McBride v UK Insurance Ltd (Rev 1)

In a non-impecunious credit-hire claim, damages for loss of use are assessed by reference to the basic hire rate, not automatically by the full credit-hire charge. The defendant must prove any difference, but the comparison does not fail merely because mainstream or reputable suppliers do not offer a nil excess. The default credit-hire and basic rates should first be compared on like terms, stripping out irrecoverable credit-hire benefits. The reasonable cost of a nil excess is then assessed separately and may be recoverable where obtaining it was reasonable. The basic hire rate remains an objective and necessarily approximate assessment. The court may identify the lowest reasonable local rate and make reasonable adjustments for matters such as the hire period and excess.

These were conjoined appeals concerning credit-hire charges and the effect of a nil excess. In McBride, District Judge Brookes in Salisbury County Court accepted the need for a replacement vehicle and awarded damages by reference to a daily basic hire rate. The claimant challenged the use of the lowest reasonable rate and the treatment of the nil excess.

In Clayton, District Judge Mitchell in Colchester County Court made adjustments to a basic hire rate for the hire period and nil excess. Her Honour Judge Staite dismissed the appeal, although she criticised the district judge’s conduct and granted permission to appeal. The central issues were the correct method of assessing the basic hire rate, whether a nil excess should be treated separately, the evidential burden on the defendant, and whether the adjustments were permissible.

Disposition. In McBride, permission to appeal on Ground 1 was granted but the appeal was dismissed. Permission on Ground 2 was refused. Ground 3 was dismissed, but Ground 3A was allowed, increasing damages by £888. The appeal in Clayton was dismissed.

1. For a non-impecunious claimant, the recoverable loss is the basic hire rate for an equivalent vehicle. The defendant bears the burden of proving that the credit-hire rate exceeds the basic hire rate and, if so, the amount of the difference. The additional elements identified in Dimond v Lovell—including credit, claims handling, recovery risk and profit—must be stripped out. The impecunious claimant exception described in Lagden v O’Connor did not apply.
2. The lowest reasonable rate quoted by a mainstream supplier, or by a reputable local supplier where no mainstream supplier is available, is generally a reasonable approximation of the basic hire rate. The approach in Stevens v Equity Syndicate Management was consistent with Burdis v Livsey and Pattni v First Leicester Buses Ltd and Bent v Highway and Utilities Construction Limited (No. 2), and was binding on this Court.
3. Where comparable suppliers do not offer a nil excess, the claimant is not entitled to recover the full credit-hire rate merely for that reason. The default credit-hire rate and the basic hire rate should first be compared on equivalent excess terms. The reasonable cost of obtaining nil-excess protection should then be assessed separately. It was reasonable for the claimant in McBride to obtain AEL’s nil-excess cover, and £10 per day plus VAT was recoverable.
4. The assessment is objective, hypothetical and necessarily approximate. A judge may make reasonable adjustments for differences such as seven-day and 28-day rates, drawing on judicial knowledge and experience where appropriate. The 15% adjustment in Clayton was permissible. The statement that full credit-hire charges could be awarded only where the defendant’s evidence was wholly unchallenged was legally wrong.
5. Intemperate and offensive judicial comments did not establish actual or apparent bias on the facts. Stand-alone excess-elimination products should ordinarily be admitted and assessed where the quote concerns a comparable vehicle and the same hire period, although that guidance was not necessary to the disposal of the appeals.

The Court agreed with Lord Justice Flaux’s judgment. Sir Timothy Lloyd and Sir Stanley Burnton agreed.

1. Court of Appeal (Civil Division) heard the conjoined appeals and delivered judgment on 15 March 2017: [2017] EWCA Civ 144.
2. Chelmsford County Court—Her Honour Judge Staite dismissed the appeal from the district judge’s decision in Clayton, while granting permission after criticising the district judge’s conduct.
3. Colchester County Court—District Judge Mitchell assessed damages in Clayton by applying adjustments to the basic hire rate.
4. Salisbury County Court—District Judge Brookes assessed damages in McBride by reference to a daily basic hire rate.