Bent v Highways and Utilities Construction Ltd and Allianz Insurance 24.11.11

The Court of Appeal, preferring the term “basic hire rate” (BHR) to “spot hire rate”, found that the rate claimed was not shown to be unreasonable on the evidence provided and was therefore recoverable, subject to a discount on the basis that the hire should have been on a 28 day basis.  

Implications

  • The Court should not arbitrarily apply the highest or average rate from surveyed rates. Instead, it should make a finding of fact as to the appropriate BHR for the type of vehicle hired by the claimant. This is an objective test.
  • Contemporaneous rates, and rates for the exact model of vehicle hired, should be preferred. This may adversely affect a defendant’s ability to dispute hire rates in relation to historical hire charges. Rates surveying companies will need to adapt their methods and approach.
  • In establishing the BHR, the approach in Burdis v Livsey [2001] was endorsed, namely a short survey of local hire rates. However, in addition the court can consider direct evidence from the CHO and this in fact “might be the best evidence of any difference between the credit hire rate charged and the BHR for that type of car in that area at the time the replacement car was hired”.
  • The exact method of assessing the appropriate BHR remains open to interpretation.
  • The Court of Appeal has missed an opportunity to give clear guidance as to the method of assessing appropriate rates of hire. Without this, it seems likely that a variety of approaches will be adopted, potentially leading to an increase in litigation.

Background

  • The Claimant, a well known Premier League and England footballer, hired an Aston Martin DB9 for 94 days after an RTA, incurring hire charges in excess of £60,000. The Claimant was not impecunious.
  • At first instance, the Court allowed the claim in full, suggesting that the Defendant’s rates evidence was not comparable as it dealt with spot rates obtained around two years post accident.
  • On appeal, the Court of Appeal held that it was acceptable for spot rates obtained some time post-accident to be utilised for the purposes of comparison. Lord Justice Jacob commented “One must not be hypnotised by any supposed need to find an exact spot rate for an almost exactly comparable car”. The Court commented that working with comparables and making adjustments is the daily diet of judges concerned with valuation in all sorts of fields. This effectively deemed it reasonable for a judge to take a broad view as to average spot hire rates and use current rates as evidence of likely historic rates at the time of hire. It was reiterated that, where a claimant is pecunious, he should reasonably have been required to “shop around” for local spot rates of hire. The Court ordered a retrial limited to determination of the appropriate spot hire rate.
  • Dealing with the retrial, Her Honour Judge Plumstead held in April 2011 that it was reasonable for the Claimant to recover a rate in the middle of a bracket of spot hire rates. In addition, on the facts of the case, she found that it would have been evident on reasonable enquiry that the repair of the Claimant's vehicle would have taken more than four weeks. As such, the Claimant should have hired a replacement vehicle for a minimum of a 28 day period and the appropriate rate of hire should be a discounted rate assessed on that basis.
  • On appeal, the Court of Appeal disliked the reference to “spot hire rates”, preferring the term “basic hire rate”, defined as “the basic measure of damages recoverable in cases where the claimant could afford to have hired a car by paying in advance, i.e. not hiring the car on credit.” In assessing hire rates, the objective of the Court was to “ascertain the BHR for the model of car that the claimant actually hired and to do so on an objective basis”.
  • The suggestions of Jacob LJ made during the previous appeal that “One must not be hypnotised by any supposed need to find an exact spot rate for an almost exactly comparable car” and that “a judge who considered that bracket and aimed for some sort of reasonable average would not be going wrong” were reversed as not being in keeping with Burdis v Livsey. In fact, the judgment now imposes an obligation upon the trial Judge to find an exact BHR for an exactly comparable car, on an objective basis. Adopting an average rate was not appropriate.
  • The Court of Appeal reiterated that a claimant was entitled to recover the actual cost of hire not the average cost, even if this was at the top of a bracket of comparable rates.
  • The Court of Appeal held that in this case, the Judge was wrong in utilising the 2009 rates as a basis for establishing the appropriate BHR. The Judge should have used the figures for 2007 which were available to her, even though they were limited and the 2009 figures showed a broader range. In addition, rates for a vehicle the same as the hired vehicle should have been utilised, instead of rates for a comparable vehicle. Other factors relevant to the rate of hire should also be taken into account - age of hirer, insurance cover etc.
  • On the facts of the case, the credit rate fell within a bracket of rates given as evidence of the appropriate BHR. In the absence of evidence to the contrary, the credit rate charged could not be considered unreasonable and was therefore allowed in full, subject to a discount on the basis that the hire should have been on a 28-day basis.
  • The application of the 28 day rate and the 12% discount applied in this case were fact-specific. Although there is no binding precedent set, there appears to be judicial support for the premise that hire rates should be discounted for extended periods of hire in cases where a claimant was pecunious (and it would have been obvious to the claimant that an extended period of hire was likely). The exact rate and discount would be assessed on the merits of each case.

Hire charges of £55,719.81 were therefore awarded, inclusive of VAT (a net payment of £17,103.05 taking into account the previous interim payment of £38,618.76). This represented an increase of around £12,000 above the amount of £43,738.20 (net £5,119.44) which was awarded at the previous trial.

Pattni v First Leicester Buses Ltd was also decided by the Court of Appeal at the same time.