Pattni v First Leicester Buses Ltd

A solvent claimant who reasonably hires a replacement vehicle on credit may recover the basic hire rate, but not the cost of credit or other additional benefits. Contractual interest charged for deferring payment until settlement is therefore irrecoverable as damages for loss of use.

Damages for loss of the use of money require proof of actual financial loss. Statutory interest also remains discretionary.

The basic hire rate is determined objectively for the model actually hired in the relevant area and period. Comparable vehicles may provide indirect evidence where an exact rate is unavailable. The defendant bears the burden of proving that the basic hire rate was below the credit hire rate.

These conjoined appeals concerned replacement vehicles hired on credit following road traffic accidents for which the claimants were not responsible. Both claimants could have afforded conventional hire.

In Pattni, the county court limited recovery to the basic hire rate and refused contractual, compensatory and statutory interest. Swift J dismissed an appeal concerning interest. The issue before the Court of Appeal was whether interest could nevertheless be recovered under the credit hire agreement, as damages for loss of use of money, or under County Courts Act 1984, section 69.

In Bent, the Court of Appeal had previously ordered a retrial of the basic hire rate. HHJ Plumstead fixed a discounted rate of £396 per day. The further appeal concerned the correct method of identifying that rate, the appropriate period of hire and the applicable discount.

1. The Pattni appeal was dismissed. A contractual interest charge for the period between the end of hire and final settlement represented the cost of an additional credit benefit. Under the analysis in Dimond v Lovell, that cost was not part of the damages recoverable by a claimant who could have paid for conventional hire. Expressly describing the charge as interest did not alter its character.

2. Compensatory interest required proof that the claimant had actually paid money and thereby lost its use. The concurrent findings established that neither the claimant nor his insurer had incurred such a loss. A credit hire company’s own financing costs could not enlarge the claimant’s damages.

3. Interest under section 69 of the County Courts Act 1984 was discretionary. The absence of evidence that the claimant had paid any sum justified the refusal of statutory interest.

4. The Bent appeal was allowed. The basic hire rate must be found objectively for the model actually hired, in the same broad geographical area and at the relevant time. The court may use rates for broadly comparable cars where exact evidence is unavailable, but the exercise remains an assessment of the rate for the car actually hired. It is not an averaging exercise, nor is the court invariably to select the highest reasonable rate.

5. The defendants bore the burden of proving that the basic hire rate was below the credit hire rate. Contemporary evidence disclosed a wide range of rates and did not establish that the lower quotations were available to a driver of the claimant’s age. The defendants therefore failed to discharge that burden.

6. The judge was entitled to find that a 28-day hiring basis was reasonable and to apply a 12% discount. The recoverable daily rate was consequently £504.48 plus VAT. The total recovery was £55,719.81, leaving £17,103.05 after the interim payment. Pill and Moore-Bick LJJ agreed with Aikens LJ.

• Court of Appeal (Civil Division): In [2011] EWCA Civ 1384, dismissed Pattni’s appeal and allowed Bent’s appeal, substituting a balance recoverable of £17,103.05.
• High Court, Queen’s Bench Division: Swift J dismissed Pattni’s appeal from the county court’s refusal to award interest. No neutral citation is stated.
• Court of Appeal (Civil Division): In Bent, an earlier appeal reported as [2010] EWCA Civ 292 was allowed and the assessment of the basic hire rate was remitted for retrial.
• Cambridge County Court: On retrial, HHJ Plumstead fixed Bent’s basic hire rate at £396 per day after a 12% discount.
• County Court: Judge O’Rorke awarded Pattni 29 days’ hire at a basic hire rate of £370.50 per day and refused interest.