At Lacey Solicitors, with offices in Belfast and Dublin, we act on behalf of insurers across the entire island of Ireland in defending credit hire claims. One of the most pivotal and frequently litigated issues in these cases is impecuniosity—a claimant’s inability to pay for vehicle hire upfront without making unreasonable sacrifices.
This article explores the legal framework, key case law, and strategic considerations for insurers facing credit hire claims, where courts have developed a robust body of jurisprudence around the concept of impecuniosity.
What Is Impecuniosity?
Contrary to popular suggestion, impecuniosity is not strictly related to an individuals finances. It refers to a claimant’s inability to pay for hire charges upfront without compromising essential financial obligations. As Stephens J explained:
“An individual who is not penniless can still be impecunious, because as a question of priorities he is unable to pay car hire charges without making sacrifices he could not reasonably be expected to make.”
— South Eastern Health and Social Care Trust v Flanagan [2015] NIQB 30
This principle is central to the duty to mitigate loss. A claimant must act reasonably to reduce their losses. If they cannot afford to pay for hire in advance, using a credit hire company may be justified—but only if they can prove their financial limitations.
A stark reminder is a case dealt with by our own office where an individual with over £200,000.00 in one bank account sought to rely on impecuniosity after an accident in 2020. He was a businessman who owned two chinese restaurants and sucessfully argued that those funds were savings that he would not sacrifice in the middle of a pandemic where the future was uncertain.
Legal Framework: Pleading and Proving Impecuniosity
If an individual seeks to rely on impecunioisty, the burden of proof lies squarely with the claimant. As Underhill LJ stated:
“A claim for the cost of hire of a replacement vehicle is, strictly, a claim for expenditure incurred in mitigation of the primary loss… The burden is thus on the claimant to prove (and therefore plead) that such expenditure was reasonably incurred.”
— Zurich Insurance Plc v Umerji [2014] EWCA Civ 357
Importantly, the Court of Appeal in Umerji also confirmed that impecuniosity is not limited to the rate of hire—it also applies to the duration of hire. If a claimant cannot afford to replace or repair their vehicle promptly, their impecuniosity may justify a longer hire period.
Burgess J reinforced this in Kerr v Toal & Others [2015] NIQB 83, stating that the issue of impecuniosity should be addressed at the outset of a claim and supported by financial documentation, including:
- Bank statements (typically three months pre-accident)
- Proof of income and liabilities
- Details of essential outgoings
Revisiting Critical Case Law on Impecuniosity
1. McCauley v Brennan & Coulter [2017] NIQB 41
This case is a straighforward but detailed one in Northern Ireland’s credit hire jurisprudence. The plaintiff, a single mother on state benefits, incurred over £36,000 in hire charges over 445 days. The court accepted her impecuniosity and found that she had acted reasonably throughout.
Keegan J observed:
“The facts of this case are extremely significant… The insurers on behalf of the tortfeasors have taken a very long time in apportioning liability… There were systemic problems… which had nothing whatsoever to do with the plaintiff.” (para 39)
She concluded:
“It seems to me to be unsound to shift the burden for the period of hire to the plaintiff and away from the tortfeasor.” (para 41)
This case underscores that where a plaintiff is impecunious and acts reasonably, even lengthy hire periods may be recoverable.
2. Lagden v O’Connor [2004] 1 AC 1067
This House of Lords decision established that an impecunious claimant is entitled to recover the reasonable costs of credit hire, even if those exceed basic hire rates. Lord Nicholls emphasised that:
“Common fairness requires that if an innocent plaintiff cannot afford to pay car hire charges… then the damages payable… should include the reasonable costs of a credit hire company.”
3. Gilheaney v McGovern [2009] NIQB 38
The court held that the plaintiff is prima facie entitled to the rate paid, but the defendant may rebut this by showing that a cheaper, reasonable alternative was available. The court found that a student at a stressful time sitting A-levels could not reasonably be expected to conduct a market search for cheaper hire options.
4. Clarke v McCullough [2013] NICA 50
The Court of Appeal scrutinised an 11-month hire period and found that the plaintiff’s continued use of a superior replacement vehicle, despite no resolution in sight, was excessive. The case highlights the importance of proportionality and ongoing reasonableness.
5. Kelly v Mackle [2009] NIQB 39
The plaintiff, a taxi driver, hired a vehicle at £227/day while earning only £300/week. The court found this to be “economic folly” and reduced the recoverable amount accordingly.
The Role of Basic Hire Rate (BHR) Evidence
In McBride v UK Insurance Ltd & Others [2017] EWCA Civ 144, the English Court of Appeal accepted the use of BHR reports to establish lower market rates. Northern Irish courts, pursuant to this decision and similar decisions such as Clayton v Admiral Insurance are now very open to an evidence-based approach to rate assessment. Judges in this jurisdiction are now inclined to consider such reports, even those whose rate include the requirement for a Quaestor type insurance excess.
There are of course often many technical objections to the various hire providers and whether the policies they offer are truly comparable however, in line with Mr. Justice Stephens’ decision in SEH&SCT v Capper & Flanagan [2015] NIQB 30, the judges tend to be prepared to disregard overly technical submissions.
A BHR report creates the clear prima facie basis for a defence on rate provided a claimant is not relying on impecuniosity in Northern Ireland.
Strategic Considerations for Insurers when addressing Impecuniosity in Northern Ireland
1. Early Disclosure
Request financial disclosure as soon as a credit hire claim is made. This includes:
- A clear confirmation on whether impecuniosity is being claimed
- Supporting financial documents
- Clarification on the claimant’s efforts to mitigate loss
2. Challenge the Reasonableness of the Hire
Even if impecuniosity is established, the hire must still be reasonable in:
- Rate: Was the credit hire rate excessive?
- Duration: Was the hire period unnecessarily prolonged?
- Provider: Was the hire company selected based on necessity or convenience?
3. Use Robust BHR Evidence
If the claimant is not impecunious—or fails to prove it—defendants can argue for the BHR as seen in our recent case in Letterkenny Ireland. This requires:
- Evidence from local, reputable hire companies
- Documentation of availability, pricing, and terms at the time of the accident.
- Demonstration that the claimant could have accessed these services
Why Choose Lacey Solicitors?
With offices in Belfast and Dublin, and with a client base of both insurers and leading AMCs Lacey Solicitors is uniquely positioned to deal with credit hire claims across both jurisdictions. Our team has extensive experience in:
- Challenging claims of impecuniosity in Northern Ireland
- Preparing and presenting robust BHR evidence
- Advising insurers on cross-border litigation strategy
- Resolving claims efficiently and cost-effectively
Conclusion on Impecuniosity in Northern Ireland
Impecuniosity is not just a financial question—it’s a legal and evidential one. For insurers, the key to managing credit hire claims lies in:
- Early engagement with claimants and their solicitors
- Demanding timely and complete financial disclosure
- Challenging the reasonableness of the hire in terms of rate, duration, and necessity
- Using robust BHR evidence to limit liability where appropriate
At Lacey Solicitors, we are committed to delivering strategic, evidence-led defence in credit hire litigation. Contact our Belfast or Dublin office to learn how we can support your claims handling team.
