horwich farrelly

McBride v UKI – Confirming the Approach in Stevens v Equity?

January, 21, 2016

On 21 January 2016 the Court of Appeal heard Accident Exchange’s (“AEL”) application for permission to appeal in McBride v UK Insurance Limited, a case concerning the Court’s approach to the assessment of Basic Hire Rates (BHRs) following the earlier ruling in Stevens v Equity.

This case may prove to be a significant endorsement of the decision in Stevens.

Brief History and Grounds of Appeal

The case came before the County Court just a few days after the decision was handed down by the Court of Appeal in Stevens. Evidence as to the BHR was adduced by both the Defendant and by AEL on behalf of the Claimant, although none of the BHRs in either survey contained a quote with an excess capable of being waived to zero.

The Judge rejected AEL’s submissions that the BHR evidence was not sufficiently comparable and awarded the lowest rate from a ‘reputable local supplier’ in the BHR evidence adduced by AEL.

AEL appealed on the three grounds, which in summary were:

  1. That the decision in Stevens – namely that the BHR was to be assessed by reference to the lowest reasonable rate – was wrong and inconsistent with earlier authority such as Clark v Ardington.
  2. That the Judge was wrong to rely on the evidence adduced by AEL, as none of the rates were from mainstream suppliers.
  3. That in the absence of there being a BHR quote with a zero excess, the Defendant has failed to discharge the burden of proving there is a comparable BHR which is less than the credit rate, so the judge was wrong to award the BHR and the hire charges should have been awarded in full.

The application for permission to appeal was initially refused on the papers by LJ Kitchin. However AEL requested that the application be renewed by way of an oral hearing, which came before Underhill LJ.


In a short judgment, Lord Justice Underhill dealt with the grounds in reverse order (which he stated was also the order of their arguability):

Ground 3

Although he stated that he considered it unlikely to succeed, Underhill LJ stated that the claimant’s ‘zero excess’ point was arguable. Moreover, given the volume of other cases in the County Court where the excess point is raised, it is likely to be desirable for further guidance to be given on it in a fully considered judgment.

Therefore permission to Appeal was granted on this point.

Ground 2

The Judge considered the point as it was pleaded in the Grounds of Appeal to be unarguable: Stevens makes clear that the BHR could be based on a rate from a reputable local supplier, and the judge took figures from AELs own evidence, so AEL could have no complaints.

However, AEL sought to amend this ground in later written submissions on the basis that one of the rates in the table was from a Mainstream Supplier. Therefore, AEL said that this mainstream rate – which was higher than the local rate awarded – ought to have been taken instead.

Whilst Underhill LJ made clear that permission would have been refused on this ground if it was being considered alone, given that the case would go to a full appeal on Ground 3 in any event, the Judge allowed the amendment and for the point to be considered at the full appeal.

Ground 1

Clearly this ground was the most ambitious; and indeed controversial. The Court of Appeal cannot overturn its earlier decisions apart from in exceptional circumstances as set out in Young v. Bristol Aeroplane Co Ltd [1944] KB 718 CA.

The Judge stated that Stevens, which is the authoritative decision on the issue, was set directly against the arguments of AEL’s first ground. It was noted that they had the opportunity to petition the Supreme Court in Stevens but did not take it. Further, the Judge was not persuaded that there was any arguable inconsistency between Stevens and any earlier authority in any event.  Therefore the exception in the Young v Bristol case did not apply.

Despite making clear those views, the decision on permission was adjourned to the full appeal. The judge considered that as permission had already been granted on Ground 3 anyway, the issue would be better left to be dealt with at a full hearing.

Significantly, Underhill LJ was at pains to emphasise at the end of the judgment that Stevens v Equity is, and remains, the authoritative decision on the recoverable BHR; and that the mere fact that he had allowed the permission decision on ground one to be adjourned must not be taken as any sort of suggestion to the contrary.

Implications and Comment

The comments of Underhill LJ in our view clearly serve to galvanise and reinforce the decision in Stevens v Equity; in particular the fundamental principle that the “reasonable approximation” of the BHR is to be ascertained by reference to the lowest reasonable rate of hire.

However, in relation to whether Stevens applies in the circumstances where it is not possible to adduce evidence of a BHR with a zero excess, an element of uncertainty will unfortunately remain until the issue is finally resolved.

Therefore, in the interim:

  • Stevens should continue to be firmly applied by insurers when considering the recoverable rate of hire.
  • Reliance should be made on the numerous persuasive decisions of the County Court following Stevens v Equity in which it has been held that a zero excess is not an absolute right: some of which are reviewed in more detail here.
  • On a case by case basis, and dependant on the facts and economics, in any case where credit hire is awarded in full because BHR evidence does not contain a zero excess, it may be sensible for insurers to consider lodging an appeal then seeking to stay it pending the outcome of McBride. We would be happy to advise further on this point.

Another BHR excess related appeal, the Horwich Farrelly case of Clayton v EUI, is due for a permission hearing at the Court of Appeal on Tuesday 26 January.

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