What is credit hire?
If you had a non-fault road traffic accident and your car is not roadworthy as a result of the accident you are entitled to hire a replacement car, similar to your own. If you do not have the money to pay for repairs or a replacement car “upfront” you are entitled to obtain a replacement vehicle what is called a Credit Hire basis. This is not a courtesy vehicle as it is often mistaken to be. It is a car you are hiring on credit and agreeing to pay for it later
Credit hire is the supply of a ‘like for like’ replacement vehicle on a credit basis. This means that the person benefiting from the credit hire vehicle (usually the non-fault party) does not pay for the car hire cost upfront. The cost of the credit hire is then recovered directly from the at fault party’s insurers.
Often credit hire vehicles are arranged through a specialise Credit Hire Supplier. A credit hire vehicle will often be supplied while the Pursuer’s own vehicle is unroadworthy due to the damage caused from the road traffic accident or is being repaired or, if their vehicle is a total loss, until the total loss cheque is received and a new vehicle has been purchased within a week.
If the credit hire company is unable to recover their costs from the at fault insurers, a court action is raised in the majority of cases. The Pursuer should be aware that the court action will be raised in their name. However, the Pursuer will not be liable for any costs incurred as a result of the court action. The credit hire company will reimburse the Pursuer.
The theory behind credit hire is that the Pursuer should not be out of pocket while their vehicle is off the road following an accident.
If the credit hire vehicle is provided by a Credit Hire Supplier, this avoids the Pursuer having to claim through their own insurers. This can have adverse effects such as having to pay an excess, having an impact on their no claims bonus and potentially their premium if its due for renewal shortly after the accident or the claim takes a long time to settle.
Most credit hire providers strive to ensure that a Pursuer is always kept mobile and will provide a similar vehicle to that of the Pursuer’s promptly in order to minimise inconvenience for them. The aim is to ensure that a Pursuer is not out of pocket and minimise the impact the accident has on their ability to go about life normally.
This is why the Pursuer is entitled to a similar vehicle, as they made need one of a similar size for transporting their family or work purposes. A further benefit is that no money is required up front. The large majority of credit hire companies will only require a Pursuer to sign a ‘rental agreement’ and possibly provide a small deposit to secure the hire vehicle.
The constant battle’s in recovering hire charges – claimants v defendants
There has been number of battles between claimant and defendant Solicitors regarding recovery of credit hire charges, cases which have taken place at the High Court / Court of appeal which were set a precedent and influenced how both sides approached Credit Hire case.
At first there was the cases such as Giles v Thompson and Dimond v Lovell regarding the enforceability of credit hire agreements and need for the hire vehicles, followed by Clark v Ardington and Lagden v O’Connor which were regarding impecuniosity status of the claimant and the duration in hire, they were also the Case Laws of Opuku v Tintas and Umerji v Zurich which touched on the same issues.
They were later followed by number of case laws which were based on rates applied such as Copley v Lawn due to the intervention services provided by the Defendant insurers, the appeal case of Bent v Highway, Stevens v Equity and then Mcbride v Eui where the arguments were regarding Basis Hire rates and the criteria of how a Basic Hire Rate is formulated and applied.
However, Defendant insurers and Solicitors have also had difficulties in dealing with Taxi credit hire cases and were on most occasions on the losing side, up until the court of appeal case of Hussain v Eui Ltd, a game changer in the Taxi Credit Hire Claims and victory for the defendants.
In Hussain v EUI  EWHC 2647 (QB), whereby the High Court has now established clear principles applicable to self-employed taxi drivers when credit hire forms part of their recovery claim. These principles are most applicable when the inherited credit hire charges may appear to exceed what would have been the claimant’s profits during the same period of credit hire.
At the hearing, the claimant’s own vehicle was deemed to be ‘profit earning chattel’, thus the need of his replacement vehicle was to ensure this position continued, therefore allowing him to maintain his income as a taxi-driver as he would have done had it not been for the incident. It was then ascertained that the total loss of profit the claimant would have earned in his own vehicle during the dates of credit hire would have been limited to £423.00.
It has to be noted the claimant was not able to rely on impecuniosity as the failed to comply with the court order to disclose the same. Her Honour Judge Wall continued to find that even in the event that the credit hire charges had been recoverable, the claimant would have been limited to the basic hire rates as disclosed by the defendant.
Following this judgment, the claimant appealed to the High Court on two grounds –
- The judge was wrong to limit the damages to what the profit would have been, and
- That the judge was wrong to accept the defendant’s evidence of basis hire rates.
Here, Mr Justice Pepperell made the judgment which provided guidance as to the correct principles which should be applied to the recoverability of credit hire charges in taxi cases.
Generally, the starting point when assessing such cases is the following, as per paragraph 16.5,
“Where the cost of hire significantly exceeds the avoided loss of profit, the court will ordinarily limit damages to the lost profit.”
This general starting point is however subject to three potential circumstances, which may deem the claimant to have acted reasonably in hiring even if the credit hire charges clearly exceed the loss of profit, thus validate the application pertaining to the recovery of the true credit hire invoice. These consist of –
- Where there is a “real risk of a greater loss”. This would be applicable in cases where the continuance of work would be adversely affected or the loss of important customers would be highly likely.
“For example, a chauffeur might not want to let down a regular client for fear of losing her. Equally; a self-employed taxi driver might risk being dropped by the taxi company that provides him with most of his work.”
- Where the claimant evidences that their vehicle was not only needed for business use, but also for social and domestic purposes.
“Where a claimant proves that they need a replacement vehicle for private and family use, they will be entitled to recover the cost of hire as any private motorist would be even if it is in excess of the loss of profit.”
- Where the claimant has proven their impecunious financial state.
“It might be reasonable to hire a replacement in circumstances where the driver simply could not afford to be out of work. Impecunious self-employed claimants cannot be expected to be left without any income.”
In the case of Hussain v EUI  EWHC 2647 (QB), none of these circumstances applied. Accordingly, the High Court upheld the decision of Her Honour Judge Wall and thereby restricted the claimant’s recovery to loss of profit and dismissed the claimant’s appeal.
Clearly this case is in the favour for the defendants and brings further onus on the claimant to prove impecuniosity and need for a taxi credit hire vehicle. At Din Solicitors we have prepared ourselves to take the defendants insurers arguments based on this case law Hussain v EUI. We have implemented strategies from the start of the claim and working along side the credit hire organisations we represent.