PI Brief Update

Kevan and Ellis on Credit Hire, 4th Edition: Introduction

21/03/12. The death of credit hire litigation has been predicted rather often. After each new higher court case, there is a tendency to imagine that all issues have been conclusively resolved, facilitating the negotiated settlement of the majority of cases. And yet credit hire litigation continues. Indeed it prospers, to the concern of many County Court Judges. It is no exaggeration to say that credit hire cases, often on similar issues in low value cases, come before the courts every day. Partly, this is due to the relentless tide of new statutory instruments affecting consumer credit. Partly, it is simply because many of the issues that arise turn on the facts of individual cases.

Many credit hire cases originate in very similar facts. The Defendant negligently causes a road traffic accident in which the Claimant’s vehicle is damaged. Whilst the Claimant’s own vehicle is off the road being repaired (or replaced), the Claimant may want to be able to use an alternative vehicle. One option for the Claimant is to obtain a replacement vehicle from a credit hire company.

It is easy to see why...

Image ©iStockphoto.com/blueclue

Read more (PIBULJ subscribers only)...

Kevan and Ellis on Credit Hire, 4th Edition: Contents

Introduction
The death of credit hire litigation has been predicted rather often. After each new higher court case, there is a tendency to imagine that all issues have been conclusively resolved, facilitating the negotiated settlement of the majority of cases. And yet credit hire litigation continues. Indeed it prospers, to the concern of many County Court Judges. It is no exaggeration to say that credit hire cases, often on similar issues in low value cases, come before the courts every day. Partly, this is due to the relentless tide of new statutory instruments affecting consumer credit. Partly, it is simply because many of the issues that arise turn on the facts of individual cases.

Chapter One - Rates
“the major protection for the defendant and his insurers is that the claimant can only recover the ‘spot’ or market rate of hire”. So spoke the Court of Appeal in Copley v Lawn in considering the proper scope of mitigation of loss in credit hire cases. It remains open to argument whether the Court of Appeal was correct to regard the protection of the spot or market rates as limiting the scope for traditional mitigation arguments. But far less contentious was the Court’s identification of spot rates as the major issue in current credit hire cases. With the reduction in the number of cases challenging the enforceability of hire agreements (at least under the Consumer Credit Acts), and the unpredictability of mitigation arguments, the focus has definitely shifted to arguments about the applicable daily rate of hire. It is no exaggeration to say that in recent years credit hire cases have been fought in the County Courts every day, often in circumstances where the applicable daily rate is the only real point of contention.

Chapter Two - Impecuniosity
In this chapter, we will consider the analysis of impecuniosity in the leading case of Lagden v O’Connor, with particular emphasis on the definition of impecuniosity and the practical implications of this issue.

Chapter Three - Mitigation of Loss
A further way for Defendant Insurers to attack credit hire charges is to argue that the Claimant has failed to mitigate his loss. In short, that the Claimant has acted unreasonably. In assessing the strength of arguments based on mitigation of loss it is important to start with a firm grip on the general principles of mitigation. We will summarise them first.

Chapter Four - Introduction to Enforceability
The next chapters are devoted to the vexed question of whether a particular credit hire agreement is enforceable in the light of various statutory and common law issues, which in particular dictate the form of consumer credit agreements.

Chapter Five - Enforceability Issues: The Consumer Credit Acts
The purpose of this chapter is to discuss the enforceability of credit hire agreements under the Consumer Credit Act 1974 as amended by the Consumer Credit Act 2006.

Chapter Six - Cancellation of Contracts Made at a Consumer’s Home or Place of Work Regulations 2008
The Cancellation of Contracts made in a Consumer's Home or Place of Work Regulations 2008 ("the Cancellation Regulations") came into force on 1 October 2008. They give further effect to the Doorstep Selling Directive, and were enabled by the Consumers, Estate Agents and Redress Act 2007. In short they provide that, where the Regulations apply, the trader must give to the consumer a notice of their right to cancel the agreement. If this cancellation notice is not given, the Regulations provide that the agreement "shall not enforceable against the consumer".

Chapter Seven - Other Enforceability Issues
In this chapter, we address other issues related to enforceability which may arise in relation to credit hire agreements whether by statute or at common law. These are: the Distance Selling Regulations; the concept of Unfair Relationships; the Unfair Terms in Consumer Contracts Regulations 1999; issues arising from signature of...

Chapter Eight - Miscellaneous
The purpose of this chapter is to address additional heads of claim which the practitioner will frequently encounter in dealing with credit hire claims, including claims for interest on credit hire charges and claims for engineer’s fees. Further, the chapter concludes with a section summarising the law on champerty, which was the Insurers’ first big challenge to the credit hire industry but which is now only of historical interest.