Stevens v Equity Syndicate Management Ltd

Where a claimant who is not impecunious hires a replacement vehicle on credit terms, recoverable damages are limited to the basic hire rate. That rate excludes the value of credit, claims-handling and other additional services supplied under the credit hire agreement.

The basic hire rate is assessed objectively. It does not depend on what the particular claimant says that he would have paid in the ordinary hire market. Where comparable local non-credit rates form a range, the proper proportionate approximation is the lowest reasonable rate quoted by a mainstream supplier, or, if none is available, a reputable local supplier, for the type of vehicle hired.

The defendant bears the burden of proving the difference between the credit hire charge and that basic hire rate.

The claimant’s vehicle was damaged in a road traffic accident for which the defendant’s insured was liable. A credit hire company supplied a replacement vehicle for 28 days at a daily rate which included charges for reducing the excess and accidental-damage liability.

The Recorder held that the claimant was not impecunious and assessed a basic hire rate by averaging rates charged by four mainstream suppliers. On appeal, Burnett J upheld that assessment, although he accepted that averaging conflicted with authority. He also held that the full 28-day hire period was reasonable. The claimant appealed only the basic-hire-rate issue from the High Court decision, [2014] EWHC 689 (QB).

The central issue was whether the basic hire rate should be determined by reference to what this claimant would have paid, or by an objective assessment of the ordinary market rate.

Appeal dismissed unanimously. Kitchin LJ, with whom Floyd and Jackson LJJ agreed, held that the High Court had used an erroneous method but had reached a result favourable to, rather than detrimental to, the claimant.

1. A non-impecunious claimant who reasonably hires on credit terms may recover only the part of the charge attributable to the basic hire of the replacement vehicle. The additional benefits of credit hire, including credit and claims-related services, are not recoverable. This follows the loss-and-gain analysis explained in [2002] 1 AC 384 and [1912] AC 673.

2. The exercise is objective. It is not an inquiry into what the individual claimant would have been willing to pay had he entered the ordinary hire market. The evidence must instead identify the basic rate that a reasonable person in the claimant’s position would have paid for the vehicle actually hired.

3. Where locally available comparable rates yield a range, the court should select the lowest reasonable rate offered by a mainstream supplier. If no mainstream supplier is available, it should use a reputable local supplier. That is a proportionate approximation of the basic hire rate and avoids both an arbitrary standard discount and averaging. It is consistent with the structured approach in [2011] EWCA Civ 1384 and the rejection of averaging in [2002] EWCA Civ 510.

4. The Recorder had wrongly averaged the four comparable rates. However, the lowest reasonable rate within the identified range was slightly lower than the figure he selected. The defendant had therefore proved a recoverable basic hire rate below the credit hire charge, and the claimant suffered no prejudice from the error.

• Court of Appeal (Civil Division) — dismissed the claimant’s appeal on the basic-hire-rate issue.
• High Court (Queen’s Bench Division, Bristol District Registry) — Burnett J allowed the claimant’s appeal in part and dismissed it in part: he upheld the finding that the claimant was not impecunious, restored the full 28-day hire period, and upheld the basic-hire-rate award: [2014] EWHC 689 (QB).
• County Court — the Recorder held that the claimant was not impecunious, assessed the basic hire rate at £63.02 per day excluding VAT, and allowed 19 days’ hire.