Keoghs Insight


Melanie Mooney

Melanie Mooney


T:01204 677290


Credit Hire Aware 13

When discussing with clients what claims they find difficult to deal with, one of the subjects which comes up time and time again is how to handle taxi claims. Why are they so difficult? Melanie Mooney takes a closer look.

Taxi drivers operate in a cash economy so ascertaining what their true financial position is can be extremely difficult; the tax returns or profit and loss accounts rarely assist and it is often a closed door when you are asking questions of others.

Getting rates evidence for hire and reward vehicles can also be quite difficult with providers suggesting that any driver hiring from them would have to work for that operator, which causes problems in itself if the driver has a long established relationship with a particular operator or has existing commitments or contracts that they need to fulfil.

Here, we examine some of the more thorny issues that arise from credit hire claims involving taxis.

The eternal triangle

One common scenario we see is the following:

Mr A leases a vehicle from B’s Cabs and has a non-fault accident. CHO C then hires a vehicle from B’s cabs and provides it on credit hire (and the accompanying expensive rates) to Mr A.

Mr A is happy because he has a car and can earn a living. B’s cabs are happy because Mr A is still earning money for them and CHO C are paying them for the hire of their vehicle and CHO C are happy because they potentially recover a credit hire rate.

With constraints on the criteria for carrying out DVLA searches, it is sometimes difficult to establish the parties involved, however we would request as standard a copy of the V5’s for all vehicles involved - which will reveal the true position.

This then also opens up the question of whether this is really a claim for credit hire or a claim for loss of profit for B’s cabs. Mr A has a car, he is earning a living so arguably he is in the position he was before the accident. B’s cabs however have one less car on the road so should this not be a claim for their loss of profit? We would certainly say so.

What is the tortfeasor’s liability?

With the advent of ever more stringent emissions regulations and the ability of local authorities to set their own policies, it presents a conundrum when an older vehicle can no longer be used as a taxi and the driver can only replace it with a much younger vehicle. What is the tortfeasor’s liability? Is it to pay the PAV of the accident-damaged vehicle, or is it to provide sufficient funds to enable the claimant to purchase a new one?

If the liability is the former, then the claimant has not been put back in the position they were before the accident, i.e. they don’t have a vehicle they can use as a taxi.

If it is the latter, then the claimant is in a better position than they were before the accident as they have a more expensive car, which may bring with it better fuel economy, better safety rating and cheaper insurance.

It is a conundrum to which there is yet to be a clear answer. It seems to be a point that neither claimants nor defendants wish to vigorously pursue - but there will come a point where guidance from the court must be sought.

In the meantime, whilst a vehicle may technically be a total loss, if it is possible to repair the vehicle then it may be sensible to consider doing so.

There is also the argument that the claimant should have been saving and preparing for the eventuality that there would come a point where the local authority would require the vehicle to be replaced regardless of the accident. Evidence should be sought as to those preparations.

Assessing impecuniosity

As mentioned previously, as most taxi drivers work in a cash economy establishing their true financial position (and therefore whether hiring on the conventional market would represent an “unreasonable sacrifice”) requires forensic examination of financial documents and cross referencing of the same.

Many taxi drivers’ tax returns suggest that they do not earn enough to pay tax. However, when you add up their regular outgoings, they are often paying out more than it is alleged that they earn.

Equally, when you look at petrol expenses as shown in the account, they add up to less than is shown on the profit and loss accounts.

Petrol expenses can raise other interesting issues. The writer recently saw a set of bank statements where an allegedly full time taxi driver spent very little on fuel which led to the question of whether the claimant had a genuine need to hire a replacement taxi. It became apparent that they worked for four different taxi firms and earned approximately £6,000 per annum. This clearly created lots of questions to be asked.

With taxi claims we would, as a matter of course, seek disclosure of booking records for the period of hire. These requests are often resisted, with it being asserted that they do not exist. If the driver works for Uber for example, those documents do exist and should be disclosed. Any monies received from Uber are deposited in the claimant’s bank account and these should be cross referenced with the yearly earnings disclosed in any tax returns.

Despite the difficulties above, we do have lots of successes in defending taxi claims and a sample of these are set out below – see the PDF document for more.

Claim 1: Quantum win - 89% saving on hire
Amount claimed: £38,316.86
Amount paid: £4,045.16
C Sols: Nayyars Solicitors
CHO: Yorkshire Hire Ltd

The claimant’s own vehicle was a private hire licensed Toyota Avensis and he hired a number of replacement private hire vehicles for a total of 207 days at a daily hire rate of £185.10. The claimant was licensed in Bradford.

With the claimant being a taxi driver, a pragmatic view was taken on the claimant’s likeliness to demonstrate need and issues we expected to encounter in obtaining comparable BHR evidence. We therefore recommended a settlement offer of £7,700 be made at the outset of the claim.

We also suggested a CPR 18/31 request be made early in order to place the claimant on the back foot from the early stages. The CPR 18/31 request was opposed, so we proceeded with an application to compel the claimant to respond. This was successful.

A series of ever-decreasing settlement proposals were made by the claimant however they ultimately accepted, out of time, our CPR 36 offer of £7,700.

Claim 2: Quantum win - 89% saving on hire
Amount claimed: £36,786
Amount paid: £4,000
C Sols: Lex solicitors
CHO: Driver Claims

The claimant’s own vehicle was a private hire vehicle and he hired a standard vehicle for a period of two days at a daily rate of £90.00 + VAT followed by private hire vehicles for 150 days at a daily rate of £200.00 + VAT.

The claimant, a taxi driver, purported to be impecunious. He was ordered by the court to provide all relevant financial documents including his job logs. Whilst the job logs were late he did eventually provide them. The documents appeared to show that the claimant was impecunious.

A conversation with the claimant’s solicitors, whereby our case handler was asked what was preventing settlement and whether we knew something/had identified an issue with the case which we were not telling them, raised suspicion. It was decided that the client would carry out a basic/soft credit check on the claimant to see if he was telling the truth about his finances.

Prior to this we had put Part 18 Questions to the claimant seeking clarification on some of the issues identified. The claimant refused to answer the pertinent questions and stated that the answers were within his witness statement.

The directions were extremely close together with less than two weeks between the updated counter schedule and trial so an application to force his responses was not feasible.

Further enquiries revealed that the claimant had numerous other bank accounts and three active credit cards over the period of hire. An application was made to debar the claimant from relying upon the issue of impecuniosity.

The claimant then accepted our client’s pre-litigation offer of £13,000, waived their entitlement to costs upon the same and agreed to pay the defendant’s costs of £7,000. The claimant therefore only received £6,000 in settlement of the claim.

Claim 3: Quantum win - 93% saving on hire
Amount claimed: £69,631.56
Amount paid: £4,576
C Sols: Advantage Solicitors
CHO: Advantage Hire Ltd

The claimant’s own vehicle was a Vauxhall Zafira private hire vehicle, and he hired a number of replacement private hire vehicles between 30/03/2015 – 16/12/2015 for a total period of 262 days at a daily rate of £265.49.

Upon receipt of the instructions it was noted hire remained ongoing and an urgent cheque was requested on a without prejudice basis in order to cease hire. The main issues related to impecuniosity along with the rate and period of hire.

The claimant maintained that they were impecunious and the documents disclosed appeared to support this. However, Deputy District Judge Lennon ordered that the claimant provide very specific documents in relation to impecuniosity and would be debarred from raising impecuniosity in relation to any purpose if he failed to do so. The claimant failed to provide any accounts/ tax returns, or details of taxi takings or balance sheets, although profit and loss accounts were disclosed. The claimant also failed to provide the full period of bank statements with 16/11/15 - 17/12/15 being omitted.

A period of 56 days was offered to allow the claimant sufficient time to arrange the inspection and repairs. As the claimant was debarred from raising impecuniosity in relation to any issue an offer was made in line with basic hire rate evidence. A daily rate of £70.51 per day was offered.

Whilst this had a mileage restriction, the mileage done in 2014 according to the MOT history showed that this would have been sufficient.

The claimant solicitors made a Part 36 offer of £32,376 for hire charges as they intended to rely on documentation supporting impecuniosity which was provided late. This was rejected.

The claimant solicitors then accepted the Part 36 offer the day prior to the hearing.