horwich farrelly

Curbing the Excesses: Post Stevens Case Law Round Up

August, 24, 2015

The following article, by Associate Gary Herring, was published in PI Brief Law Journal in August 2015.

Almost seven months on from the decision of the Court of Appeal in Stevens v Equity [2015] EWCA Civ 93, County Court lists remain busy with credit hire disposals requiring the court’s determination of the basic hire rate (BHR).

The continued disputes arise largely as a result of a concerted attempt by credit hire organisations (CHOs) to confine the effect of the decision in Stevens to cases where BHR quotes are on precisely the same terms as the credit hire and include a comparable excess. However, whilst a significant level of dispute and litigation remains, there seems to be little doubt that the majority of those disputes are thus far being resolved in favour of defendants.

Indeed, since the decision in Cheung v UKI at Birmingham County Court handed down shortly after Stevens, we are not aware of any decision at Circuit Judge or Recorder Level which has allowed the full credit hire rate to be recovered on the basis that BHR evidence does not include an excess waiver, or because any other terms are not comparable.

The following are summaries of a handful of the most significant recent cases.

Shaw v McLeans, Oxford County Court, April 2015

Whilst rates evidence of the type habitually relied upon by claimants pre-Stevens has now virtually disappeared, the claimant did in fact choose to rely on it in this case. That may be explained by the fact that, unlike in the Stevens case, the evidence did not contain quotes for any vehicles which could have been hired at a zero excess. The quotes in the claimants report ranged from £90 to £275 per day, with excesses varying from £500 up to £3,000.

The defendant also relied upon BHR evidence, in the form of a short survey of rates ranging from £136 to £228, all with excesses up to £3,000.

It was argued that in accordance with Bee v Jensen (No 2) [2007] RTR 32, the claimant was entitled to hire with a zero excess, and that the Stevens principle did not apply where there was no evidence of directly comparable excess-free quotes.

In his judgment HHJ Harris, a judge with considerable experience in the field of credit hire litigation, said:

“I do not consider that this is the correct way to read the Stevens decision. It is, if one can say so respectfully, a laudable attempt – long overdue perhaps – to simplify a common problem… Obviously a rate with a nil excess is likely to be more attractive than one with a substantial excess. A £500 excess is not a very substantial one and in any event the liability to pay it is probably on balance unlikely. The Court of Appeal’s objective in Stevens was to enable damages in these cases to be readily calculated by a simple method and not to involve the parties in unnecessary complexities such as the analysis of the different rates of excess which were required and the costs that might or might not be charged in order to diminish them.”

The BHR awarded was £144.99, as against the credit hire rate of £395. The claimant chose not to appeal.

Lawson v Mullen, Newcastle County Court, June 2015

Next came a claimant’s appeal from the decision of a District Judge to award the BHR in the circumstances where the only BHR evidence was a quote from the defendant which contained a non-waivable £500 excess.

The claimant relied heavily on the decisions in Marcic v Davies (Court of Appeal, 20 February 1985, Unreported) and Bee v Jenson, arguing that the claimant was entitled to hire at a zero excess, and given that there was no BHR quote which provided for this, there was no ‘like for like’ BHR upon which to base the award. Accordingly, it was submitted, the full credit rate should have been awarded.

HHJ Freeman, delivering judgment on appeal, rejected the submission that Marcic v Davies was authority for the proposition that a hirer will always be entitled to hire a vehicle on terms that there is no excess; rather it was a decision based upon consideration of what was reasonable in that particular case. Bee v Jenson was dealt with in a similar manner. In particular, in that case, there was never any suggestion that the credit rate claimed was unreasonable; indeed the evidence showed that it was in line with the BHR.

However, in Lawson, there was a “gross disparity” between the credit rate and the BHR; £4,300 in fact. Therefore, the question was whether it was reasonable for the claimant to have spent an additional £4,300 (or £153 per day) to avoid a potential excess liability of £500. HHJ Freeman’s conclusion was that it was not. He said:

“In my judgment, a claimant, as a matter of legal principle does not have an inalienable right to hire a vehicle with a full waiver excess. In many situations it may be reasonable for a claimant to obtain a replacement vehicle with a nil excess, but where, as here, there is a gross disparity between what the credit hire company charged and the basic hire rate, with the only additional advantage being the waiver of a £500 excess, it may well be unreasonable for the claimant to incur that additional cost.”

Taj v Islan, Birmingham CC, July 2015

The issue here did not relate to excesses, but rather another one of the common claimant/CHO arguments to re-emerge following Stevens v Equity: namely that there has to be BHR evidence from the time of the hire.

The fact that this point is now being so routinely taken by claimants is surprising, given that there is already binding authority on the point. It is an issue dealt with relatively recently by the Court of Appeal, in the ‘Bent  No 1’ case ([2010] EWCA Civ 292), where it was held that the trial judge was wrong to disregard rates evidence obtained “a year or so” after the hire. Giving the leading judgment, Lord Justice Jacob stated:

“The heart of [the trial judge’s] reasoning is that evidence of the position at a somewhat later date than that of the hire is irrelevant. With respect, that was a mistake. Very often when one is assessing valuation evidence in all sorts of fields, one has evidence of prices of the same or similar things at different dates and has to make appropriate adjustments. Working with comparables and making adjustments is the daily diet of judges concerned with valuation in all sorts of fields. Clearly evidence of the spot rate a year or so later than the relevant date is likely to throw considerable light on what the spot rate would have been at the time.”

Nonetheless, the District Judge in Taj was led into similar error as the trial judge in Bent and gave judgment for the claimant for the sum claimed; primarily on the basis that the BHR was obtained 17 months after the hire had ended. That was notwithstanding that the evidence showed that the BHRs were 75% less than the credit rate.

Unsurprisingly, the judgment did not survive the defendant’s appeal. HHJ Stacey held that the District Judge was wrong in principle to have rejected the evidence on account of it not being contemporaneous, and importantly, re-iterated that judges should deal with the evidence available to assess the BHR even where that evidence is not perfect. The award of the credit hire rate was therefore substituted for the lowest BHR in accordance with Stevens.

Shah v James, Leicester County Court, July 2015

In a case in which Horwich Farrelly acted for the defendant, the claimant sought the total sum of £28,897.20 consisting of 46 days hire at the total rate of £497.50 per day.

The vehicle hired was of some considerable prestige and as is often the case for high value prestige vehicles, it was not possible to obtain evidence of the BHR which included a fully waived excess.

Similarly to the Shaw case referred to above, the claimant relied on a rates report showing a range of purported local rates, with excesses ranging from £500 to £3,000. The defendant’s evidence exhibited three quotes ranging from £150 per day to £270 per day, including excesses of between £1,000 and £5,000.

The claimant relied heavily on the decisions in Bee v Jenson and Marcic v Davies, in support of a submission that a claimant was entitled to hire at a zero excess. In addition, equally heavy reliance was made on the principle referred to by the House of Lords in Lagden v O’Connor [2003] UKHL 64, that a claimant is not expected to bear any cost or burden in the mitigation of their loss. This, it was submitted, meant that the defendant cannot require the claimant to bear a risk of any excess on a policy of insurance for the hire vehicle, and therefore, that for any BHR to be considered as comparable (within a Stevens context) it must be for hire with a nil excess.

Recorder Hedley, having reminded himself that the question of whether it was reasonable to hire at the rate agreed in the first place came before consideration of the recoverable BHR, reached a similar conclusion on the issue to the cases of Lawson and Shaw. In reducing the recoverable rate to £150 per day, he said:

“In my judgment, given that Dr Shah accepts that he was able to fund payment of the daily figure for the hire of the replacement car at £497.50, it cannot be reasonable to take such a vehicle when an alternative could be hired for less than one third of the price with an excess of £500. In the event that the excess became payable (if Dr Shah had another accident involving the replacement car) the excess would be recouped out of the    saving if the hire was just two days.”

In relation to the issue of BHR evidence, he continued:

“in my judgment in order to establish a BHR it is not necessary to find exactly identical terms for an exactly identical car (indeed Jacob LJ counselled against such an approach in Bent No.1).”

The Shah case is perhaps of particular persuasive weight because it was argued over a full day by very experienced Counsel, with a considered and extremely thorough reserved judgment which included a careful analysis of all of the relevant authorities. Whilst the claimant initially gave an indication that it may appeal, this was not in the end pursued.

Forthcoming Appeals

Whilst as the above cases demonstrate, County Courts (at Circuit Judge level at least) are interpreting Stevens in the manner that it was clearly intended, the disputes show no sign of abating just yet. The next significant instalment of the saga will be when two ‘excess cases’ (one of which being handled by Horwich Farrelly pre-dates the decision in Stevens), come before the Court of Appeal for permission to appeal hearings in January 2016.

If you would like to discuss any of these issues in further detail please e-mail Gary Herring in our Cardiff Office or call 0844 3300 199.

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