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PI and Civil Litigation

Law - practice - procedure

10 APR 2014

Credit Hire Agreements - Zurich Insurance PLC v Sameer Umerji [2014] EWCA Civ 357; (2014) APIL 016

Credit Hire Agreements - Zurich Insurance PLC v Sameer Umerji [2014] EWCA Civ 357; (2014) APIL 016
The defendant insurance company appealed against a judgment in favor of the claimant for vehicle hire and storage charges in the sum of £101,559.
Moses LJ, Underhill LJ, Sir Robin Jacob
25 March 2014
The claimant's car was written off following an accident between him and a vehicle insured by the defendant on 19 October 2010.
The claimant's car was worth approximately £8,000. After the accident the claimant could not afford a replacement vehicle and entered into credit hire agreements renting replacement cars. Over a year and a half he had incurred fees in the sum of £95,000. Proceedings for recovery of these were brought by the hire company in the claimant's name.
Directions were ordered by the judge and the claimant had to notify the court whether he was impecunious at the time of the hire. The claimant failed to do so within the time required and at trial he confirmed that he did not have the means to purchase a replacement car.
The defendant argued that as the claimant had failed to comply with the order he be debarred from relying on impecuniosity.
The trial judge held that impecuniosity went to the question of credit hire, not duration of hire and damages were awarded for the entire period of hire as well as storage charges for the damaged vehicle that was subsequently disposed of. The defendant appealed.
It was held that the trial judge had been wrong. The debarring order was considered as a starting point. The debarring order was straightforward, and therefore the claimant could not rely on impecuniosity. The claimant was debarred from alleging that he could not afford to buy a replacement vehicle. Therefore he should only have been entitled to recover the hire charges from the date when he should have reasonably done so. Following Lagden v O'Connor [2004] 1 AC 1067 the court stated 'A claimant whose car has been damaged as a result of the defendant's negligence is entitled to recover for the cost of hiring a replacement vehicle to the extent, but only to the extent, that it was reasonable for him to incur that expenditure.' In allowing the appeal, it was held that by March 2011, the claimant would have been in a position to purchase a replacement vehicle and he was therefore entitled to hire charges to that date and recovery of storage charges in full. The substantial damages previously allowed were reduced to a very modest sum.
Following this case we are likely to see an increase in those defending credit hire cases; particularly those that have involved significant delays in repairs. A claimant wishing to rely on impecuniosity must be prepared to justify and fully disclose any documentation relating to impecuniosity. It remains to be seen what action the hire company will take in relation to recovery of their substantial charges.
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