Facts
The Claimant, a resident of Northern Ireland was involved in a road traffic accident with the Respondent in Co Donegal and subsequently entered into a credit agreement with an Accident Management Company (AMC) who assisted the Plaintiff with the recovery, storage and inspection of the damaged vehicle as well as a replacement vehicle on a Credit Hire basis.
The Claimant’s motor vehicle was written off following the accident and a timely payment was made by our instructing insurers in relation to the pre-accident value (PAV) of the Claimant’s vehicle.
Hire came to an end and all invoices, to include the claim for credit hire were presented to our instructing insurers who challenged the daily rate claimed in respect of the hire vehicle.
A Claim Notice was filed and proceedings were issued in Letterkenny, Ireland.
Lacey Solicitors Insurance Lawyers are appointed
Credit hire is not a common phenomenon within Ireland, when compared to Northern Ireland, where Credit Hire is so prevalent after road traffic accidents.
Our instructing Insurers had been, until this point, spared any real experience with these claims. Ruaidhri Austin, Partner, was appointed to Defend the matter having regard to our offices position as an ‘all-island’ Insurance Law Firm, and his status as a dual qualified solicitor with considerable credit hire experience in both NI and ROI.
Challenging the Credit Hire Rate
Our initial assessment of the claim was that it was reasonable for the claimant to hire a replacement vehicle and that the vehicle hired was like for like. Furthermore the period of hire was reasonable having regard to all the circumstances of the case. The daily rate for the hire vehicle however, appeared to be excessive.
We advised our Irish Insurers of the law surrounding Credit Hire in NI and the UK on the issue of Credit Hire Rates. We advised that simply stating ‘excessive‘ or ‘economic folly’ in the absence of evidence, would not suffice.
We clarified the position in NI and the UK, namely that the burden of proof rests with the Defendant to demonstrate, by evidence (known as Basic Hire Rate evidence) that there was an alternative rate available and that there was a difference between these two rates.
If we failed to provide any evidence of any evidence of alternative daily rates in the form of Basic Hire Rate evidence, then prima facie, the Claimant would be entitled to recover the whole of the Credit Hire rate claimed.
Alternatively, we clarified, if the Plaintiff alleged, that they could not afford to have opted to use any of the high street hire vehicle providers outlined in the BHR evidence, in circumstances where they were impecunious then they would likely recover the whole of the credit hire rate claimed.
Ruaidhrí Austin wrote appropriately to the Plaintiff’s representatives asking them whether they intended to rely on impecuniosity. The position of course being that if they did seek to rely on impecuniosity, that they should Plead and Prove same.
Receiving no response, we instructed VeriRate (formerly Surveyorship) to prepare a Basic Hire Rate Report.
The report confirmed that;
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At the time of the accident;
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There were like for like vehicles available;
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In the Plaintiff’s geographical area in NI;
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With a cheaper daily rate.
One high street provider confirmed that their total cost of hire, for the entire period of hire, would have been half the total cost of the hire vehicle provided on a credit basis.
A Tender was made on the basis of this report at the lowest rate.
The Tender was refused and when we confirmed to the Claimant’s representatives that no increase would be made to the Tender the matter proceeded to hearing.
The Hearing
Ruaidhrí Austin attended the hearing of the action in Letterkenny Courthouse. We secured the attendance of the author of the Basic Hire Rate report from VeriRate to give evidence. Bearing in mind the likelihood of a court being unfamiliar with the case law from NI and the UK, our office had a number of Judgments on hand to assist the court.
The Plaintiff sought, during the course of the trial, to allege that she could not have afforded to pay ‘upfront’ any high street provider for a replacement vehicle and had ‘no choice’ but to hire a vehicle on credit terms.
We objected in the strongest terms to the Claimant seeking to rely on impecuniosity at that late stage having failed to Plead or Prove same. We presented the court with the English case of Zurich Insurance Plc v Umerji [2014] EWCA Civ 357.
The Plaintiff’s representatives sought to argue that impecuniosity was self proving in circumstances where the Claimant was at the time a student. We presented the court with the NI case of Kerr v Toal [2015] NIQB 83 which confirmed that assessment of impecuniosity is a fact specific exercise and the Defendant should, prior to hearing, be afforded the opportunity to consider the Plaintiff’s financial documentation by way of Voluntary Discovery.
The Plaintiff finally sought to challenge the BHR evidence itself and the author of the report was robustly challenged on the methodology and data sources from the reports. Arguments were made that the vehicles listed in the BHR report were not an exact match for the Plaintiff’s own vehicle and that no evidence could be adduced that these rates would have been available at the exact time of the accident but instead could have been days or weeks later.
We presented the court with the English case of Stevens v Equity Syndicate Management Limited [2015] EWCA Civ 93 which confirmed that a court should not allow overly technical arguments and should attempt a reasonable estimate when it comes to the reports. The replacement need be no more than in the same broad range of quality and nature as the damaged car. Furthermore an alternative rate from even a year or so later than the accident date is still likely to throw considerable light on what the spot rate would have been at the time.
The Judgment and the Credit Hire Rate
The Judge stated that the Plaintiff’s impecuniosity would have convinced him to allow the Credit Hire rate but accepted our office’s position that impecuniosity had not been pleaded nor proven.
In the absence of an impecunious Plaintiff, the Judge accepted the evidence presented VeriRate of a BHR rate and the difference between the BHR rate and the Credit Hire rate.
The Judge found that the BHR evidence and evidence from the VeriRate representative confirmed that the Claimant failed to mitigate their losses in opting to utilise a Credit Hire Rate rather than a High Street Provider and paying ‘upfront.’
The Judge having reference to a number of rates within the BHR report awarded the lowest sum available in the BHR Report.
This resulted in a significant saving to our insurer at more than 50% of the Credit Hire invoice claimed.
The figure awarded in respect of hire by the Court failed to ‘beat’ the Tender made by our office almost one year previously.
Key Takeaways
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Credit Hire claims in the Republic of Ireland are a rare phenomenon but are undoubtedly on the rise.
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Those cases where the daily rate appears to be excessive should be challenged by way of Basic Hire Rate evidence provided that the Claimant is not relying on impecuniosity.
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If a Claimant is relying on impecuniosity, they should plead and prove it.
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Tenders remain an effective tool in the Defendant’s arsenal and any Tender should be made with the benefit of a Basic Hire Rate report.
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An allowance should be made for a courts unfamiliarity with these types of claims and Defendants should ensure that they have compelling arguments, supported by case law to challenge any issues that arise should the matter proceed to hearing.
This case was handled by Ruaidhrí Austin of our office. Ruaidhrí Austin is the Head of the Credit Hire department in Lacey Solicitors and is known and respected in both NI and ROI for his knowledge and experience of Credit Hire claims across all court levels in both jurisdictions.
