Stevens v Equity Syndicate Management Ltd [2014] EWHC 689 (QB)

Case No 2YL65057[2014] EWHC 689 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue BRISTOL DISTRICT REGISTRY, Royal Courts of Justice, Strand, London, WC2A 2LLDate 12/03/2014
Before
THE HON MR JUSTICE BURNETT
Between
Mr Karl StevensClaimantEquity Syndicate Management LimitedDefendant
Mr Vickers (instructed by PCJ Solicitors Limited) for ClaimantMr McBride (instructed by Lyons Davidson) for DefendantHearing Hearing date: 26 th February 2014
JudgmentMr Justice Burnett :
[1]This is an appeal from the order Mr Recorder Tolson QC of the 24 May 2013 whereby he assessed damages for the claimant in the sum of £1436.78 in respect of hire charges incurred by the claimant whilst his own vehicle was being repaired. The claim had been advanced in the sum of £5764.80. The judge allowed the claimant fixed costs of £585.00 but ordered him to pay costs of £1240.27 incurred by the defendant. That was on the basis that the claim was exaggerated. It was tried as a fast track claim when in fact it was a small claim. Furthermore, the defendant won on the main issues in dispute.[2]The formal order drawn by the court on 3June 2013 inadvertently omits the judgment sum.[3]This is a credit hire claim in which the protagonists are a credit hire car company called Accident Exchange Limited and the insurers of the driver of the vehicle which damaged the claimant’s car. The claimant owned an Audi A4 S Line TDi 140 registered between March and September 2006. On 10 February 2011 a vehicle driven by the other insured driver reversed into the rear nearside of the Audi. Liability was never in issue and was formally conceded on 28 February 2011.[4]The claimant had comprehensive insurance but did not wish to jeopardise his no claims discount by claiming for the repairs on his own policy. He wished to claim directly from the other driver’s insurers. The claimant’s own insurers therefore put him in touch with Accident Exchange. They provided two distinct services. First, they made arrangements for the repair of the vehicle. In so doing they agreed repair costs and authorised repairs to the vehicle on behalf of the claimant. They funded the repair costs pending reimbursement from the insurers of the driver at fault. Secondly, they hired an alternative vehicle to the claimant whilst his car was off the road.

The facts of this case

[5]The repair invoice amounted to £2582.87 plus VAT, that is £3099.44. Accident Exchange discharged the invoice on behalf of the claimant, but subject to a discount which was not passed onto the insurers of the other driver. The level of that discount or commission has been redacted from the papers in the bundle. But this case does not concern the repair costs, and thus a claim for credit repair, but only the second aspect, namely hire charges. Such hire charges often prove controversial for at least three reasons, a) The daily rate is often rather higher than available to anyone seeking to hire a car in the market place; b) The period of hire often seems rather long; c) The period of hire may start sometime before repairs on the vehicle commence.[6]There is an understandable concern on the part of those called upon to meet the hire charges claimed that they are very far removed from the sort of sum anyone would pay if he would be meeting them himself.[7]In this case the bare bones of the hiring arrangement were these. The claimant hired a 2009 Audi A4 for £140.00 per day. There was a £1500.00 excess should it be damaged. To extinguish liability for such excess the agreement provided for two excess waiver fees. The first was £10.00 per day which reduced the excess to £750.00 and then a further £12.50 per day to reduce it to zero. Then £3.00 per day was added to protect the claimant from liability for damaged tyres and windscreen. In that way the daily charge was £165.50. That charge was subject to VAT at 20% making a total of £198.60 per day. Additionally, there was a delivery and collection fee of £120.00 and a credit repair administration fee of £50.00. The vehicle was on hire for 28 days. In that way the total claimed was £5764.80.[8]Mr Vickers, who appears for the claimant, accepts that the credit repair administration fee was claimed in error.

The case before the judge

[9]There was three issues which called for determination by the judge: a) Was the claimant impecunious in the sense that to have hired a car directly would have exposed him to a loss or burden which was unreasonable? b) If not what was the ‘Basic Hire Rate’ of an equivalent vehicle on the market in the locality in which the claimant lived? c) Was the period of hire reasonable?[10]The Recorder concluded that the claimant was not impecunious in the sense discussed in the authorities, and in particular Lagden v O’Connor [2004] 1 A.C. 1067. He determined that the Basic Hire Rate was £75.62 per day inclusive of VAT and that the reasonable period of hire was 19 days.[11]This being a fast track claim which was concluded in about half a day, the judgment was commendably short. The first conclusion arose from the claimant’s oral evidence in the context of his bank statements which demonstrated a positive balance at material times of some thousand of pounds. The second was arrived at by taking the average of hire rates available from four different national hire companies at various places close to where the claimant lived, each of which offered to hire on a nil excess basis. The third conclusion, which disallowed nine days’ hire, flowed from the fact that although the damaged car was taken by the claimant to the garage for repair on 24 February 2011, they were far from ready to commence work. The work did not start until 4 March. The car was ready for collection on 23 March. The judge rejected a submission that the period of repair between 4 and 23 March was itself too long, and that the period of hire for which damages were payable should be reduced on that account. In doing so the judge applied authority that goes back to Mattocks v Mann [1993] RTR 13. The defendant does not seek to upset that finding. The judge disallowed the first nine days on the basis that a reasonable driver would not have delivered his driveable car to the garage for repair before they were ready to start. In other words, he concluded that the claimant had failed to mitigate his loss.[12]There appears to have been some disagreement before the judge as to whether Accident Exchange were acting as agents for the claimant in arranging and authorising the repair. The point being reserved was this. Even if Accident Exchange had been remiss in arranging for the claimant’s car to be dropped off at the garage at a time before the garage was ready to commence repairs that failure could not be fixed upon the claimant. Mr Vickers did not seek to press that point and readily accepted that in their dealings with the garage, Accident Exchange were acting as agents for the claimant.

Submissions

[13]On behalf of the appellant Mr Vickers submits 1) That the judge was bound to conclude on the evidence that the claimant was impecunious. In those circumstances the full claim relating to hire charges was recoverable. 2) If, contrary to that submission, the finding on impecuniosity was sustainable, the judge was wrong to arrive at the Basic Hire Rate by averaging the rates charged by four different hire companies at many different local locations. Authority determines that the need is to identify a single Basic Hire Rate. (see paragraph 23 below). Mr McBride, on behalf of the defendant, accepts that the approach adopted by the judge was wrong. It is fair to say that the judge was led into error. 3) In any event, the judge was too selective in his chosen figures. The evidence showed a range from £33.83 per day to £142.86 (net of VAT) and with variable non-waiveable excesses. The proper approach was to look at the highest figure in the market disclosed in the schedules of evidence before the judge. 4) The judge was wrong to reduce the period of hire to 19 days, that is to say disallow the first nine days, because the evidence before the judge showed that the initial delay followed the stripping of the car to determine precisely what parts were needed, and then the need to wait for those parts to arrive.[14]Mr McBride submits 1) That the finding relating to impecuniosity was one open to the judge on the evidence before him and should not be disturbed on appeal. 2) That, whilst accepting that the judge should not have averaged the figures in the way he did, the figure he arrived at is sustainable. It might well have been lower. 3) That the evidence relating to the activity, or lack of it, in the repairing garage in the first nine days they had the car in their possession is unsatisfactory. The judge was entitled to the conclusion he reached.

Impecuniosity

[15]The concept of impecuniosity in the context of a credit agreement for hire of a replacement vehicle following an accident was considered by the House of Lords in Lagden. As Lord Nichols of Birkenhead observed between paras [5] and [9] “5. In Dimond v Lovell Mrs Dimond could have found the money needed to hire a replacement car until she was reimbursed by Mr Lovell or his insurers. The case proceeded on this basis. Understandably enough, she preferred to take advantage of the services of an accident hire firm. But what if the innocent motorist, like many people, is unable to afford the cost of hiring a replacement car from a car hire company? Unlike Mrs Dimond, he cannot find the necessary money, so unless he can use the services of a credit hire company, he will be unable to obtain a replacement car. While his car is being repaired he will have to make do as best he can without a car of his own. If this happens, he will be without his own car and in practice will receive little or no recompense for the inconvenience involved. 6. My Lords, the law would be seriously defective in this type of case if the innocent motorist were, in practice, unable to obtain use of a replacement car. The law does not assess damages payable to an innocent plaintiff on the basis that he is expected to perform the impossible. The common law prides itself in being sensible and reasonable…….. 7. The conclusion I have stated does not mean that, if impecunious, an innocent motorist can recover damages beyond losses for which he is properly compensateable. What it means is that in measuring the loss suffered by the impecunious plaintiff by loss of use of his own car the law will recognise that, because of his lack of financial means, the timely provision of a replacement vehicle for him costs more than it does his affluent neighbour. In the case of an impecunious plaintiff someone has to provide him with credit, by incurring the expense of providing a car without receiving immediate payment, and then incur the administrative expense involved in pursuing the defendant insurers for payment. …………….. 9. There remains the difficult point of what is meant by ‘impecunious’ in the context of the present type of case. Lack of financial means is, almost always, a question of priorities. In the present context what it signifies is an inability to pay car hire charges without making sacrifices the plaintiff could not reasonable by expected to make. I am fully conscious of the open–ended nature of this test. But fear this will lead to increased litigation in small claims courts seem to me exaggerated.”[16]In para [36] Lord Hope expressed the same concept in slightly different language:
“Many car owners are, of course, well able to provide what is needed to satisfy the hirer that the money which is needed to pay for the hire is available. If they choose to use the services of a credit hire company they must accept as a deduction from their expenditure the extra cost of doing so. The full cost of obtaining the services of a credit hire company cannot be claimed by the motorist who is able to pay the cost of the hire up front without exposing himself or his family to a loss or burden which is unreasonable.”
[17]This decision of the House of Lords was referred to in the course of the extensive argument advanced before the judge. In his judgment he said:
“I do not find that Mr Stevens was someone who was impecunious, giving the expression the meaning found in the cases that have been outlined to me.”
[18]The evidence relating to the claimant’s means was sketchy. In his witness statement it was dealt with in one line where he said that ‘in all the circumstances I could not have afforded to pay for a hire vehicle myself, using my own funds.’ There was no indication in the statement of what those circumstances were, nor any attempt to elaborate upon the nature and extent of his funds or available means. The witness statement did explain that he was by calling a tattooist born on 5 July 1971. The only disclosure given by the claimant relating to his financial position were photocopy bank statements for a current account with Lloyds Bank which provided details of activity between 26 November 2010 and 19 May 2011. There were regular deposits made in figures of multiples of £250. The amount paid in each month varied. The evidence of Mr Stevens was this, this was his only bank account and that after paying mortgage and another loan (which together came to nearly £1500 per month) he had only about £500 left for all other items of expenditure. The judge noted that there was a balance of some thousand of pounds in this account at all material times. It had, in fact, dipped in January but was back to a healthy balance of £1748.59 at the time of the accident. It continued to rise and was substantially augmented by a payment in of £2500 on 2 March. At the time that the car was with the repairers, the balance was between about £2500 and £3500. The statements showed an overdraft facility of £1,000.[19]It is true that the claimant asserted in the course of his evidence that he could not, and would not have hired a car, taking direct responsibility for the charges. He did not consider that he could have afforded to do so. His pragmatic and sensible approach, had he not been able to secure a hire car on credit would have been to have his car repaired at a garage that would have given him a free courtesy car. He indicated that it is important to keep a cushion of money because one never knows what might be around the corner. He referred to the fact that at some point not long after these events he had to find money to pay for a tonsillectomy for his youngest child. That was outside the period covered by the statements.[20]Mr Vickers accepts that the amount in surplus each month after payment of the mortgage and the other loan obligation was in fact about £750 rather £500. There is no suggestion that the claimant did anything more than make a mistake in his mental arithmetic in coming up with that figure; indeed the judge found him to be a truthful witness, in particular in his candour about what he would have done if Accident Exchange had not come to his aid.[21]It is striking that the bank statements showed very little activity at all. In other words, the money passing through the bank account could not conceivably reflect the totality of economic activity of a man, still less a family man. For example, in the six months covered by the bank statements there was only one debit relating to petrol. In the same period there was only one debit relating to a supermarket and there were no cash withdrawals. The judge rested his conclusion on the continuous healthy balance in the account. In my judgement he was entitled to do so, particularly in the context of a case where they was no dispute on liability and thus no question about the recoverability of reasonable hire charges. Mr Vickers was mildly critical of the lack of detailed reasoning surrounding this finding particularly given the general approbation of the claimant’s evidence. I am bound to observe that when the bank statements are examined in some detail the finding of lack of impecuniosity becomes all the more compelling.

Basic Hire Rate

[22]The approach to ascertaining the appropriate Basic Hire Rate in a case of this nature was discussed in the judgment of Aikens LJ in Pattniv First Leicester Buses Limited; Bent Highways and Utilities Construction, Allianz Insurance [2011] EWCA Civ 1384. Both of the cases considered by the Court of Appeal concerned damage to expensive specialist cars and so very substantial claims for hire charges. The claimants in both underlining actions were well able to pay for the hire of alternative vehicles directly, but had chosen to use credit hire facilities. The issue that arose in Pattni’s case was whether interest was recoverable on the Basic Hire Rate found by the judge to apply. The issues that arose in Bent’s case included the proper approach to the question of Basic Hire Rate. Between paragraphs 29 and 33 of his judgment Aikens LJ distilled the applicable principles which arose in the general context of credit hire from a trilogy of cases in the House of Lords: Giles v Thompson [1994] 1 A.C. 142; Dimond v Lovell [2002] 1A.C. 384 and Lagden [Supra]; and Burdis v Livsey [2003] QB 36 in the Court of Appeal. At paragraph 30(4) the Lord Justice reiterated that in cases where the claimant could afford to hire a replacement car in the normal way, that is without credit terms, and by paying in advance, then the damages recoverable for loss of use of the damaged car would be the Basic Hire Rate of the replacement car. In paragraph 30(5) he noted that it is for the defendant to demonstrate, by evidence, that there is a difference between the credit hire charge agreed between the claimant and the credit hire company and the Basic Hire Rate.[23]In paragraphs 30(8), 31 and 32 the Lord Justice identified three potential ways of calculating the Basic Hire Rate. The first was by evidence of how the credit hire charge was made up. That was rejected in Burdis as impracticable in most cases because they concern relatively small amounts of money, but Aikens LJ concluded that in an appropriate case such an approach might be feasible. He had in mind those involving substantial sums. The second was to apply a ‘reasonable discount’ which was rightly dismissed in Burdis as being too arbitrary. It was the third possible method which, in practice, will be adopted in most cases of this nature. As to that, at para [32] and following:
“32 The third possible method and the one preferred by this court in Burdis at [139] is to look at “…actual locally available figures”
. However, the court also emphasised, at [146], that “… a person who needs to hire a car because of the negligence of another must, subject to mitigating his loss, be entitled to recover the actual cost of hire, not an average [cost of hire]”. I would, with respect, endorse that statement. Once the court has concluded that it was reasonable for the claimant to hire the type of car that he did, then the task of the court is to find what constitutes the BHR for the particular type of car actually hired. As this court put it at [147] in Burdis: “[The claimant] can go round to the nearest hire company and is prima facie entitled to recover the amount charged whether or not the charge is at the top of the range of car hire rates. However, the basic principle is qualified by the duty to take reasonable steps to mitigate the loss. What is reasonable will depend on the particular circumstances”. 33 In practice, therefore, on the issue of what BHR is recoverable in a case where the claimant who has hired on credit is not “impecunious”, a judge may have two sorts of evidence. First, he may have direct evidence, in the form of published rates, from the actual credit hire company that hired the replacement car which demonstrates either that the credit hire rate and the BHR for that type of car is the same or it is different and what the difference is. Secondly, the judge may have evidence of the BHR charged by other car hire companies in the area for the type of car actually hired. From that he will be able to ascertain, on a balance of probabilities, what the BHR for the actual type of care hired was and so arrive at the measure of damages recoverable, subject to the issue of the reasonable time for hiring the car” “[The claimant] can go round to the nearest hire company and is prima facie entitled to recover the amount charged whether or not the charge is at the top of the range of car hire rates. However, the basic principle is qualified by the duty to take reasonable steps to mitigate the loss. What is reasonable will depend on the particular circumstances”.[24]I note that in the submissions advanced on behalf of Bent (see paragraph 38 of the judgment) was this:
“…..if there is evidence of a range of basic hire rates, then the highest reasonable rate should be taken, because the obligation of the claimant is only to do what is reasonable.”
That submission was not accepted. The evidence was that there was a range of Basic Hire Rates some of which where rather more than the credit hire rate (see para [73]). Yet the Court of Appeal clearly contemplated allowing a Basic Hire Rate which was less than the credit hire rate but determined not to do so, on the basis of special factual circumstances which existed in that case (see para [81]).[25]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.[26]Before leaving the judgment of Aikens LJ it is of note that when he considered the facts in Pattni, he recorded that the judge accepted evidence that if the claimant had made reasonable searches locally to hire a substitute car on non credit terms he would of done so for a Basic Hire Rate of £37.50 per day. That approach was not the subject of any question or criticism in the appeal[27]Mr Vickers’ submissions have an element of despair about them. He submits that “Basic Hire Rate” is an elusive concept which, despite the efforts of successive appellant courts, is impossible to pin down. He suggested that in reality the divination of such figures was left to the good sense of District Judges and Circuit Judges who deal with these cases on a daily basis without any principled guidance from the appellant courts. He went so far as to submit it is difficult to pin point a Basic Higher Rate in cases where there is evidence of a wide range of locally available rates because, in truth, it does not exist.[28]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 all cases where this question arises a car will have been provided on credit hire but the claimant found not to be impecunious. Inevitably there is an air of unreality in trying to determine what would have happened otherwise. This case provides an illustration. As already mentioned, the evidence of the claimant was that if he had not been able to secure an alternative car by way of credit hire, he would not have hired one at all. He confidently asserted in evidence that he would have sought out a garage to repair his vehicle which would have made available to him a courtesy car. No doubt he would have been successful in his search. However, the defendant did not suggest (and does not now suggest) that the consequence of that candid evidence is that the claimant can recover nothing for his hire charges.[29]Instead, 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.[30]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.[31]The evidence of ordinary hire rates in this case was produced by Accident Exchange. The defendant was content to rely upon that evidence to demonstrate that there was indeed a difference between the credit hire rate and the Basic Hire Rate in this case. In seeking the objective Basic Hire Rate the judge considered the extensive data provided in the evidence and focused on companies which provided vehicles in the appropriate group, namely P4, in the locality in which the claimant lived and with a nil excess. The parties agreed that it was appropriate in this case to look at hire charges by reference to that group. In focussing on the nil excess the judge was endeavouring to find the closest like for like comparator. It was, in my judgment, appropriate to look at nil excess rates because the claimant had taken the trouble to ensure that he would have no excess should the car he secured by way of credit hire encounter a mishap during the hire period.[32]The reality is that most hire companies offer reduced or nil excesses at additional cost, but in this case the evidence did not condescend to that detail for the majority of rates shown in the Schedule. For that reason the judge did not rely upon the lowest rates apparently available. The hire companies on which the judge concentrated were National, Europcar, Thrifty and Alamo. All are substantial national organisations whose rates would be readily accessible to someone seeking to have a car. As I have already indicated, the parties agreed that the judge erred in averaging the rates available from the four companies at the localities within striking distance of the claimant’s home. Neither party has suggested that, as a result, the matter should be remitted for a further trial. Such a course would be disproportionate in the circumstances of this case. Had the judge been reminded that the averaging exercise in which he had engaged was disapproved by authority, he would have had a range of Basic Hire Rates to choose from which covered a spectrum from £10.00 per day less than the figure on which he alighted to £7.00 per day more. The correct approach to reflect the factors that the evidence disclosed in this case would have been likely to lead the judge to pick a figure somewhere in the middle, in fact a little less than the average upon which he eventually chose. Whilst able to hire a vehicle in the market, the claimant was not especially affluent and had demonstrated by his evidence his disinclination to spend more than was necessary. Had he hired, he would have done so with a nil excess from a major reputable company with a local presence. The error in approach has not resulted in any detriment to the claimant.

Period of Hire

[33]I will deal with this aspect of the appeal more shortly. The detail of what happened to the car must be collected from a number of documents that were before the court coupled with a witness statement which exhibited a log of events but whose author did not give oral evidence.[34]Having looked at the transcript of discussion about this aspect of the case, it seems to me that the full implications of this evidence were not the subject of particular focus, no doubt because of the rather more substantial impact of the other points and the detailed discussion of legal principles that informed them.[35]The claimant’s car was delivered to the garage on 24 February 2011. The log of activity to which I have referred notes that it was ‘stripped’ on the following day and that the parts necessary to make the repairs did not come until 4 March. Thereafter the repairs were commenced. This is not a case in which the claimant simply left his car with a garage which then did nothing for a protracted period with the effect of incurring substantial hire charges in exchange for the privilege of parking a vehicle at the repairers. Were that the case, then a case of failure to mitigate might arise. It is unrealistic to suppose, certainly there is no evidence to the effect, that having stripped the car on the 25 February to determine precisely what parts and work were required it could have been reassembled to enable the claimant to drive it for the nine days (as it turned out) before the parts arrived.[36]There was no failure to mitigate on the part of the claimant or Accident Exchange, who for these purposes were his agents. It follows that the claimant is entitled to a further nine days’ hire at the rate identified by the judge, namely £75.62 per day. To that very limited extent this appeal is allowed.