CHO’s “spurious” BHR rebuttal points firmly rejected on Appeal

GH Newco 1 Ltd v Advantage Insurance Co Ltd

In a case in which Keoghs acted for both the defendant and appellant, the judgment of His Honour Judge Gosnell firmly reiterates the correct approach to the assessment of the basic hire rate (BHR), as well as providing guidance as to the issues Judges should be alive to when considering ‘rebuttal’ evidence put forward on behalf of credit hire organisations (CHO).

Facts

The claimant hired a BMW X5 from Accident Exchange Limited for 77 days at a total cost of £14,039.74, to replace his own Mitsubishi Outlander during the period of repairs.

The BHR evidence adduced by the defendant showed three quotes obtained seven months after the accident, which ranged from £3000 to £4500; the lowest of which was for a Ford Kuga “or similar”. 

The claimant adduced two witness statements in relation to the BHR. Firstly, there was a ‘rebuttal’ statement, which made a plethora of points objecting to perceived deficiencies in the defendant’s BHR evidence. Secondly, the claimant relied on their own evidence of the BHR; namely one single quote for a BMW X5, obtained on the date the hire started, which showed a rate which was higher than the credit rate claimed.

At First Instance

Although it was accepted by District Judge Jackson that BHR evidence was not required to be contemporaneous, ultimately the defendant’s BHR was rejected for the following reason:

“I accept that a Ford Kuga would have been a sufficient vehicle. However, the evidence before me for the Defendant is not for a Ford Kuga, it is for a Ford Kuga or a similar vehicle, and in my judgment, I cannot find that a similar vehicle would have been sufficient because similar vehicles were proposed to this Claimant, a Land Rover Discovery Sport, a Mercedes GLE coupe, a Passat, all of which he was able to refuse as unsuitable for specific reasons relating to his job.”

DJ Jackson therefore awarded the full credit hire rate.

On Appeal

The defendant appealed on a number of grounds, largely focussed on the failure to apply the correct approach to the assessment of the BHR set down in the long line of authorities from Dimond v Lovell up to Bunting v Zurich. Specifically, the District Judge had fallen into error by taking into account subjective requirements of the claimant and factors relating to the availability of a specific type of vehicle on a specific day.

The claimant on appeal argued that the best rates evidence before the court was the claimant’s, because it was for the exact type of vehicle hired and contemporaneous. This was in fact higher than the credit rate claimed, and so on that basis it was entirely appropriate for DJ Jackson to reject the defendant’s evidence.

His Honour Judge Gosnell overturned the decision of the DJ Jackson and allowed the appeal. Some of the key points of the judgment are as follows:

29. The next issue is availability and I sense here there is a pending battle between credit hire companies and insurance companies on this issue.…my own view is that the Defendant does not have to prove that a particular car or model of car used as an example was, in fact, available to the Claimant or would have been available to the Claimant from the hire company who has provided the price on the date of original credit hire.

In terms of whether it is correct to take into account subjective factors such as boot space:

“33. However, in my view, the assessment of the basic hire rate is not something which is specifically tailored to the needs of the Claimant, it is a hypothetical exercise.

43. I think it would be wrong when dealing with what is supposed to be a broad assessment of the marketplace for basic hire rates for vehicles of that general nature, to look at specifics as to what the boot size was. I think there, we are indulging in a subjective analysis of almost putting the example to [the claimant] for his approval before going any further.
44. That would be wrong because [the claimant] was never going to get in this vehicle. It is not about whether [the claimant] would have got into it that is a mitigation point, which is the wrong way of approaching it. It is about considering the original credit hire vehicle which complied with [the claimant’s] broad requirements, and then deciding what is the value of that vehicle in the open market on a basic hire rate

As to the BHR quote and rebuttal evidence put forward on behalf of the claimant, HHJ Gosnell stated:

“38. [DJ Jackson] was not taken in by the spurious argument about the size of the boot and it is a testament to the way these cases are litigated that, effectively, the credit hire company will put forward virtually any argument to show that the examples provided by the Defendant insurance company are unsuitable.

39. I do not criticise them for that, it is a legitimate tactic, but I think that judges need to be alive to that tactic and, as I said to a counsel only on Wednesday, as he put forward a series of even less convincing arguments as to why one particular comparable vehicle was unsuitable, my quote was, “you would say that, wouldn’t you”…. My point being that, it suits the credit hire company to devalue or to discredit the Defendant’s examples because if all the examples are discredited, then the judge has to refer back to the credit hire rate.
40. In this case, it seems to me, the judge should have started off with a healthy concern about the Claimant’s evidence. The whole purpose of the search for the BHR is to strip out those additional costs which relate to a credit hire arrangement, of which I accept they are always substantial. The fact that the Claimant’s witness could only find a basic hire rate higher than the credit hire rate should, I think, have made her consider why that had occurred and the answer is probably a judicious use of filters.

HHJ Gosnell therefore substituted DJ Jackson’s award of the credit hire rate for the lowest BHR in the defendant’s evidence.

Keoghs Comment

In many respects this outcome is not particularly surprising, since it is already well-established by a number of higher court authorities that neither availability, nor subjective factors relevant to the particular claimant, should play any part in the hypothetical exercise of ascertaining the recoverable BHR. It should already be abundantly clear that the exercise is an objective one to be carried out with a broad brush.

The decision is however an illustration of the continued reluctance of many CHOs to accept the ‘Dimond’ rule.

It had been hoped following the decision of the High Court in Bunting v Zurich, itself a firm reiteration of prior authorities and a warning that CHOs should not “nit-pick” when it comes to BHR, that the volume of contested disputes concerning the assessment of the BHR would subside.

Unfortunately, in our experience, that has not been the case. Rather the use of ‘rebuttal’ evidence on the part of CHOs – which usually seeks to do precisely what was warned against in Bunting – appears to if anything have proliferated. It is therefore refreshing, and certainly of use to defendant insurers when met with BHR ‘rebuttals’ going forward, to note HHJ Gosnell’s recognition of the motives behind the use of such evidence and of the “healthy concern” with which it should be approached by the courts.