When handling credit hire claims Keoghs has always remained focussed on tackling the issues where there is a degree of uncertainty for all parties dealing with the claims.
Last year we identified that, where the hirer uses the vehicle for business purposes and has access to a fleet of vehicles, further clarification from the courts was needed, particularly in respect of how far the claimant has to go to discharge the burden of proof. Earlier this year, Keoghs successfully defended an appeal in the CoA in the matter of Singh v Yaqubi (see Credit Hire Aware: Issue 1 - March 2013).
In the first instance the claimant was awarded nothing for hire on the basis that they had not discharged the burden of proving he had a need to hire a replacement vehicle. This resulted in savings of over £100,000 for our insurer client. More importantly however, it gave us guidance and a platform upon which similar claims could be defended (see Keoghs' Client Alert on fleet and utilisation on our website (19/08/2013).
In a similar manner, it was also identified that further clarification was needed with regard to the application of impecuniosity. Keoghs' view was that whether a claimant was impecunious was relevant not only to the issue of the rate of hire to be applied, but also to the need to hire, the period of hire and general mitigation. Work was then put in progress to identify the right case in order to obtain such clarification.
Mr Opoku’s taxi was damaged in an accident with Mr Tintas on 18 June 2010. The claimant presented a claim for hire for £130,750 together with recovery and storage of £19,626. There was also a claim for injury which was settled by negotiation.
The claimant was a taxi driver (part time) and earned approx. £100 per week from this job, whilst also having a second job which earned him around £900 per month. This is against a backdrop of him hiring a replacement taxi which cost £175 plus VAT per day.
Investigations into the claim were undertaken and liability was disputed. The claimant was duly advised of the issues which prevented payment for his vehicle damage being paid. However, the claimant continued to hire for a staggering 614 days. The defendants argued that the claimant had not demonstrated a genuine need to hire. His wife also had a vehicle, and it was disproportionate for him to hire a vehicle at a cost of £175 plus VAT per day to achieve earnings of around £100 per week. In addition, by having the benefit of a credit hire vehicle, the claimant was also saving money by not having to pay for insurance, maintenance and servicing.
It was also discovered that, during the period of hire, the credit limit on the claimant’s credit card was increased. It was argued that he should have sought other sources of funds at an earlier stage.
The matter proceeded to trial at Central London County Court in September 2012 before Her Honour Judge May QC.
The claimant was found to be impecunious for the purpose of assessing the rate of hire to be applied. However, in light of the dispute and the savings the claimant made by not having his own vehicle and the extension of credit facilities, the judge found that as soon as the claimant had some certainty of the cost of the repairs (the date that the defendant’s insurer inspected the vehicle) he should have had his vehicle repaired at a cost of £3,435.92.
When completed, the repairs actually took 14 days and these days were allowed in addition. In respect of the storage, the cut-off date was 14 days prior to hire ceasing. The claimant was awarded the sum of £63,796.04. They appealed the decision and permission was granted.
The appellant submitted that there was an inconsistency in the funding of impecuniosity, in finding that the claimant, despite being impecunious, had failed to mitigate by not funding repairs. It was submitted on behalf of the defendant that there was no necessary inconsistency between findings of impecuniosity and failure to mitigate. Reference was made to Singh v Yaqubi and that high value claims ought to be given close scrutiny.
The matter proceeded to an appeal hearing on 5 July 2013 before Lord Justice Patten, Lord Justice McCombe and Lord Justice Beatson. The appeal was dismissed with the appellant to pay the respondent’s costs of the appeal.
The judge had not said it would have been reasonable to fund the repairs after the accident. It quickly became clear upon service of the defence that the claim was contested.
The judge took into account; evidence of bank and credit card limits; evidence that Opuku funded other, previous repairs; and the amounts the appellant saved on insurance. She accepted the claimant was not extravagant and was fully aware that she could not apply the appropriate test in hindsight.
The CoA held that the judge was entitled to conclude the appellant could reasonably have been expected to find the means to pay for the repairs through credit cards and savings. She had been entitled to take into account Opuku’s continuing open ended liability of £5,000 per month in hire charges (upon which interest was accruing) against the one off payment for repairs of approximately £3,000.
Against the background of the appellant maintaining liability for the hire charges of £40,000 per year, the judge was entitled to conclude that a reasonable period to have saved funds for repairs was eight months. It was commented that this was not a case of asking a person to be put in debt, rather it was a balancing exercise between accruing a debt of £5,000 per month or find a way to fund a one off payment of around £3,000.
In previous decisions, Lord Nicholls referred to, “matter of priorities,” and on the facts the court could not conclude that it was outside the judge’s scope to find the appellant’s actions unreasonable. It does not follow that because a claimant cannot fund hire charges for an open ended period that he cannot save funds to pay for repairs.
The judge’s task was to consider all evidence before her to assess what was reasonable. As per Burdis v Livesey, whether loss is avoidable is a question of fact, not law. As such the appellant faced a high hurdle on appeal and, as per Biogen v Mediana, the appellant court should be reluctant to interfere.
Impecuniosity should continually be addressed throughout the hire and not only at the outset. Full financial disclosure should still be sought even where impecuniosity in respect of the rate has been conceded by the claimant.
Keoghs has already had further successes at trials since this judgment was given by relying upon the principles laid down here. The importance of clearly setting out all the issues in the claim at the earliest opportunity and ensuring they are fully pleaded in the defence, is crucial. The correct pleading of the defence was a key factor in both this decision and Singh v Yaqubi. It is important in each and every case to give serious consideration whether to make an interim payment in order to enable the claimant to cease hire.
The judgment was released to Keoghs at the time of this publication going to print. We can see it has given some clear guidance and seen some claims being 'fiercely contested' during the period. I will be speaking with, and issuing further detail to, clients in the coming weeks.
These two decisions are the product of Keoghs and our insurer clients working closely together to handle claims on a strategic basis.
Melanie Mooney
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