CoA confirms burden of proof for Credit Hire claims rests with the claimant

Singh v Yaqubi

Court of Appeal (Civil Division)

29 January 2013

In a controversial area of law, this is a significant case for insurers and 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 Singh’s 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 - 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 Porsch.

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.” Using 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?

“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... 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.”

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 - 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, he said, would 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...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...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 CoA 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 Judge’s 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 - 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,’ 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 appellant’s claim.

Court of Appeal decision

The CoA dismissed this ground of appeal on the basis that the Judge had expressed views on the values of society openly and frankly, citing the appellant’s 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 appellant’s need to hire, the appellant argued there was a burden on the respondent to show that they 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. The burden was 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 LJ’s judgment in Pattni sought to alter the position but this was rejected. Indeed, it was noted that, when considering a credit hire claim, the 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.

What does this mean for insurers?

• This decision places the burden of proving that there was a genuine need to hire firmly at the claimant’s door. Only once that burden has been discharged do questions of mitigation of loss come into play.
• Arguably a high value case (albeit it is unclear where that threshold lies) places a higher burden upon the claimant in terms of what evidence should be adduced.
• Where the hirer is a business, or the vehicle is used for business purposes, it would be reasonable and proportionate for detailed evidence to be provided as to:
  1. the use to which the accident damaged vehicle was put prior to the accident.
  2. the use to which the hire vehicle was put during the period of hire.
• The claimant will not necessarily be awarded the top basic hire rate of any accepted statement of evidence. The Court may review the rates and apply the specific facts of the case to determine the most appropriate rate.

Keoghs’ Partner and Credit Hire Technical Director, Melanie Mooney, who represented the insurer in this case, said: “This judgment shows that in this world of ever escalating cost to motorists, the Court will to scrutinise high value claims and take a firm line in an issue where the burden of proof has not historically been considered very onerous.”