Impecuniosity and other issues in credit hire claims

The Court will usually provide specific directions, including those relating to alleged impecuniosity, in matters where credit hire is claimed.

The importance of compliance with these directions cannot be overestimated, as failure to comply with the same can have a detrimental effect upon a claimant’s claim in particular and, therefore, potentially benefit the defendant.

This was apparent in the recent case of RA v Rhondda Cynon Taf County Borough Council, in which Dolmans represented the Defendant Local Authority.

Background

It was alleged that the Defendant Local Authority’s vehicle collided with the Claimant’s parked and unattended vehicle, causing damage.

Liability was admitted by the Defendant Local Authority and an interim payment made in settlement of the Claimant’s vehicle which was deemed to be beyond economic repair and a total loss.

However, the Claimant also pursued a claim for credit hire charges in the sum of £21,811.20 over a period of 71 days and collection/delivery charges in the sum of £240.00. Both of these items were disputed and the Claimant issued Court proceedings in respect of the same.

Court process and directions

The matter was allocated to the Fast Track, Complexity Band One, and the usual Court directions were given for disclosure, exchange of witness statements and schedules/ counter schedules.

Given that the Claimant’s claim included credit hire charges however, the Court also provided specific directions relating to basic hire rates by way of witness evidence and impecuniosity.

The Claimant was ordered to provide documentary evidence of all income for a period of 3 months prior to commencement of hire until the earlier of 3 months cessation of hire or the repair/replacement of the Claimant’s vehicle, together with copies of all bank, credit card and savings statements for the same period and evidence of any loan, overdraft or other credit facilities available to the Claimant.

Likewise, the Claimant was required to file witness evidence in support of her alleged impecuniosity and the need to hire a replacement vehicle.

The Court Order stated unequivocally that a failure to comply with the above would result in the Claimant being debarred from asserting impecuniosity and/or need at trial accordingly.

In addition to need and impecuniosity, the Court was, of course, also required to consider the rate and period of hire.

Impecuniosity – preliminary issue

The Defendant Local Authority argued at the outset of the trial that it was for the Claimant to plead and prove impecuniosity and if the Claimant was debarred from asserting impecuniosity for the purposes of rate, then she was debarred from asserting impecuniosity for any purpose, including the period of hire. This is particularly relevant to cases where the vehicle has been written off rather than repaired. The Defendant Local Authority relied upon the decision in Zurich Insurance PLC v Sameer Umerji (2014) EWCA Civ 357 in support of the above.

The Claimant failed in this particular matter to provide sufficient documentary evidence for the relevant period to prove impecuniosity, as had been ordered by the Court. Impecuniosity was, therefore, dealt with as a preliminary issue and the Defendant Local Authority was successful in arguing that the Claimant be debarred from asserting impecuniosity at trial.

Need

The Claimant was put to strict proof as to her reasonable need for a replacement vehicle during the period of hire claimed, which was not admitted. The Claimant did not commence hire of the vehicle until 7 days after the date of the alleged accident. The Claimant also delayed purchase of a replacement vehicle after receiving funds and some time following return of the hire vehicle. Hence, the Defendant Local Authority argued that Claimant would have been able to utilise alternative transport methods during the period of hire, as she had done both before and after hiring the alternative vehicle.

As such, it was argued that the Claimant could not satisfy the Court that she had a reasonable need to hire a replacement vehicle for the duration of the hire period.

Period of hire

The period of hire was also disputed.

The Claimant had refrained to hire the vehicle for some time following receipt of funds to purchase a replacement vehicle, and had not purchased such a replacement vehicle for some considerable time thereafter. The Defendant Local Authority argued, therefore, that it could not be said that this period was reasonably required to enable the Claimant to purchase a replacement vehicle as she did not purchase a replacement vehicle for some time.

There was also a delay in the Claimant’s agents forwarding the engineer report to the Defendant Local Authority’s insurer and a delay in the Claimant’s agents forwarding the vehicle funds to the Claimant.

In the event that the Claimant was not found to be impecunious, it was argued that the Claimant ought to have mitigated any loss of use by replacing the damaged vehicle at an earlier stage. The Claimant’s failure to take early proactive steps represented a failure to mitigate this loss. As per Zurich Insurance PLC v Sameer Umerji (2014) EWCA Civ 357, it was argued that the Claimant was not entitled to do nothing while waiting for the Defendant Local Authority’s insurers to act.

Rate of hire

The Claimant was put to strict proof that she and her agents acted reasonably at all times. The same was not admitted and the Defendant Local Authority adduced witness evidence in support of alternative/reasonable basic hire rates. This witness evidence was provided on behalf of a company that provides impartial research into the rates of hire for specific categories of vehicles.

In any event, the Claimant asserted that she was impecunious at the material time, the burden of proving such impecuniosity resting with the Claimant as per Zurich Insurance PLC v Sameer Umerji (2014) EWCA Civ 357 as referred to.

As the Claimant was debarred from asserting impecuniosity at trial however, the Defendant Local Authority argued that the Claimant had failed to mitigate her loss by hiring a replacement vehicle on credit terms and, in the event that she could prove that she had a reasonable need for a replacement vehicle which was not admitted, the Claimant’s entitlement to damages should be limited to the lowest basic hire rate available on the open market, as per Stevens v Equity Syndicate Management (2015) EWCA Civ 93.

Collection and delivery charges

The collection and delivery charges were not admitted and the Claimant was put to strict proof that the same were reasonably incurred and reasonable in amount. The Claimant was specifically required to prove that she was unable to make use of low or no cost alternative transport to collect the hire vehicle.

Judgment

As already referred to above, the Trial Judge agreed the Defendant Local Authority’s arguments regarding impecuniosity as a preliminary point, despite the Claimant having attempted to make a last-minute application for relief from sanction at trial.

The Trial Judge agreed that the question of impecuniosity also affected other aspects of the Claimant’s claim and that, on the strength of the decision in Zurich Insurance PLC v Sameer Umerji (2014) EWCA Civ 357, the Claimant was debarred from raising impecuniosity in relation to the period of hire as well as the rate of hire.

The Trial Judge considered, therefore, that the Claimant’s hire should be restricted to a reasonable period for a non-impecunious claimant to purchase a replacement vehicle, which the Trial Judge considered to be 42 days in this particular matter. The Trial Judge took account of the fact that the write off value was relatively low, which would have increased the time to locate a suitable replacement vehicle and that the Claimant was a working person living in a relatively rural area.

The Trial Judge considered the basic hire rates referred to in the Defendant Local Authority’s witness evidence to be the appropriate hire rates, being much lower that the hire rates claimed, and particularly as the Claimant did not raise any arguments against the same.

As for need, the Trial Judge agreed that a claimant bears the burden of proving the same and that need is not self-proving, albeit with a relatively low threshold. The Trial Judge was satisfied that there was a need for a vehicle and that it was rare to have a vehicle if someone did not need such a vehicle. The Claimant gave evidence in support of her domestic needs and need for a vehicle to travel to/from work. As such, the Trial Judge held that the Claimant had proved her need for a hire vehicle.

Taking all of the above into account, the Trial Judge awarded damages for hire charges and collection/ delivery charges in the vastly reduced total sum of £2,395.17.

Comment

The Claimant’s failure to provide sufficient documentary evidence in support of her alleged impecuniosity had a detrimental effect on the value of her claim, being debarred from asserting impecuniosity for any purpose, including the rate and period of hire.

The Trial Judge took account of the fact that the above had been raised in the Defendant Local Authority’s Counter-Schedule of Special Damages, so the Claimant could not argue that she had been ambushed at trial in this regard. In addition, the Claimant had to make a previous application for relief from sanction relating to a different failure to comply with Court directions that was also noted by the Trial Judge.

The Trial Judge considered that the Claimant’s hire should be restricted to a reasonable period for a non-impecunious claimant to purchase a replacement vehicle, which was almost half of the time claimed, and was assisted by the Defendant Local Authority’s witness evidence in support of alternative/reasonable basic hire rates that were lower than the rates claimed by the Claimant.

The success of the Defendant Local Authority’s arguments regarding the above resulted in the Claimant being awarded damages at just over 10% of the amount claimed and, therefore, substantial savings for the Defendant Local Authority in this matter.

Tom Danter is an Associate at Dolmans Solicitors.