PI Brief Update

Basic Hire Rates - Aidan Ellis, Temple Garden Chambers

19/12/11. It turns out that for the last ten years we have all been misusing the term spot hire rates. The Court of Appeal in Bent v Highways and Utilities Construction and Allianz Insurance [2011] EWCA Civ 1384, prefers the term “basic hire rates” which apparently distinguishes the situation in credit hire cases from freight or charter hire. Apart from altering the language, has the Court of Appeal in Bent finally resolved the issues surrounding the identification of these basic / spot hire rates? 

The dilemma arises because a pecunious claimant who hires a replacement vehicle on credit, can only recover in damages that sum which is attributable to the basic hire rate of the replacement car. But ascertaining the basic hire rate is not straightforward. Insurers and Hire Companies regularly argue this very issue in County Courts in low value cases at significant cost. 

In Bent, the Court of Appeal said repeatedly that the task facing the trial Judge in such a case is to “make a calculation of what the Basic Hire Rate was for the car actually hired”. In making this calculation the Judge may be assisted by direct evidence from the credit hire company about its basic hire tariff, or indirect evidence about the basic hire rates charged by other companies in the relevant area. Where there is no evidence relating to the exact car hired, the Judge can consider rates for other vehicles that are within a bracket which is comparable, whilst rejecting an approach purely based on averages. Further, in the course of reaching a decision on the facts of that case, the Court expressed a preference for contemporaneous rates evidence over evidence from a number of years later, and for evidence about rates for the actual car hired rather than comparable vehicles. 

How will this affect ongoing cases? Whilst placing the burden of proving the basic hire rate on the Defendant, the Court of Appeal clearly recognised that evidence of the basic hire rates of comparable vehicles at a different point in time does offer indirect evidence of the basic hire rate. This makes it more difficult for claimants to rely on undermining the defendant’s evidence without offering any rates evidence of their own.  

In cases in which both sides have rates evidence, Bent confirms that the courts will have to analyse both pieces of evidence in determining the basic hire rate (rather than simply taking an average). Many County Courts were already adopting this approach. Such an analysis should now consider, amongst other things, how closely the evidence matches the actual hire in terms of date, location, terms and conditions, and type of vehicle. Some standard form rates evidence may have to be improved to meet the rigours of this approach. This approach means that there is no magic formula to calculate the result in individual cases. Rather everything still depends on the Court’s assessment of the quality of the rates evidence presented. Thus the flow of small claims testing the quality of rates evidence is likely to continue unabated. 

Aidan Ellis

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