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Hit 'em in the pocket - a credit hire update

The single common factor in all fraudulent claims is, of course, the desire for financial gain, whether it is the claimant him or herself, an accident management company lurking in the background or some other service provider liable for a big payout if the claim is successful.

Of the commonly seen service providers, such as vehicle recovery agents or storage yards, physiotherapists or credit hire companies, it is the latter where one typically sees the really big numbers. Credit hire is big business, fraud is big business and it is in many cases difficult clearly to separate the two.

Whilst the success or failure of the defence of a suspected fraudulent claim is in many respects typically dependent on the strengths and weaknesses of the parties’ competing evidence, the defence of a claim for credit hire charges - whilst of course recognising the evidential role of such things as basic hire rate evidence - often turns on technical, legal argument. Indeed, whilst the defence of a suspected fraudulent claim might fail there can nonetheless still be success in respect of the credit hire element.

Since the credit hire aspect is often where the real profit lies for the would-be fraudster, defeating credit hire claims might almost be as much of a disincentive as defeating the whole claim – or, to put it another way, even if the defendant loses the war, it can still come out victorious in the most valuable battle.

In 2020, there were two judgements of particular use to all defendants (not just to those defending a suspected fraudulent claim) in the ongoing battle between insurers and credit hire companies. The first was Bunting v Zurich Insurance Plc [2020] EWHC 1807 (QB), a judgment given in May in a High Court appeal in Birmingham. The second was Diriye v Kaltrina Bojaj Quick-Sure Insurance Limited [2020] EWCA Civ 1400, a judgment given on 4 November 2020 by the Court of Appeal.

Bunting v Zurich

Despite ‘only’ being a decision of the High Court, the case of Bunting is of course binding on the County Court (under the principle of stare decisis). This is helpful since the County Court is where the vast majority of credit hire litigation takes place.

The key features of the case were that the claimant, who hired a vehicle on credit for a period of 78 days, was not impecunious (not claiming to be, rather than failing to prove to be) and that, curiously, the author of the Defendant’s basic hire rate statement, Mr Rose, was called by the Claimant to be cross-examined.

As such, the content of the judgment has to be taken in the context that the first instance judge had not just Mr Rose’s in written form (as is typically the case, generally accompanied by a hearsay notice) but also the benefit of hearing his evidence orally. It may therefore be that there is, in other cases, some (in this author’s opinion, limited) scope for argument by a claimant that any County Court judge ought to be less forgiving of any difficulties which there may be with a defendant’s basic hire rate evidence when only the written statement is available at a final hearing.

In any event, the first instance judge essentially accepted Mr Rose’s evidence and took the initiative to make a number of adjustments on some discrete issues. Of particular interest, the claimant’s appeal concerned the way the first instance judge:

  • treated the evidence of Mr Rose
  • addressed the contractual 30-day time limit for periods of hire
  • made adjustments to the evidenced figures
  • dealt with the lack of evidence of availability of a vehicle during the actual hire period
  • used the 7-day rate for the whole 78-day period of hire.

The claimant’s appeal argued, in essence, that Mr Rose’s evidence was imperfect in a number of respects and so had been unreliable for the purposes of the first instance judgment. The appeal judge, Mr. Justice Pepperall, reminded himself that County Court judges are effectively expected to get on with it and “do their best with imperfect evidence” and that “do[ing] their best in less than ideal material […] is consistent with the approach of the Civil Procedure Rules 1998”.

The appeal judge went on to find that the first instance judge was “absolutely entitled” to rely on Mr Rose’s evidence, observing that it was the only basic hire rate evidence for him and that it had been admitted into evidence (that is, included in the trial bundle) without any objection as to its shortcomings. It is probably worth recalling at this point that Mr Rose also gave oral evidence at final hearing, elaborating on his statement, so his evidence is likely, at least to some extent, to have been more compelling than a written statement alone.

The appeal judge also went on to endorse the approach the first instance judge took on the following issues having heard the evidence of Mr Rose.

He re-stated (if ever it needed to be re-stated) that basic hire rate evidence does not need to be contemporaneous with the actual period of credit hire. Related to this, the first instance judge was held to have been entitled to find, on the balance of probability, that a comparable [basic hire rate] car would have been available during the actual period of credit hire despite the absence of clear and categorical evidence on that point. He also agreed the first instance judge was entitled to apply the 7-day basic hire rate to the entire 78-day credit hire period even though the terms of the basic hire rate provider (Thrifty) specify a 30-day maximum period of hire[1].

Furthermore, the first instance judge had been “fully entitled to use his experience to make a rough and ready adjustment to the hire cost” which approach had been “precisely the sort of matter that is open to the first instance judge and with whose judgment the Appeal Court should be very slow to interfere”.

Those adjustments included using the 7-day rate for the whole 78-day period of hire and allowing (on the basis of the evidence of Mr Rose) the 78th day at one seventh of the weekly rate. In fact, the appeal judge went further still and noted that “even without express evidence on the point [emphasis added] the judge, it seems to me, would have been entitled to come to such a commonsense conclusion upon proof of the weekly rate”.

Thus, the judgment encourages first instance judges to take a commonsense approach and to make commonsense conclusions even without express evidence on a particular point. In the [battle]field of credit hire litigation this is particularly helpful to defendants. Of course, such an approach is not at all inconsistent with the imprecision and artificiality advocated by the Court of Appeal in the earlier case of McBride v UK Insurance [2017] EWCA Civ 144. In that judgment the Court of Appeal used the word approximate 9 times, the word artificial twice and the word imprecise 3 times: it can scarcely have done more to emphasise the point that first instance judges should be prepared to engage in a rough and ready approach in their judgments on credit hire claims.

Finally, although it did not form part of the core appeal, the appeal judge found, in respect of the question of a deposit being required by the would-be basic hire rate provider, that “whether there was a deposit required or not would make no difference to the overall cost of hire” and furthermore that a deposit “would be relevant in the case where there is no evidence of impecuniosity”. This too is helpful to defendants since many first instance judges will disregard basic hire rate evidence entirely on the basis of minor, technical arguments pursued by claimants on points such as a deposit being payable.

Diriye v Bojaj

This was actually an appeal relating to issues of service by first class post but, due to the nature of the document to be served in order to comply with an unless order, namely a Reply to the Defence “setting out all facts in support of any assertion that the claimant was impecunious”, the appeal judgment also covered some of the fundamental ways in which credit hire claims are to be pleaded and pursued during the course of litigation.

In the author’s opinion, this will actually define some of the key ways in which the claimant can now approach a credit hire claim even prior to issue. Before any Claim Form is issued, Pre-Action Protocols demand a ‘cards on the table’ approach by all parties and for there to be effectively a stock take between the parties with a view to litigation being avoided.

Accordingly, since Diriye now defines what information, a claimant alleging impecuniosity needs to provide at the very outset of his claim (that is, within the Particulars of Claim) it must, by extension, define what information such a claimant needs to provide before the end of the pre-action period.

In fact, one could say that Diriye doesn’t so much define what the starting point ought to be as simply make clear beyond any doubt what has always been the case upon a proper reading of CPR 16 and the accompanying Practice Direction, where for many years paragraph 8.2(8) has stated that a claimant “must specifically set out any facts relating to a claim for mitigation expenditure where he wishes to rely on them in support of his claim”.

In Diriye, the claimant in his Particulars of Claim had done no more than to make a bald assertion that he was impecunious. This was, said the Court of Appeal, a “problem” and did not constitute a “proper pleading”. The Reply he was ordered to serve went no further and “stated simply that “As he earned cash as a minicab driver, he expended the same on bills and daily living allowances for his family”.”

Upon being told that unless orders of the type given were not uncommon, the Court of Appeal said that, “If […] such orders are not uncommon, then that can only be because claimants in these sorts of cases are taking too lax an approach to the obligation to plead and prove impecuniosity so clearly spelt out in Zurich [v Umerji]”.

Thus, the Court of Appeal identified the recurring problem faced by defendants and the court, namely that claimants are consistently and persistently not properly complying with their obligation clearly and fully to plead impecuniosity in accordance with the terms of the Civil Procedure Rules. It therefore took the opportunity to require them clearly and fully to do so.

By failing in his Reply to give clear and full details of his alleged impecuniosity the claimant, said the Court of Appeal, committed a “fundamental breach of the unless order” and observed that “the significance of the breach could hardly be greater”.

At this point the author takes the opportunity to observe that, considering the original threadbare Particulars of Claim, the claimant must also have been fundamentally in breach of Practice Direction 16 and, furthermore, by failing to have provided the required information prior to issuing his claim, must also have been fundamentally in breach of the Pre-Action Protocol.

The Court of Appeal continued and said that there was “no room for any gap between the pleading and the statement” and went on to emphasise the “incorrect notion that the claimant was entitled to advance a rubbishy case in stages, from pleading to witness statement to trial, presumably in the hope that, by the time the trial came on there was a commercial imperative on the part of the respondents to settle the case”. It found it intolerable that defendants might “be expected to have to prepare for a trial where the critical item of claim depends on a one line assertion […] that is not how civil litigation is supposed to work post-CPR”.

In short, the Court of Appeal was scathing about the approach taken by the claimant. “Parties to civil litigation need to make clear the important elements of their respective cases at an early stage. Gone are the days of ambush and keeping important points up your sleeve”, it said.

Happily, the judgment did set down what the claimant ought to have provided in his Reply, namely what his income was, what his expenditure was, and how those figures meant that he could not afford to hire a replacement vehicle. This therefore sets down unequivocally what any claimant ought to provide in his or her Particulars of Claim.

Thus, it seems to the author that a claimant seeking to comply properly with the obligation to plead fully and properly as to his impecuniosity must in his or her Particulars of Claim:

  • set out in full the figures relevant to his or her income
  • set out in full the figures relevant to his or her expenditure
  • explain how those figures mean (s)he could not afford to hire [at the basic hire rate].

This will be of enormous benefit to defendants who, where claimants comply, can now take early steps in litigation to take an effective and structured approach to the question of impecuniosity and the obtaining of basic hire rate evidence.

Indeed, if the Pre-Action Protocol is complied with, it will allow defendants to understand the likely shape and nature of any impending litigation and thus, where the facts of the case demand it, to take appropriate steps to try to avoid that litigation altogether and so to save costs and expenditure and/or to make effective pre-or post-issue offers giving real costs protection.

These two judgments of Bunting and Diriye ought therefore to assist defendants further drive down the value of credit hire claims and judgments. They ought, one would hope, to make the bringing of fraudulent claims an even less enticing proposition by hitting ‘em where it really hurts, the pocket.


[1] in the author's opinion the 30 day maximum would never actually be reached as the theoretical approach would have the claimant entering into a series of 7 day agreements. It does not appear that this argument was pursued either at first instance or on appeal.

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