BLM partners report on the cases of Darren Bent v Highways & Utilities Construction Limited and Allianz Insurance PLC and Vasant Pattni v First Leicester Buses Limited, in the following newsflash released today.
Court of Appeal affirms test for rates assessment 'top spot rate' replaced by objective assessment of 'basic hire rate'
Darren Bent v Highways & Utilities Construction Limited and Allianz Insurance Plc
This was the second appeal to the Court of Appeal in a claim by England footballer, Darren Bent, for the cost of hiring a replacement vehicle when his own had been damaged in an accident.
There were three aspects of the decision of the trial judge under appeal. The Court of Appeal upheld her approach on two of these. Firstly, she was entitled to hold that the owner of a badly damaged foreign Prestige car is not entitled to claim in respect of a seven day rate of hire, but should be limited to recovery at a lower 28 day rate. Secondly, she was entitled to arrive at a discount of 12% on the seven day rate to reflect the cheaper longer term hire charges.
The one respect in which the trial judge's approach was criticised rested primarily upon the relative weight she gave to the various sources of evidence, relating to spot hire rates in her ex tempore judgment in the particular circumstances of the case. The findings of general principle were, however, of considerable significance.
The Court of Appeal made the following observations:
||the "spot rate" is more appropriately referred to as the basic hire rate (BHR) because it is not a true "spot rate" as understood in common commercial parlance;
||the starting point in any case in which credit hire rates are claimed, is to determine whether or not it was reasonable for the claimant to hire a replacement vehicle in any event. If not, no claim in respect of hire charges can be sustained;
||if it were reasonable for the claimant to hire a vehicle, the court must then go on to consider if it were reasonable to hire the particular type of car chosen at the particular rate agreed. The court only goes on to consider the issue of the "impecuniosity" of the claimant if it is satisfied that both the type of vehicle and the level of hire charges are reasonable;
||if the claimant is not impecunious then the task of the judge is to assess the BHR in respect of the vehicle hired, and not to aim for the higher end of a range of average BHRs for similar vehicles;
||the best evidence of the relevant BHR is that relating to the actual type of vehicle hired at the time, but the court is entitled to take into account indirect evidence of the BHR of similar vehicles at different times, in appropriate cases (thereby upholding the authority of the Court of Appeal in the first Bent Appeal).
This decision is good news all round for insurers. Although the claimant achieved an increase in the assessment of his damages, this was as a consequence of individual flaws in the assessment process of the judge, on the particular facts of the case. The generic impact of the court's wide analysis has made this a Pyrrhic victory for credit hire companies.
In particular, the court in future will no longer be seeking to assess a "spot rate" at the higher end of average but will determine a basic hire rate by finding one objectively assessed figure referable to the type of reasonable vehicle hired.
The defendants were represented by Mark Turner QC and Richard Whitehall, counsel as instructed by Val Jones and Sarah Cartlidge of national law firm Berrymans Lace Mawer LLP.
Pattni - a very interesting result
Vasant Pattni v First Leicester Buses Limited
The Court of Appeal has now settled the law as to the recoverability of interest on credit hire charges, whether based on contract or on statute.
Vasant Pattni hired a car on credit terms after his Porsche was damaged in an accident. At trial, his hire claim was reduced to reflect a lower daily rate of hire and a shorter period of hire. The hire agreement required him to pay contractual interest on any outstanding hire charges from the end of the hire period until the charges were paid after settlement of the claim. The claimant sought to recover a sum representing the contractual interest which had accrued on those hire charges awarded by the court.
The defendant opposed the claimant's claim for interest and succeeded in defeating it at every stage. The trial judge, His Honour Judge O'Rorke, rejected the claim. That decision was upheld by Mrs Justice Swift. On the 24 November 2011, the Court of Appeal handed down judgment upholding the decision once again.
The claimant's representatives argued that he was entitled to contractual interest on any one of three grounds. First, they argued that the claimant had reasonably entered into a contract with the hire company, and that the interest on the hire charges was as much part of the loss he suffered as a result of the accident as the hire charges themselves. The Court of Appeal rejected this argument on the basis that any liability the claimant might have for such interest comprised the cost of an "additional benefit", which was irrecoverable pursuant to Dimond v Lovell  1 AC 384.
The claimant's representatives' second argument was that since Dimond requires the court to assume that the claimant would have hired a replacement vehicle on a spot hire basis, the court should allow interest as damages to the extent that the claimant would have been out of pocket, had he paid the hire at the outset. The Court of Appeal rejected this argument on the basis that the claimant had not proved any actual loss.
The third argument was that the court should award statutory interest to reflect the loss of use of funds that he would have incurred, if he had hired on a spot hire basis and paid in advance. The Court of Appeal held that statutory interest was to be awarded at the discretion of the court, where the claimant could show that they would suffer loss, if an award for interest were not made. The court repeated that there was no evidence that the claimant had had to pay out anything at all.
It is likely that this judgment will finally bring an end to litigation over interest on hire charges. The decision is a welcome clarification of the law on this point.
Transportation Claims Limited were represented by Mark Turner QC and Richard Whitehall, Counsel as instructed by lawyers Ruth Graham and Cathie Mortimer of Berrymans Lace Mawer LLP.