- March 14, 2014
- Posted by: Josiah Hincks Solicitors
- Category: Litigation Updates
A minor road accident which caused less than £3,000 worth of damage gave rise to a Court of Appeal test case on the burning issue of credit vehicle hire agreements, and a decision of critical importance to the motor insurance industry.
A motorist whose car was shunted from behind had lodged a claim against the other driver’s insurers. He had made arrangements with a credit vehicle hire company for his car to be repaired and to be provided with a replacement vehicle. The hire charges in respect of that vehicle came to more than £5,700 over a 28-day period and the motorist, with the company standing behind him, sought to recover that sum from the insurers.
The latter disputed the reasonableness of the hire charges and a county court judge cut down the claim in respect of them to less than £1,500, also ordering the motorist to pay the lion’s share of the action’s legal costs. He reached that decision on the basis that the motorist was not impecunious, and thus could have hired a suitable vehicle on the open market at a much lower rate.
The judge had calculated a reasonable car hire charge by averaging the rates of four different hire companies at many different local locations. He also disallowed part of the hire period on the basis that a reasonable motorist would not have delivered his driveable car to a garage for repair before the garage was ready to start work on it. In that respect, the motorist had failed to mitigate his loss.
Ruling on the motorist’s appeal, the Court found that the judge’s conclusion that he was not impecunious was supported by ‘compelling evidence’, not least the healthy state of his bank account throughout the relevant period. Although there had been an error in the judge’s approach to assessment of a reasonable car hire rate, that had had no influence on the outcome of the case.
However, in allowing the appeal in part, the Court found that there had been no failure to mitigate loss on the part of the motorist or the company, which had acted as his agent. It followed that the motorist was entitled to be compensated for a further nine days’ hire at the rate identified as reasonable by the judge.