Credit Hire - litigation still continues

Sun, 05 Jun 2016

It is often queried if credit hire litigation is going to come to an end. Post Karl Stevens v Equity Syndicate Management Limited credit hire claims remain strongly disputed. The Courts are consistently asked to adjudicate on some of the issues which are explored below.


Long gone are the days where a Claimant in a credit hire claim can simply say that owning a vehicle pre accident entitled them to hire a replacement vehicle post accident. Giles v Thompson reminds us that the need for a replacement vehicle is not ‘self proving’. Recently His Honour Judge Armstrong in Frankland v UKI held that a District Judge appropriately entered summary judgment for the Defendant in a case where the Judge found that the Defendant had successfully displaced the inference of need.

In Frankland the Claimant was the owner of a Ferrari 360 Modena vehicle. His vehicle was off the road for a substantial period of time whilst extensive repairs were undertaken (in the region of £25,000). No doubt parts had to be provided from Europe which could have extended any period of repair. During this time the claimant hired two replacement Ferraris from Accident Exchange with hire charges totalling £236,724.

The Defendant also adduced evidence from the Claimant’s own insurance company which confirmed that the Claimant insured other vehicles. In particular, a BMW 335, a Land Rover Defender, an MG Midget, and a Citroen Berlingo. Further enquiries were also made which found that the permitted mileage for the Ferrari under the policy of insurance was 1000 miles only.

His Honour Judge Armstrong was of the view that it was appropriate for the District Judge to decide such issues at a preliminary stage and enter summary judgment for the Defendant. In doing so the judge emphasised that each case on the issue of need is factually specific and that the Claimant had failed to present a cogent case on this issue. This decision may be contrasted with the case of Jones v Thompson [2010] where after a full trial His Honour Judge Spencer QC was satisfied that the Claimant had established a need for a replacement Ferrari 360 Spider vehicle in circumstances where the Claimant had access to a Range Rover and his own business had access to a Ford Mondeo vehicle, a Land Rover Discovery, and a number of delivery vans. In Frankland therefore the Judge was of the view that more cogent evidence should have been provided at an earlier stage on the issue (even before the filing of witness evidence). This perhaps identifies the need to make full enquiries pre-issue and to reply in full to any Defence which specifically raises the issue.

Company claims can also prove difficult on the issue of need. In Beechwood Birmingham Limited v Hoyer Group Limited a motor dealer with a substantial amount of other vehicles in stock for sale and use as courtesy cars was only entitled to damages for the loss of use of their vehicle based on the interest and capital employed, and any depreciation sustained over the overall period of repairs.

The loss of use/loss of profit argument is also consistently raised in opposition to claims for replacement private hire/taxi vehicles. Essentially a Defendant will aver that the hire charges incurred significantly outweigh any potential claim for the loss of profit/loss of use of the vehicle. Such arguments however ignore the fact that the damaged vehicle may not just be a 'profit earning chattel' but may also be used for social and domestic usage. Further some courts may not readily accept that a Claimant should be out of pocket (particularly if they are supporting a family) until the issue of liability may be determined, or damages paid by the Defendant.

Where the Claimant is a company it will be necessary to provide detailed evidence as to all vehicles owned by the company and why these vehicles could not be used as a suitable replacement as opposed to hiring a credit hire vehicle. A motor dealer may for example have courtesy cars which may only be used by customers. They may also have contractual obligations to provide their employees with a vehicle. In the event that this vehicle is damaged it may not be readily possible to access other vehicles from the dealership/wider group. A Claimant would be expected to provide fleet information and an explanation as to why any other vehicles could not be used in such circumstances.

Duration of hire

Period arguments are still hotly disputed. In particular, courts are still dealing with cases where a Claimant may have a vehicle with a small pre-accident value who then goes on to hire a replacement vehicle on the basis that they are unable to repair/replace their vehicle sooner. In Zurich Insurance Plc v Sameer Umerji the Court of Appeal confirmed that the issue of impecuniosity goes both to the rate and the period of hire. In Umerji the Claimant hired for a total period of 591 days with hire charges totalling £95,130.14. The Claimant’s own vehicle was valued at roughly £8,000. He contended that he was unable to come out of hire and replace his vehicle until he had received a cheque for the pre-accident value of his vehicle.

In such cases a Claimant will need to establish that they are ‘impecunious’ and could not have afforded to have acted differently. Now Courts may impose restrictive case management directions on the issue of impecuniosity requiring financial disclosure for a period of three months before the commencement of hire, during the period of hire, and three months after the hire has ended (so it can be seen if the Claimant did actually replace their vehicle). Such orders may have an automatic debarring order in place which will entail that an automatic breach of the Order may prevent the Claimant from relying on impecuniosity at Trial (and recovering the full duration of hire).

In Umerji the Claimant failed to comply with the terms of the order and was accordingly pecunious. When assessing what period a of hire pecunious Claimant should be entitled to recover the Court of Appeal was of the opinion that the Claimant was entitled to wait until at least the Defendant had inspected his vehicle.

Following Umerji a Claimant will be expected to plead if they intend to rely on impecuniosity and may even have to set out full particulars of their case on impecuniosity in a Reply to Defence.

In Opoku v Tintas a Claimant hired for nine months until he was able to repair his damaged vehicle at a cost of £1,475. The total hire charges claimed were in a sum of some £130,000. It was held that it would have been reasonable (despite the Claimant’s impecuniosity) to have saved up funds throughout the duration of the hire to repair his vehicle sooner.  


If a Claimant is able to comply with the directions order (and is prepared to provide detailed financial disclosure) they will have crossed the first hurdle in seeking to establish that they are impecunious as to both the duration and the rate of hire. In Lagden v O’Connor the consideration as to whether or not the Claimant was impeuncious was whether the Claimant had the 'choice' to go into the open market and hire at ordinary credit hire rates. In W v Veolia Environmental Services (UK) plc the Claimant was an actuary who owned a 21 year old Bentley. The Court was of the opinion that the Claimant did not have any realisable assets. Any capital the Claimant had was needed to deal with possible future family commitments and to help provide for himself. Accordingly he was found to be ‘impecunious’. In Anna Kerr v Connor Toal (a decision of Northern Ireland) it was stated that the question of impecuniosity should be informed by the ability of the Claimant to be in a financial position to meet his bill from his available cash assets and not cash assets that are needed for everyday living and one-off bills that individuals occasionally face. It is therefore a fact specific exercise and a Claimant seeking to rely on impecuniosity will need to be able to provide detailed financial disclosure and witness evidence upon the issue.

Rate of Hire

It was very clear following Clark v Ardington and Bent that the Defendant bore the evidential burden to demonstrate that it would have been reasonable for the Claimant to use another company which charged a lower rate than the credit hire company rate incurred. In discharging the evidential burden the Defendant would need to provide rates evidence in the broad geographical area of the Claimant for the model of vehicle hired to demonstrate if there was actually a difference between the credit hire rate charged and an appropriate 'Basic Hire Rate'. Traditionally, rates evidence would be provided for a range of rates and the Court would select the top rate (or near to it) as representing a comparable rate.

Stevens now places an emphasis on the lowest reasonable rate quoted by a mainstream supplier as being the reasonable approximation to the BHR. The Court of Appeal is due to reconsider the issue of the rate of hire again when the appeals in Clayton v EUI Limited and McBride v UK Insurance Limited are heard on the 22nd/23rd February 2017.

Other jurisdictions

Credit hire arguments are not simply limited to the UK either. Australia has credit hire which is referred to as 'demurrage' where similar arguments are advanced and adjudicated by the Courts.

About the author

Maria Mulla is a barrister at No 5 Chambers who undertakes credit hire litigation on the behalf of both the Claimant and Defendant. Maria is also due to spend a period of time in Australia undertaking credit hire litigation. Maria may be contacted at and followed on Twitter @MMofCounsel


Giles v Thompson [1994] A.C. 142

Frankland v UKI , Darlington County Court 18.03.2016

Jones v Thomson, Halifax County Court, 28.05.2010

Beechwood Birmingham Limited v Hoyer Group Limited 2010 EWCA Civ 647

 Zurich Insurance Plc v Sameer Umerji [2014] EWCA Civ 357

Lagden v O’Connor [2003] UKHL 649UK

Opoku v Tintas [2013] EWCA Civ 1299

W v Veolia Environmental Services (UK) PLC 2011 EWHC 2020 (QB)

Kerr v Toal [2015] NIQB 83

Karl Stevens Equity Syndicate Management Limited [2015] EWCA 93

Clark v Ardington 2002 EWCA Civ 510

Darren Bent and Highways and Utilities Construction and Allianz Insurance [2011] EWCA Civ 1384

This article was written by Maria Mulla, click here to view Maria's Credit Hire profile.

Related articles

The Claimant, a licensed taxi driver, brought a claim including £11,825.49 in respect of hire charges relating to his taxi which was damaged in a RTA. The hire claim was fully dismissed at the contested MOJ Stage 3 Hearing as the Claimant had not made a claim for, or provided any evidence in support of loss of profit (Hussain v EUI Limited followed)....

Date: Mon, 10 May 2021
Alex Mellis shares his experiences of Remote Hearings with 12 steps to better Remote hearings...

Date: Tue, 05 Jan 2021
Could menopause be impacting on the poor rates of retention of women at senior levels?...

Date: Fri, 28 Feb 2020