Credit Hire and Period of Hire

One of the most important topics in any credit hire case can be the issue of period. From my experience it’s a live issue in almost every case and therefore careful attention needs to be paid to it.

In Zurich Insurance Plc v Sameer Umerji ([2014] EWCA Civ 357) the Court of Appeal stated: “The issue of reasonableness is conventionally assessed by reference to three elements labelled “need”, “rate” and “duration”. So, the matter of period or duration is one of the “trio” of usual issues in order to determine “reasonableness” in any credit hire case.

In this article, I propose to deal with the topic of credit hire and period in the following way:

(i) where does the burden of proof lie on this issue?
(ii) how the courts deal with this issue of period of hire, subdivided into:
(a) when the claimant is pecunious and
(b) when the claimant is impecunious.
(iii) what about delays in repair?
(iv) selected real case examples from my own experience and
(v) conclusion.

Where does the burden of proof lie on this issue?

A reasonable period of hire is inextricably linked to the claimant's duty to mitigate. The claimant is under a duty to mitigate, which includes keeping the hire to a reasonable period.

In the Court of Common Pleas in Roper and Another v Johnson [(1872-73) L.R. 8 C.P. 167, 181] it was stated that: “The expression “mitigation” ... rather shews that the onus of proof lies on the defendant. The plaintiffs having made out a primâ facie case of damages, actual and prospective, to a given amount, the defendant should have given evidence to shew how and to what extent that claim ought to be mitigated.”

The case of Roper and Another v Johnson states that “...the onus of proof lies on the defendant.” However, it also states that this happens when the plaintiff (now called a claimant) has made out a “prima facie case of damages”.

One must be very careful with the words used in older cases and also how the position has been expressed more recently. In Clerk and Lindsell on Torts 24th Ed (26-09) for example it is stated that “The onus is on the defendant to show that the claimant failed to mitigate”.

So, is it really the case that the onus lies on the defendant to show that the claimant failed to mitigate? Or referring specifically to period (or duration) in credit hire, is it the case that the defendant has to show that the claimant's period of hire was unreasonable?

In my view this confuses the difference between the legal burden and the evidential burden. In my view the legal burden is always on the claimant, including proving that the hire period is reasonable. After all its always for the claimant to prove the claim, as I hear on countless occasions in court.

Even in the 19th century case of Roper and Another v Johnson, the true situation can be understood by paying careful attention to the words. There is reference to the onus being on the defendant to show that the claimant failed to mitigate, but there is also a reference to the claimant having to establish a “prima facie” case before that happens. “Prima facie” is Latin for “at first sight”.

In Zurich Insurance Plc v Sameer Umerji, (paragraph 37) it was stated that “the burden is thus on the claimant to prove (and therefore plead) that such expenditure was reasonably incurred... There is no doubt a grey area about how much needs to be pleaded and proved to establish reasonableness before the evidential burden shifts to the defendant to show that the expenditure was unreasonable.”

The case of Zurich v Umerji in my view makes the situation far clearer. The reality is that it is always the claimant's burden to prove on a balance of probability that the period of hire was a reasonable one. However, the situation at trial is such that when a claimant establishes some basic facts (or “prima facie” evidence), then the evidential burden shifts to the defendant. This situation is doing no more than explaining how in reality trials operate in the courts. For example, a claimant gives evidence by adopting their witness statement at a trial. The statement confirms that the period of three months was reasonable, as the claimant was impecunious and only received the PAV (pre-accident vehicle) cheque at two and a half months post-accident. The claimant produces bank statements, wage slips and other financial evidence. Left unchallenged that evidence would be likely to prove that that the claimant did hire the vehicle for a reasonable period. However, the defendant will challenge the claimant at trial by cross-examining her/him and challenging the claimant's evidence and/or producing their own evidence. The reality is that the claimant has produced the evidence of reasonableness of the period of hire and the “evidential burden” has now passed to the defendant to show that the claimant has failed to mitigate. The legal burden remains on the claimant.

How do the courts deal with this issue of period of hire?

(a) When the claimant is pecunious

The issue is quite simple on the surface; the claimant will be allowed a period of hire that is “reasonable”. As put succinctly in Zurich Insurance Plc v Sameer Umerji (para 39): “It follows that he should only have been entitled to recover hire charges up to the date when he should reasonably have done so.”

What does reasonableness mean in practice? How long is a piece of string?

The case of Zurich v Umerji was very much decided upon its own facts, which for the purposes of this article I will not refer to. However, some important guidance can be picked from this case.

In the case of Zurich v Umerji, I note the three points that the Court of Appeal concentrate on in paragraph 40, namely:

• It was reasonable for the Claimant to wait until an assessment had been made of whether it was economic to repair the damaged vehicle.
• It was also reasonable for the Claimant to wait until the Defendant's had the opportunity to inspect the Claimant vehicle and say whether they agreed.
• The claimant was entitled to wait until the vehicle had been disposed (presumably for scrap) of and then he should have had another two weeks to replace the vehicle.

Of course, it goes without saying that the claimant would need to act reasonably expeditiously through all these three situations. A claimant should for example act reasonably prompt in arranging an engineer's report – s/he does not have forever to arrange this! A claimant could not wait for an excessive period of time for the defendant to be given an opportunity to inspect the claimant's vehicle. If the defendant is given a reasonable amount of time and is still not inspecting the vehicle, then it may be time for the claimant to get on with repairing or replacing the vehicle. After all a claimant's actions are looked at through the prism of reasonableness.

In the third point in Zurich v Umerji, there is reference to a vehicle being disposed of - this situation is clearly referring to when a vehicle needs to be replaced due it being written off. It goes without saying that the situation of a vehicle being disposed of for scrap would not apply to a vehicle being repaired. But the first two factors would still apply to a repair case, namely the claimant is entitled to wait for an assessment as to whether it was economic to repair and to wait for the defendant to be given an opportunity to arrange their own inspection – all subject to the claimant in my view acting with reasonable expedition.

(b) When the claimant is impecunious

In Mattocks v Mann ([1993] CA, R.T.R. 13,20) it was stated: “In these days when everybody looks to one or other of the insurers of vehicles involved in an accident, it is clearly contemplated that where the cost of repairs is of the substantial kind involved in this case, the source of payment of that cost will be the insurers. Looking here at the whole history of events, one cannot isolate the plaintiff’s inability to meet the cost of those repairs and say that that brought an end to the period for which it was reasonable that the second defendant’s insurers should be liable.”

From my experience a impecunious party is generally entitled to wait until the defendant provides the monies for the pre-accident value/repair of the vehicle. The above passage from Mattocks v Mann provides potential support – one cannot isolate the inability of the claimant to pay from the hire period itself.

However, this is not set in stone. After all impecuniosity is not isolated from reasonableness, in fact impecuniosity is rooted in the concept of reasonableness. An example of this is the Court of Appeal case of Opoku v Tintas [2013] 7 WLUK 192 where a vehicle was hired for nearly two years, and it was held that the Circuit Judge was entitled to find that that the impecunious Claimant should not have waited for a without prejudice payment from the defendant and should instead have repaired the vehicle earlier through credit cards and savings – my understanding of this aspect of the case is that the Court of Appeal was simply stating that the lower court judge was entitled to make that finding of fact.

What about delays in repair?

The law is well established on this. It's always an issue of reasonableness. Following this line of reasoning, the claimant is entitled to place a vehicle in the hands of reputable repairers. In Clark v Ardington Electrical Services [2002] EWCA Civ 510, para 121, the Court of Appeal stated as follows:

“We believe that the approach of the Court of Appeal in Mattocks v Mann [1993] RTR 13 applies to this case. The defendants’ actions damaged the cars of Mrs Clark and Mr Dennard. They should pay the loss caused by their actions. The actual loss incurred involved hire of replacement cars for ten days in the case of Mrs Clark and 12 days in the case of Mr Dennard. They both appear to have acted reasonably in placing the cars in the hands of respectable repairers and there were no supervening events. Further, delays of that order were foreseeable. The extra loss caused by the delay in the repair must fall on the tortfeasor as there was no failure to mitigate. On the findings of fact in those cases the cost of hire should not have been reduced. The insurers of the defendants should seek a contribution from the repairers for any unjustified length of repair.”

So, in other words, once the claimant has placed the vehicle in the hands of respectable repairers, any delay to the repairs will normally fall on the defendant. Of course, it all depends on the facts of any case and if it can be shown for example that the claimant did not chase the repair company adequately then the period may be reduced, in my view. However, generally speaking any delays in repair by “respectable” repairers cannot be blamed on the claimant. The defendant's remedy is to seek a contribution from the repairers, something I have found to be a rather rare occurrence.

Selected real examples from my own experience

By providing real time examples, I am hoping that the reader can gain some assistance of how courts may deal with period in different cases. I do however emphasise that there is no “arithmetical” process, and each case ultimately stands on its own facts.

Example one: Claimant claims over £200,000 for credit hire based on about 2 years of credit hire. Claimant is debarred from asserting impecuniosity. The judge finds that a 6-week period of hire is a reasonable period of hire for the claimant to get an engineer's report and then wait for some period of time for the defendant's response and then some further time to purchase another vehicle.

Example two: Claimant claims approximately £35,000 for credit hire based on about 90 days of credit hire. Claimant is debarred from asserting impecuniosity. The judge finds that an 8-week period of hire is a reasonable period of hire for the claimant to get an engineer's report and then wait for some period of time for the defendant’s response and then some further time to purchase another vehicle.

Example three: Claimant claims approximately £25,000 for credit hire based on about 50 days of credit hire. Claimant is debarred from asserting impecuniosity. The judge finds that a 4-week period of hire is a reasonable period of hire for the claimant to get an engineer's report and then wait for some period of time for the defendant’s response and then some more time to purchase another vehicle.

Example four: Claim for about £50,000 credit hire based on approximately 90 days of credit hire. The claimant is found to be impecunious, and the full hire period is allowed. The judge decided that Zurich v Umerji did not apply to the case as the Claimant was impecunious and s/he was entitled to wait for the repair monies from the Defendant of about £1200!

Example five: Claim for approximately £10,000 for credit hire based on about 65 days of hire. The claimant is found to be impecunious; nevertheless, the judge decides to reduce the hire period by 30 days as s/he did not make the vehicle available for inspection as soon as s/he could, and another 3 days deduction for delaying the termination of the hire after receiving the PAV cheque. This demonstrates my earlier point that nothing is set is stone as demonstrated by the case of Opoku v Tintas. It's all about reasonableness ultimately.

Example six: Claim for approximately £45,000 based on about 60 days of hire. The claimant is found to be impecunious and entitled to wait for the PAV cheque for approximately £4500. The full hire period is allowed.

Conclusion

In conclusion:

(1) the legal burden of proof to show that a hire period is reasonable is upon the claimant (on a balance of probability);

(2) once however, the claimant has produced “prima facie” evidence that the hire period was reasonable, the evidential burden is upon the defendant to show that the claimant has failed to mitigate and the hire period is unreasonable;

(3) ultimately a hire period is determined by the favourite phrase of the law, namely is it “reasonable”?

(4) from my experience in cases where the claimant has not proven impecuniosity, the court has allowed between 4 weeks to 8 weeks for the hire period – however it all depends on the facts.

(5) from my experience, generally the courts will allow the claimant who proves impecuniosity to wait until the cheque for repair or PAV arrives from the defendant. This however is not a “blank cheque” situation, as the claimant is not entitled to wait forever and it all boils down to reasonableness, as demonstrated by the Court of Appeal case of Opoku v Tintas where it was held that the judge was entitled to decide that the claimant should have ended hire sooner than when he received the repair monies from the defendant;

(6) once the claimant places a vehicle in the hands of a respectable repairers, then any delays from the repairers end cannot be held against him/her. In that case the defendant has to seek to obtain a contribution from the repairers, which from my experience is a rare occurrence. However, it all depends on the facts of each case and for example if the claimant has not chased her/his repairer company adequately, I can see some courts finding that this is due to the claimant's fault, and the hire period should be reduced accordingly.

I hope that this article on such an important issue such as period in credit hire provides some clarification on the subject.

Please note this article does not constitute legal advice for any specific case or cases or for any circumstances and should not be relied upon for such.

© Mohammed Azeem Ali 2024