Irving v Morgan Sindall Plc

A claimant may recover reasonable credit-hire charges where the contractual liability to the hire company is contingent on recovery from the tortfeasor. Such liability is a real debt and the hire is not free merely because enforcement is deferred or the claimant will not have to pay if the claim fails.

Impecuniosity means inability to pay basic hire charges without making sacrifices which the claimant could not reasonably be expected to make. The assessment must include the financial consequences of the period reasonably required to obtain a replacement vehicle. Impecuniosity does not require penury.

The claimant’s vehicle was written off in an accident for which the defendant admitted liability. She hired a replacement vehicle on credit while awaiting payment for a replacement car. The trial judge rejected the credit-hire claim, holding that she was not obliged to pay the charges and was not impecunious.

On appeal, the central issues were whether the claimant’s contingent liability constituted recoverable loss and whether the evidence established impecuniosity for the purpose of recovering credit-hire rather than basic-hire charges.

1. Contingent liability. The appeal was allowed on the recoverability issue. The court proceeded on the basis that the claimant’s liability under the hire agreement was contingent on recovering the charges from the defendant. That arrangement did not make the hire free. A debt may exist even where direct enforcement is suspended or repayment is limited to money recovered from a designated source.
2. The reasoning in Giles v Thompson and the authorities there discussed supported the distinction between a contingent debt and a genuinely free benefit. There was no prospect of double recovery or a windfall to the claimant. The trial judge therefore erred in treating the assurances given by the hire company as compromising the claim.
3. Impecuniosity. The court adopted the analysis in Umerji v Khan: the claimant bears the burden of pleading and proving impecuniosity where it is relied upon to justify credit hire. On the undisputed financial facts, however, the issue was whether the trial judge’s evaluative conclusion was correct.
4. Under Lagden v O’Connor, impecuniosity means inability to pay hire charges without making sacrifices which the claimant could not reasonably be expected to make. The trial judge wrongly assumed that the claimant could purchase a replacement car immediately. She was entitled to basic hire during the necessary period for obtaining one. The cost of that hire, together with the replacement vehicle’s capital cost, exceeded her available resources. Extending credit or seeking family loans would have left her exposed to serious financial difficulty. Impecuniosity does not require penury.
5. The defendant could still have challenged the reasonableness of the credit-hire rates, but adduced no evidence to do so. The judgment sum was increased by £20,109.60 for the credit-hire charges.

• High Court (Queen’s Bench Division): allowed the claimant’s appeal from the judgment of His Honour Judge Saffman and increased the judgment sum by £20,109.60.