How a court will approach the assessment of the recoverable rate of hire in cases where a credit hire claimant is not impecunious is now dealt with primarily by reference to the judgment of the Court of Appeal (CoA) in Bent v Highways & Utilities [2011] EWCA Civ 1384 (‘Bent 2’).
Whilst arguably the main change is simple phraseology (the ‘spot rate’ now being known as the ‘base hire rate’), it perhaps highlights some previously overlooked ‘ideals’ in terms of what a court will now look for in base hire rate (BHR) evidence.
In short, these are:
The court therefore should now look to find the most credible, accurate and relevant rate upon which to base the award; irrespective of whether the ‘ideal’ quote is at the top, middle or bottom of a range of rates. In other words, the days of simply taking the ‘top spot’ as the recoverable rate, or indeed an average, appear to be gone.
In practice, such nuances have produced some interesting results. More often than not, we have found that the changes tend to favour defendants; Williams v Service (Croydon County Court, 30/01/12) being a good illustration.
Although the basic hire rate evidence served on behalf of the claimant was accepted here, having applied the guidance provided in Bent 2, DJ Brooks worked through a long list of quotes before basing the award on the one that was identical to the vehicle hired. The rate recovered was £35.54 vs the rate claimed of £84.12.
A similar decision was reached, albeit with slightly different reasoning, by HHJ Barrie on appeal in Hart v TNT (Nottingham County Court, 10/04/12).
The case is of further interest because the Judge appeared to have some difficulty reconciling a number of the conclusions reached by the CoA in Bent 2, and indeed Burdis v Livsey, with the judgments in Dimond v Lovell and Bent 1.
In relation to the CoA’s rejection of the use of an average of a range of rates, the Judge said: “At paragraph 71 Atkins LJ affirms the Court of Appeal’s view in Burdis that the BHR must not be assessed as an average of the available market rates. I do not understand why the court is so set against the taking of an average. Of course a claimant who actually hires a car is entitled to the actual cost (subject to mitigation) rather than an average cost, but in these cases the claimant, by his decision to use credit hire when he does not need to do so, has forced on the court the need to carry out a hypothetical exercise to value the open market rate of hire.
“It does not seem to me that any legal principle would be transgressed by using an average to do this in a suitable case, particularly in a case where (as is usual) there is no evidence to show what car hire choice the claimant would have made if he had chosen to hire a car from a retail hire company rather than to use credit hire. But I am bound by these decisions and I must not be tempted by an average.”
This might well resonate with credit hire practitioners, given that such a ‘common sense’ approach, if adopted by the higher courts, might have obviated a great deal of the types of rates arguments now experienced on a daily basis.
It is noteworthy that since Williams v Service, Hart v TNT and a number of similar cases, many of the rates evidence reports adduced by claimants no longer feature details of the vehicle make and model within the quotes, but simply the vehicle’s ABI GTA grouping instead.
Accuracy therefore appears to have been sacrificed in favour of ambiguity.
Bent 2 also introduced the concepts of ‘direct’ and ‘indirect’ BHR evidence. ‘Indirect’ evidence is the familiar form of survey evidence. ‘Direct’ evidence, on the other hand, is: “evidence from the actual credit hire company that hired the replacement car to the claimant, eg. in the form of the company's published credit hire rates and BHRs.
“If there is such direct evidence it might be the best evidence of any difference between the credit hire rate charged and the BHR for that type of car in that area at the time the replacement car was hired.”
In practice, ‘direct evidence’ will hardly ever be available, as the main credit hire organisations do not also offer hire on a genuine ‘BHR’ basis to regular walk up, pay in advance, customers. Some do however, with Enterprise being the best example. They were, and remain, primarily a high street company. In recent years however, they have branched out into the far more lucrative credit hire market. Their high street tariff for a range of vehicles from specific branches is published online and is available to anyone at the click of a mouse.
As a result, the assessment of the BHR in the case of a (non-impecunious) Enterprise credit hire claimant should be a simple and cost effective exercise. It should simply be the published non-credit rate for the type of vehicle hired in the relevant geographical location.
Bent 2 also poses a far more interesting and potentially controversial question in respect of the situation where a credit hire company procures a vehicle from another hire company, then ‘cross hires’ that vehicle to a claimant. This is a common occurrence; indeed some CHO business models are based almost entirely on such arrangements.
In some circumstances it is clearly arguable that the cross hire invoice passing between the owner hire company and the credit hire company, is the best ‘direct evidence’ available of the recoverable BHR, and that the cross hire rate is, by definition, the, “base hire rate,” as this is the rate upon which all other elements of the charges are added.
It could be argued that the uplift charged by the hire company to the claimant represents the cost of the additional services and benefits provided by the credit hire company, which, as famously held by the House of Lords in Dimond, are irrecoverable as a matter of law. Significantly, this argument was recently accepted by HHJ Denyer QC on appeal in Abdi v Fletcher (Bristol County Court, 04/12/12), a Keoghs case in which we acted for the appellant/defendant.
Abdi, a taxi driver, hired a vehicle under a credit hire agreement with Kindertons, who procured the vehicle from Cab Aid. The rate charged by Cab Aid to Kindertons was £65.00 per day, whereas the rate charged by Kindertons to the claimant was £142.59 per day.
Allowing the appeal, HHJ Denyer QC accepted that the invoice from Cab Aid to Kindertons represented the best evidence of the BHR.
Following a thorough review of the relevant authorities including Dimond, Burdis and Bent, he said: “No one disputes that it was reasonable to hire this taxi. The question is whether the sum paid pursuant to the credit hire agreement is recoverable from the defendant or whether it includes irrecoverable amounts.
“For all the reasons I have given, it does seem to me that this is a case where you could very easily on the disclosed documents, without more, strip out the extras, the betterment element, to arrive at the basic hire charge. That is the recoverable amount, following Lord Hoffman [in Dimond], that the claimant is entitled to recover. He was not entitled to recover from the defendant the extras.”
Whilst a significant judgment, Abdi v Fletcher, is not strictly binding (although there are many reasons why DJs should be persuaded to apply it in cases with similar facts).
It remains to be seen as to whether what HHJ Denyer QC referred to as, “tension between the principles“, of an approach of objectively stripping irrecoverable benefits on one hand, against the availability of the rate to the claimant on the other, would similarly be resolved in favour of the former by the higher courts.
Gary Herring
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