Court of Appeal in important credit hire ruling

08 Jul 2013

In the case of Opoku v Tintas 2013 the Court of Appeal has given an important ruling in relation to the question of period of hire.  The judgment will be significant for claimants and defendants alike and should be studied closely.

The Court of Appeal decided that the trial judge had been entitled to find that the claimant should have repaired his car earlier than he did, rather than continuing to incur costs under a credit hire agreement to hire a replacement vehicle.

The case arose out of a road traffic accident.  The defendant had driven his van into the back of the claimant's car, which suffered too much damage to be driven but was not written off.  The claimant had sometimes used the car as a minicab to supplement his income. The defendant denied liability for the accident.

The claimant instructed a claims management company which stored his car pending repair and extended credit to him to cover the cost of a replacement car. Soon after the accident the cost of repair was estimated to be £3,400 plus VAT.  The claimant claimed damages of £130,000 for the cost of hiring the replacement car over a period of almost two years, and £19,000 for the storage of his car.

The judge at first instance found that the defendant had caused the accident; that the car's damage was caused entirely by that accident; that the claimant was impecunious and therefore could recover from the defendant the cost of his replacement vehicle at the higher rate charged by the claims management company rather than a lower spot rate; but that the claimant had failed to mitigate his loss by not having his car repaired sooner. She awarded him £63,000, finding he should have had his car repaired once the defendant's insurer had inspected it, whereas in fact he did not remove it from storage and have it repaired until the defendant's insurer had paid him £3,400 on a without prejudice basis over a year later.

The claimant submitted that there was an inconsistency between the judge's finding in relation to the hire rates, i.e. that he was impecunious, and her finding that he had failed to mitigate his loss by not using credit and savings to repair his car earlier than he did.

The Court of Appeal decided that there was no inconsistency in the judgment. The judge had been entitled on the evidence to reach the decision she did regarding the funding of repairs; the question of whether a loss was avoidable was one of fact.

She did not say that it was reasonable for the claimant to repair his car right after the accident; rather that there came a time when it was reasonable for him to do so. There had been plenty of evidence of the claimant's finances before the judge. She had accepted that the claimant was not living extravagantly. She had not gone outside the wide margins that trial judges had. She had been entitled to conclude that the claimant could reasonably have been expected to find the means to pay for the repairs through credit cards and savings. The one-off cost of repair, of about £3,400, had to be balanced against the cost of credit hire accruing at the rate of £5,000 per month. It was not outside the judge's legitimate scope to find that the claimant's decision had not been reasonable.

Kelvin Farmaner, Partner with Trethowans LLP's Insurance Litigation Team believes that the judgment in Opoku v Tintas bears close scrutiny.  On close reading it is clear that the Court of Appeal is applying Lagden v O Connor.  The House of Lords in Lagden v O Connor decided that the cost of hiring a car under a credit hire scheme was recoverable in full as damages by the claimant whose car was damaged in a road traffic accident because his lack of means made him unable to hire a car at ordinary rates from an ordinary car hire company.  However, it was clear that there are limits, even where a claimant is impecunious.  It is also abundantly clear that every case needs to be analysed carefully in the context of the specific facts arising.  There is no shortcut to be had.  You must apply the settled case law to the specific facts on a case by case basis.