer's Home or Place of Work etc Regulations 2008?
• Can agreements be attacked because of the proximity of financial arrangements including commission between repairers and the hire company and, finally, are these claims being used as a vehicle for fraudulent claims by unscrupulous individuals who use the hire companies as their unwitting servants?

If you do appear before a judge with a credit hire list, you may find them less 'touchy, friendly' than usual.