.
You are receiving this email because you are subscribed to the Devon Chambers mailing list.
If you do not wish to receive further emails from us please click here to unsubscribe.
If you cannot see this email, please click here for the web version
Telephone: 01752 661659
Visit Site | Email
Credit Hire: Calculating Basic Hire Rates

Stevens v Equity Syndicate Management Limited [2015] EWCA Civ 93

Summary
  • This case provides much needed clarification to the calculation of the Basic Hire Rate (BHR) in credit hire claims.
  • BHR only applies to Claimants who can afford not to use a credit hire vehicle.
  • BHR is calculated as the lowest reasonable rate quoted by a mainstream supplier, for the basic hire of a vehicle of the kind in issue to a reasonable person in the position of the Claimant.
  • Calculating BHR is an objective test – the Claimant’s views are irrelevant.
  • Mainstream providers must be ‘local’ to the Claimant.
  • Where no local mainstream provider can be identified then a local reputable company will suffice.
  • Lowest reasonable BHR is not an average of the available rates.
  • Lowest reasonable BHR is often lower than the average of the available rates.
The Facts

Mr Stevens was involved in a collision with a car insured by Equity Syndicate Management Limited (ESM). Liability was not in dispute. In order to protect his no claims bonus Mr Stevens entered into a credit hire agreement. Recovery of the credit hire fee was in dispute.

The Recorder found Mr Stevens not impecunious; took an average of four mainstream vehicle hire companies for vehicles in the relevant group; and calculated the recoverable period as 18 days. ESM appealed that decision. The High Court increased the recoverable period to 28 days, however upheld the Recorder's decision on impecunious and BHR because the BHR figure was that which Mr Stevens would have been willing to pay for a temporary replacement vehicle.  

ESM appealed on the basis that the BHR was calculated incorrectly.


Lowest Reasonable BHR - the correct test

The appeal was dismissed. LJ Kitchin stated that the search must be for the lowest reasonable rate quoted by a mainstream supplier for the basic hire of a vehicle of the kind in issue to a reasonable person in the position of the Claimant [39]. Where there are no mainstream providers then quotes from local reputable suppliers will suffice [36].

The test is an objective one thus the views of the Claimant are irrelevant to the analysis of BHR [34][39].

If that search finds a single approximate figure then that rate is the reasonable BHR [36].  Where the rates are variable then, in accordance with Dimond v Lovell [2002] 1 A.C. 384, the right of recovery is limited to the lowest reasonable BHR. This is not the same as the average of the available rates. The lowest reasonable BHR will often be lower than the average of the available rates.


Claimants Beware

Claimants who can afford to hire a car outside of a credit hire agreement are likely to recover a lower than average local BHR. This may cause Claimants difficulty especially when they wish to avoid affecting their own no claims bonus (as was the case was in Stevens).

Practical Guidance

Those considering non-impecunious credit hire claims should:

  • Identify the comparable vehicle.
  • Establish the Claimant's local area.
  • Establish if any mainstream providers operate within that area. If not then search local reputable providers.
  • Acquire BHRs from these providers.
  • If BHRs are approximately the same then that figure will be the reasonable BHR.
  • If a range of BHRs emerge then establish the lowest reasonable BHR.       

Unfortunately, all the above are ambiguous in nature, e.g., what is local? Who is a mainstream provider? How wide is approximate? Therefore, practitioners should be aware of this when undertaking such assessments and utilise these ambiguities within negotiations to their advantage.

Dr Richardo Childs
rchilds@devonchambers.co.uk
Richardo is undertaking a general common law pupillage and will be available for instruction from April 2015.
richardo_childs.jpg
Our Personal Injury Team:
Stuart Frampton | Russell James | Scott Horner
This email was sent to %%emailaddress%% as you are subscribed to the Devon Chambers email mailing list. If you have received this email in error, please accept our apologies. If you do not wish to receive further emails from us please click here to unsubscribe.
.