Bee v Jenson and the Ways to Quantify Loss of Use

The Court of Appeal decision of Bee v Jenson [2008 R.T.R.7] was reported over 13 years ago. I recall there was a lot of discussion in the credit hire world at the time about the potential implications of this case. This case however has in my view almost drifted away from the centre piece of credit hire discussions.

The reality is however that this case is still of immense significance to this day, particularly on how a loss of use claim should be quantified. In my credit hire article “Insured Hire Subrogation - Bee v Jenson and W v Veolia”, I referred to this, though not in any great detail as the emphasis in that article was on insured hire subrogation.

In this article I will discuss how, following Bee v Jenson, (1) the main question should usually be: how the loss of use is quantified, as opposed to should the hire charges be allowed? (2) the three ways for the loss of use to be quantified namely: (a) by reference to the credit hire agreement or (b) by reference to the Basic Hire Rates (hereinafter referred to as “BHR”) or (c) loss of use daily rates.

For the avoidance of doubt, I will not be discussing in this article, the issues surrounding insured hire subrogation in Bee v Jenson. These issues have already been discussed in my previous article: “Insured Hire Subrogation - Bee v Jenson and W v Veolia”. Further in order to avoid any confusion, I will not be dealing with loss of use concerning professional driver’s (usually taxi driver) in this article. 

How, following Bee v Jenson, the main question should usually be: how is the loss of use quantified, as opposed to, should the hire charges should be allowed?

The word “hire” is used very frequently. The words “loss of use” is used less frequently. It is high time that this situation was reversed, and the terms “loss of use” should be used far more frequently. In my view the case of Bee v Jenson has implicitly stated what should always have been the obvious. Namely the real question should not be: should hire be allowed and if so, what is the amount? The real question should be: has a loss of use been established and if so, how is this quantified?

As Lord Justice Longmore in Bee v Jenson stated (para 19): “Mr Bee’s primary loss was, doubtless, the cost of repair to his damaged car. As to that there is no issue because that is a cost which Mr Jenson has paid. But there is also the fact that Mr Bee needed the use of a car for the period of repair. He is, therefore entitled in principle to damages for loss of use of his car for that period” - italics are my emphasis. Lord Justice Longmore also referred to Dimond v Lovell [2000] R.T.R. 243 at 267D, 268A in which Lord Hobhouse stated “Each case depends on its own facts, but loss of use of the chattel in question is, in principle, a loss for which compensation should be paid” - italics are my emphasis. The words “entitled” and “should” are used, suggesting that where a vehicle is damaged due to the defendant’s fault and is out of use, the issue becomes one of how that loss is quantified. The credit hire agreement is one way of quantifying that loss; there are however other ways to quantify that loss. It all depends on the circumstances of the case. 

Lord Justice Longmore further stated in paragraph 21: “As Lord Mustill pointed out in Giles v Thompson ...a claimant’s loss is not self-proving. But if (as here) a claimant needs a car while his own car is being repaired and that is due to negligence of the defendant and the cost of hiring such a car is reasonably incurred, there is, in my judgment, no reason why the tort feasor should not pay the reasonable cost of that hire...”.

So, if a claimant requires an alternative hire vehicle and this is due to the negligence of the defendant, then he/she is entitled to the reasonable cost of that hire. The crucial point however is that there is a loss of use in the first place and the “reasonable cost of hire” is just a method of quantifying that loss. Whilst a loss is not self-proving, the loss is usually not a difficult hurdle to overcome. As Lord Justice Longmore points out: if a car is damaged and requires repair due to the negligence of the tort feasor (the defendant), the loss is established.

The real issue in most cases is likely to be one of quantification of that loss. There are three ways of quantifying that loss namely: (a) by reference to the credit hire agreement or (b) by reference to the BHR or (c) by way of loss of use daily rates. I will deal with each in turn.

Quantification by reference to the credit hire agreement

Once a loss of use of established, then claimants will often seek to quantify that loss by reference to the credit hire agreement. It is clear from Bee v Jenson that this loss is one of special damages.

As Lord Justice Longmore stated in Bee v Jenson (paragraph 21): In Lagden v O’Connor [2003] UKHL 64, [2004] AC 1067 Lord Scott of Foscote considered it useful to return to first principles and, in so doing said (in para. 78) that a claim for the cost of having a replacement vehicle could be regarded as either a claim for general damages in relation to which: “a fair approach to quantum would be to award a sum based upon the spot hire charge for a comparable vehicle” (para. 76) or a “special damages claim based upon the cost of hire” (para.77). The fact that the claim can be framed as a claim for either general damages based on the spot hire charge for a comparable vehicle or special damages based on the cost of hire echoes the Mediana...”

Quantification by reference to the credit hire agreement will be sought where: (1) need for a hire vehicle is established, though from my experience the hurdle for that is not very high and (2) the claimant is impecunious, and the credit hire agreement is not unenforceable nor is it void. 

Quantification by this method will usually be the preferred method for the claimants. 

Quantification by reference to Basic Hire Rates

In loss of use cases, defendants will often seek to quantify that loss by reference to BHR, which used to be known as “spot hire rates”. This makes sense as the BHR tend to be lower than hire charges based on a credit hire agreement. It is clear from Bee v Jenson that this loss is one of general damages.

Quantification by reference to BHR will be sought where: (1) need for a hire vehicle is established and (2) where the claimant is not impecunious and/or the credit hire agreement is unenforceable or void and (3) there is evidence of BHR. 

Quantification by this method will usually be the preferred method for the defendants, though where claimants fail or are unable to prove quantification by reference to the credit hire agreement, this will often be a “fall-back” position for them as well.

Quantification by reference to loss of use daily rates

In paragraph 21 of Bee v Jenson, Lord Justice Longmore stated: “It would not follow that a claimant who never hired a replacement car (e.g., because he was out of the country at the time or already had a spare) would be entitled to the cost of so doing. His damage would, no doubt, have to be assessed on some other basis, see e.g., the observations of Beldam LJ in Alexander v Rolls Royce Ltd [1996] RTR 95. But that is not this case”.

Alexander v Rolls Royce Ltd [1996] RTR 95, is not a case which is often referred to. On the particular facts of that case, a loss of use claim was dismissed. However, Bedlam LJ stated as follows (page 102): “Notwithstanding that no substitute vehicle had been hired, judges have awarded compensation for loss of use of a vehicle while it is being repaired where it has been shown that inconvenience has been caused or, for example, that the owner has had to use public transport, or walk or that a family have been deprived of the advantage of a family car where otherwise they would have used the car which had been damaged. In short, as Lord Halsbury envisaged, a sum is given which in the circumstances of the particular case would be regarded as compensation for the particular wrong suffered” - italics are my emphasis. 

This refers to the third way of quantifying a loss of use claim and is well known in the courts. These rates are often assessed arbitrarily at £15 to £20 a day. Where there is no vehicle hired, courts will sometimes allow loss of use daily rates. In Bee v Jenson, there is specific reference to the claimant not hiring a vehicle and notwithstanding this the loss of use needs to be assessed on some other basis. 

It is however clear in my view that this situation can equally apply to situations where a vehicle has been hired. So, for example consider the following scenario: a credit hire agreement is either unenforceable or is considered to have been voided by the claimant due to a misrepresentation. Further at trial there is no evidence of BHR produced by either side. Ideally there should have been evidence of BHR. If, however, there are no BHR, then should the court allow nothing for loss of use of the vehicle? In my view this would be wrong, following the case of Bee v Jenson and Alexander v Rolls Royce Ltd. Whilst daily rates of £15 to £20 may not seem flattering to claimants, it could make all the difference if for example if Part 36 offers came into play. 

Are loss of use rates special damages or general damages? Whilst Bee v Jenson does not specifically state, in my view loss of use rates are general damages.

Conclusion and summary

In a case where a vehicle is damaged in a road traffic accident due to the fault of the defendant and is out of use for a period of time, the main question should usually be: how is the loss of use quantified? There are three ways of quantifying a loss of use claim.

A loss of use can be quantified by reference to a credit hire agreement. This is special damages. If the claimant is impecunious and the credit hire agreement is enforceable and not void, then this may be the route which the court favours. 

A loss of use can be quantified by reference to BHR. This is general damages. If the claimant is not impecunious and/or the credit hire agreement is unenforceable or void, then this may be the route the court favours.

A loss of use can be quantified by reference to daily loss of use rates. If there is no hire of a vehicle, then this may be the route which the court favours. Even if there is the hire of a vehicle, though it is pursuant to an unenforceable or void credit agreement and there is no evidence of BHR, then loss of use daily rates may be the route the court favours. Loss of use rates are usually assessed arbitrarily at the rate of £15 to 20 per day. Whilst Bee v Jenson does not specifically state this, in my view loss of use daily rates would be general damages.

In my view following Bee v Jenson, in a case where the claimant’s vehicle is damaged due to the fault of the tortfeasor (the defendant) and is out of use for a period, a loss is established, and it then becomes merely a matter of the method of quantification. The method of quantification depends on the circumstances of the case. 

Please note this article does not constitute legal advice for any specific case or cases.

© Mohammed Azeem Ali 21/09/2021