The Battle Between Insurance Companies and Credit Hire Organisations Rages On

14 November 2014

CREDIT HIRE UPDATE - Burrows v Ross [2014] NIQB 99

The recent case of Burrows v Ross heard by Senior Queen's Bench Judge, Mr Justice Stephens re-examined issues of impecuniosity, mitigation of loss and basic hire rates.

HISTORICALLY

Arguments relating to provision and reliance upon alternative spot rate/basic hire rates have played out in the NI Courts for years.  The first principles of reasonableness and mitigation of loss are still the starting point.  It then falls to a Defendant to call evidence of alternative rates.  To answer this call, companies have emerged whose sole commercial function is to obtain internet data of car hire rates for all types of vehicles for each month of the year in the relevant geographical area at a lower basic hire rate.  Credit hire companies will likely respond by arguing that such data does not take into account the personal circumstances of a particular Plaintiff.  Always the argument seems to be that it would not be unreasonable for a Plaintiff to hire from a credit hire company at a higher rate.  To consider this argument, both insurance companies and the Courts are obliged to consider the personal circumstances of an individual claimant, on a case by case basis.

BACKGROUND

The Burrows action comprised a Defendant's appeal and a Plaintiff's cross-appeal in relation to an assessment of damages in a credit hire case where liability was admitted.  At first instance, in the lower District Court, the Plaintiff was awarded a lower daily rate than the claimed credit hire rate. Evidence was submitted of an alternative rate from a local car hire agency submitted on behalf of the Defendant.  The key issue on Appeal was "...the rate of hire claimed by the Plaintiff in comparison to what the Defendant contended were basic hire rates in the Plaintiff's locality at the time of the accident and at which it was contended that it was reasonable for the Plaintiff to have hired a vehicle...".

On Appeal concessions were made on both sides - the Defendant conceding the hire period was appropriate and the Plaintiff conceding she was not impecunious.  In relation to the rate of hire the Defendant conceded that the Plaintiff was entitled to recover the rate charged by Crash Services Limited - unless it could discharge the burden of establishing that the Plaintiff failed in her duty to take reasonable steps to mitigate her loss - taking the parties to the Plaintiff's own personal circumstances.

DECISION

The Defendant had proved a difference between the credit hire rate actually paid for the car hired and what, in the same broad geographical area, would have been the basic hire rate for the model of car actually hired.  However the Court decided the Defendant had not discharged the onus of establishing that the Plaintiff had failed to mitigate her loss by not hiring at the lower basic hire rate given her personal circumstances (in relation to sourcing and obtaining quotes for alternative hire vehicles).   The Court therefore dismissed the Defendant's Appeal and allowed the Plaintiff's cross Appeal.

The Court made a number of interesting observations;

1. The personal circumstances of a Plaintiff are not taken into account by the credit hire company when deciding whether to hire a vehicle to the Plaintiff. The only factor taken into account is whether the other driver was at fault.
2. The personal circumstances only become fully known to the Insurer of the "at fault" driver during the course of the litigation and most probably at the hearing.  Accordingly, both the prediction of outcome and the resolution of disputes are impeded.

The current state of credit hire claims in Northern Ireland does not even pay lip service to the modern concept of "cards on the table" approach to civil litigation but is more akin to the old traditional approach to civil litigation in NI, namely Trial by ambush.

For legal advice on Credit Hire, contact Emma Conlon.  Telephone +44 (028) 90326636.

Murphy O'Rawe - To Lead and to Guide