It could be said that the relatively recent judgment of Burnett, J. sitting in the Queen’s Bench Division of the High Court in Stevens v Equity Syndicate Management Ltd [2014] EWHC 689 (QB) (Stevens), in introducing a subjective element, provides helpful, practical guidance for district and circuit judges in seeking to ascertain the appropriate Basic Hire Rate (BHR). Indeed, many defendant credit hire practitioners may well be ‘licking their lips’ at the prospect of using this judgment as ammunition to routinely reduce the recoverable rate of hire. On the other hand, claimant credit hire lawyers may seek to sabotage any such use of Stevens on the basis that it offends the well-worn objective test of reasonableness propounded by the higher courts in Burdis and Bent (No.2).
The claimant utilised the services of Accident Exchange after his 2006 Audi A4 S Line TDi 140 was damaged in a RTA on 10 February 2011. He hired a 2009 Audi A4 with a nil excess at an aggregate daily rate of £198.60, inclusive of VAT, for 28 days whilst his vehicle was the subject of credit repair. He brought a claim for, inter alia, credit hire charges in the sum of £5,764.80. At first instance, Mr Recorder Tolson QC assessed damages for the claimant in the sum of £1,436.78 in respect of the hire charges, concluding;
(a) the claimant was not impecunious, and;
(b) the BHR was £75.62 per day inclusive of VAT and (c) a reasonable period of hire was 19 days.
The claimant appealed against this aspect of the decision.
I am concerned, for the purposes of this article, with Burnett J.’s adjudication on the ground of appeal which challenged the recorder’s assessment of the applicable BHR. The appellant submitted that the recorder was wrong to arrive at the BHR by averaging the rates charged by four different hire companies at many different local locations. The respondent accepted that the recorder was led into this error of approach but contended that the BHR arrived at was sustainable.
In his judgment on the BHR, Burnett J. reviewed the relevant authorities, referring to the judgment of Aikens LJ in Bent (No.2), and in particular paragraphs 29, 30(8), 31, 32 and 33, later concluding that the error of approach had not resulted in any detriment to the claimant. However, the fascinating aspect of this part of the judgment concerns Burnett, J.’s discussion of how one is to interpret the meaning of the, “objective basis,” by which the court assesses the BHR:
“In para [66] of his judgment Aikens LJ explained that the exercise in which the judge is engaged is to find the Basic Hire Rate for the model of car that the claimant actually hired and to do so on an objective basis.
“It is the meaning of ‘objective basis’ that appears to be causing those engaged in this type of litigation some difficulty, in the context of evidence which invariably shows a wide range of rates for hiring identical or very similar vehicles. The key to what it means in credit hire claims is found in the speech of Lord Hoffmann in Dimond, to which Aikens LJ referred. The passage in that speech to which he directed attention is found at page 403H. It follows a discussion of the so called 'additional benefits' that accrue to a credit hire arrangement:
‘How does one estimate the value of these additional benefits that Mrs Dimond obtained? It seems to me that prima facie their value is represented by the difference between what she was willing to pay [the credit hire company] and what she would have been willing to pay an ordinary car hire company for the use of a car. As the judge said, [the credit hire company] charged more because they offered more.’ Aikens LJ considered that the Court of Appeal in Burdis had adopted the same approach.”
Burnett, J. continued by explaining how the court sought to go about identifying the BHR:
“I accept that it may be difficult to establish a Basic Hire Rate for the simple reason that the court will inevitably be concerned with a hypothetical situation…in my judgment, the search must be for the figure which the claimant was willing to pay [to use Lord Hoffmann's formulation] on the basis that he had in fact gone into the ordinary car hire market to find a temporary replacement for his vehicle.
“In doing that the evidence of a claimant that he would be disinclined to spend more than necessary on a car would be relevant. There might be evidence of how the claimant has sourced hire cars in different contexts. Some might be fortunate to have access to discounted rates through membership of motoring or professional bodies.
“As was recognised in Burdis a claimant hiring a vehicle to replace one damaged by a tortfeasor would be under a duty to take reasonable steps to mitigate his loss. That does not mean that a claimant would be expected to telephone every last car hire provider in the locality to seek details of various deals that might be available. But the reality today is that almost anybody seeking to hire a vehicle in any particular locality would be likely to investigate the market by doing a simple comparative search on the internet.
“The full panoply of different hire rates available to the credit hire industry through specialist websites (and regularly produced in credit hire litigation) would not be available to an ordinary driver, but one way or another it is not difficult for anyone wishing to hire a car to discover the rates offered by the major hire companies. Cheapest is not necessarily best and for all sorts of reasons anyone may reasonably choose to hire from a company that is not the cheapest available. Questioning of the claimant on this issue, should be directed to exploring what he would have been willing to pay on the hypothesis that he would have gone into the market to hire a vehicle.”
The judgment seems to open the door for defendant counsel to address the issue of rate with the claimant hirer at some length during cross-examination at trial.
Most contested credit-hire hearings nowadays tend to involve relatively limited questioning by counsel, save to address primarily the issues of need and period. However, what is perhaps most interesting about Stevens is that it provides a legitimate platform for defendants to potentially knock-down the allowable rate of hire by eliciting evidence from the claimant that he would have hired at the cheaper end of the market for an equivalent vehicle.
It could be said that this type of evidence may not be decidedly difficult to extract in circumstances where a claimant is paying out of their own pocket. If the claimant accepts that he would have hired at the lower end of the market, a court can be persuaded, placing reliance on the dictum in Stevens, to pin-point the BHR based upon the lowest daily rate cited in the defendant’s BHR table or survey. Alternatively, if the claimant’s BHR evidence offers a broader survey of the market, it is open to a defendant to persuade the court to utilise that evidence, and select a daily rate below the lowest rate on the defendant’s own evidence.
Having said that, any cross-examination of an ordinary member of the public by defendant counsel on basic hire rates could be fraught with danger. It leads to uncertainty, and could actually be injurious to a defence case which looked in good health based upon its factual BHR survey. Some of the pitfalls include:
The rewards for defendants, following Stevens, may lie in a tactical approach to cross-examination whereby the claimant is kept well away from any of the technical BHR data and simply asked a series of short, straightforward questions with the aim of eliciting that they would have;
(a) used the internet to shop around for hire vehicles and;
(b) would have hired at the lower end of the market for an equivalent replacement.
The only potential snag for a defendant, once it has skilfully elicited this admission/comment from the claimant, is that the claimant’s counsel may well contend that this aspect of the evidence is irrelevant - a ‘red herring’ - as the court is required to perform a purely objective assessment of the BHR, according to Burdis and Bent. By way of illustration, Aikens LJ in Bent (No. 2) explained:
“Mr Butcher submitted that Judge Plumstead had erred because she based her conclusion on the BHR at which Mr Bent could have obtained a substitute car had he himself made enquiries as to non-credit hire, rather than ascertaining what the ‘objective’ BHR was for the Aston Martin DB9.
“It might be said that the passage of Aldous LJ’s judgment that I have quoted above supports a more ‘subjective’ approach, but in my view that is not what Aldous LJ intended. The claimant in this situation has not gone out to hire a car on non-credit terms. But the object of the exercise is to find out what the BHR would have been had he done so. That figure can only be arrived at on an “objective basis.”
Thus, it remains open to debate whether Burnett, J. in Stevens has been seduced by the superficial attraction of subjectivity in determining the applicable BHR, thereby offending the established principles.
Defendants will no doubt seek to rubbish any claims of intellectual insincerity in reliance on Stevens on the basis that it is clear Burnett, J. considered all of the relevant credit-hire authorities and, thereafter, substantiated his views by reference to the dicta of Lord Hoffman in Dimond and the fact that, in Bent (No.2), it was recorded that HHJ O’Rorke, at first instance in Pattni, accepted evidence that if the claimant had made reasonable searches locally to hire a substitute car on non-credit terms he would have done so for a BHR of £370.50 per day, and that approach was not the subject of any question or criticism in the appeal.
Of course, it would be quite foolish for defendants to ignore the potential allure of the approach in Stevens to District Judges, who routinely determine credit-hire disputes and seek a practical, common-sense solution. Indeed, it is plain that the judgment in Stevens, if deployed carefully and accepted as good law by the Court, can be used to slash credit hire charges, whilst at the same time circumventing the lottery of the paper battle of BHR’s.
Guest author: James Cullen, Linenhall Chambers
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