PI Brief Update

Editorial: Basic Hire Rates - Aidan Ellis, Temple Garden Chambers

24/03/15. The Court of Appeal decision on Basic Hire Rates in Stevens v Equity Syndicate Management Ltd [2015] EWCA 93 is attracting considerable debate, with four articles in this month’s journal alone. Is it confusing decision which conflicts with earlier authority as one article argues, or will it usher in a logical and straightforward approach as another article hopes?

It may be helpful to begin by recalling the difficulty of the problem facing the Court of Appeal. In Dimond v Lovell [2002] 1 AC 384, the House of Lords held that because credit hire rates incorporate irrecoverable additional benefits, the measure of loss in respect of a pecunious Claimant should be the equivalent spot hire rate (now basic hire rate). But this left open issues of principle and practicality in relation to how the equivalent spot or basic hire rate is to be identified. In principle, the Court needs to identify a single rate to award in damages, against a shifting evidential background in which many different hire companies charge different rates for slightly different vehicles, on different terms and conditions, in different areas at different times. Moreover, since credit hire issues are argued on a daily basis, often in low value cases, as a matter of practicality a solution needs to be found which can be applied easily and proportionately in every case.

In trying to resolve this issue and provide guidance to the courts below, the Court of Appeal’s approach has fluctuated. In Burdis v Livsey [2003] QB 36, in suggesting that the Claimant was entitled to recover an actual cost of hire, the Court at least appeared to suggest that the Claimant could recover a charge at “the top of the range of car hire rates”. In Bent (no 1) [2010] EWCA Civ 292, the Court suggested that aiming for some sort of reasonable average of rates “would not be going wrong”. In Bent (no 2) [2011] EWCA Civ 1384, the Court of Appeal retreated from any suggestion that averages would be appropriate and endorsed a modified version of the approach in Burdis though with some more detailed guidance on issues including the burden of proof and the type of evidence required. In Stevens, of course, the Court of Appeal suggested that the “lowest reasonable rate quoted by a mainstream supplier” should be awarded. Whether or not it is inconsistent with earlier authority, at the very least the decision in Stevens represents a change of emphasis.

Where does this leave rates arguments? Confronted with the familiar rates surveys setting out a range of rates, District Judges are likely to find helpful guidance in Stevens: the Court should first look for the lowest reasonable rate quoted by a mainstream supplier. If there are no rates from mainstream suppliers, it should broaden the search to look for the lowest reasonable rate quoted by a local reputable supplier. That sounds straightforward. But the difficult question remains what is a “reasonable” rate. Many familiar arguments remain open: can a rate be reasonable even if it has a higher excess, more onerous terms and conditions or the hire company is further away from the Claimant’s home? How is the Court to establish whether a local supplier is reputable? Though the basic principle laid out in Stevens favours Insurers, the answer to these questions will be thrashed out in the County Courts in many low value claims. It is too early to say whether this apparently straightforward guidance will succeed in allowing consistent results to be reached in the County Courts and hence encouraging more cases to settle.

Aidan Ellis
Temple Garden Chambers

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