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Keoghs Insight

We keep you up-to-date on emerging market issues and their impact on the insurance sector, through a variety of publications, events and our leading market initiatives.

Author

Melanie Mooney

Melanie Mooney

Partner

T: 01204 677290

Credit hire: A strategic approach

Blogs||26/07/2017

“However beautiful the strategy, you should occasionally look at the results”  - Winston Churchill

Partner Melanie Mooney discusses the importance of approaching credit hire strategies in the right way, at the right time.

I have often sat in meetings and uttered the words “that’s not strategy”. So I thought I would begin with the definition. A strategy is:

“A plan of action designed to achieve a long term or overall aim”.

Strategy should not be confused with tactics or good handling practice. Tactics are used to deliver on the strategy.

Great transactional case handling should be a given but beyond this, Keoghs has also devised and helped clients to implement many strategies to conclusion which has not always been straightforward - particularly if, like me, patience is not one of your virtues!

As with all strategies it is critical to ensure that what you are doing does not make your position worse.

One of the difficulties you face as a defendant is that the ‘whether’ and ‘when’ to issue proceedings is not within your gift. You therefore need to consider a set of criteria for the type of case in respect of which you are seeking clarity, then devise a process and “marker” documents to set up the case so that if and when proceedings are issued you can deploy the strategy.

Even there, it does not end. Cases may settle, evidence may change and the criteria may alter. It is a case of deployment, then monitor and amend as appropriate. It is very much the “long game” rather than a short, transactional process.

However, when a strategy comes together it can be a real game changer.  The following cases illustrate how applying the right strategy over a period of time can help provide clarity and remove uncertainty through the litigation process.

Fleet Claims – Singh v Yaqubi

We had begun to see more and more claims for hire where the claimant had access to other vehicles. Case law had already established that the need to hire was not self-proving and that it was for the claimant to prove the need to hire, but we felt that credit hire was meant to satisfy the immediate mobility needs of an individual in the ordinary course of life - not the alleged needs of a company or someone with several vehicles.

As a result of the Court of Appeal decision in Singh v Yaqubi, we now have a decision that high value credit hire claims should be “scrutinised”, with guidelines for the evidence which should be provided by those who own or have access to a fleet.

Impecuniosity – Opoku v Tintas

The courts and the claimant’s solicitors became mesmerised by the mistaken belief that impecuniosity related only to the rate of hire.

Our view was that someone’s financial status must relate not only to the rate but to all aspects of hire. A multi-millionaire may not need to hire at all, or may be able to hire for a much shorter period as they would have the means to repair or replace their vehicle quickly.

This decision opened the door to a new understanding of what impecuniosity means; even an impecunious claimant could and should at some time take matters into their own hands and repair or replace their vehicle. It also relates to issues other than just the rate of hire.

Assessment of the rate of hire – McBride v UKI

The workings of the conventional market had, to a degree, created an anomaly where an impecunious claimant could recover a reasonable commercial rate.  Consequently, “Joe Bloggs” could recover the lowest reasonable basic hire rate but someone driving a prestigious or performance vehicle could recover a commercial rate because conventional hire companies simply could not or would not take the risk of a nil deposit or excess. As was said in “Clayton” the conventional companies need their hirers to have some “skin in the game”.

In our view, this kind of anomaly could not be what the court intended when deciding Dimond v Lovell and Lagden v O’Connor, so we set about trying to convince the court that the rate for the car (termed by us the “core” rate) and the rate for anything else should be separate from each other when assessing the recoverable rate.

As a result of McBride we have a reaffirmed assessment of damages as per Stevens v Equity and also a staged test of what would represent the “best evidence” by separating the rate for the car and the other elements within the tariff.

So what’s next?  We have already identified new areas for clarification and the required case criteria for the strategies are currently in play.

If you would like to explore developing a more strategic approach to claims handling then please get in touch.