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Articles | Fri 31st Mar, 2017
This week the Court of Appeal handed down the latest guidance in relation to credit hire claims. The Court was specifically asked to clarify the approach that ought to be taken when comparing claims for credit hire which incorporate excess waiver fees and basic hire rate evidence.
The Claimant in McBride had been involved in an accident which had rendered his Jaguar XJ Super sport V8 car un-roadworthy. Consequently, the Claimant hired a replacement vehicle for a period of 77 days and sought to recover credit hire charges of £40,215.11. The daily rate of hire included a £10 waiver fee to reduce the claimant’s excess from £2,500 to nil. At trial the DJ held that the Claimant was entitled to the lowest basic hire rate as evidenced by the Defendant in accordance with Stevens v Equity Syndicate Management Ltd  EWCA Civ 93 even though the basic hire rate did not include a daily excess waiver fee.
The Claimant appealed on four ground, the third ground being that the DJ had wrongly accepted the basic hire rate as an appropriate comparator to the credit hire rate when it had not included an excess waiver fee and/or that the DJ ought to have incorporated a reasonable adjustment to the basic hire rate to incorporate an excess waiver fee.
In Clayton the Claimant sought to recover £24,823.20 in credit hire charges from two companies over a 52 day period. Both credit hire charges included a daily waiver fee of £12.50 and latterly £17.50 to reduce the Claimant’s excess to nil. The Claimant also stated that he had intended to hire a vehicle for 7 days and therefore it was submitted that comparable hire rates provided by the Defendant ought to have been based on 7 day hire basis not a 28 day hire basis where the rates were lower.
At trial the DJ determined that the basic hire rate for 52 days was £10,500.00 which was the basic hire rate for a 28 day hire. The DJ allowed a 15% adjustment upwards to allow for the difference between a 7 day and 28 day hire. Furthermore, the DJ then allowed a further 10% upwards adjustment to account for the excess waiver fee which had not been incorporated into the basic daily rate. The Claimant appealed on the basis that the DJ had shown bias, that he should not have allowed evidence of comparable basic hire rates for 28 days and that the DJ had wrongly assessed the excess waiver fee.
The Court of Appeal confirmed that Stevens v Equity Syndicate Management Ltd  EWCA Civ 93 remains good law. Flaux LJ rejected the proposition that if a Defendant fails to produce evidence of a basic hire rate which incorporates a waiver fee to reduce an excess to nil, the comparisons should be ignored and that the Claimant should be entitled to the total credit hire rate claimed. Flaux LJ confirmed that the appropriateness of an excess fee should be treated separately from the comparison exercise between the credit hire rate claimed and the basic hire rate. Flaux LJ confirmed that it will be:
‘almost invariably the case that it was reasonable for the Claimant to recover a nil excess … the only question for the court will be how much should be recoverable as the cost of purchasing a nil excess.’
Therefore in McBride the appeal was allowed solely on the basis that the Claimant was entitled to recover the daily cost of £10 plus vat to reduce the excess to nil.
Flaux LJ further confirmed that the DJ in Clayton had not shown bias. Furthermore, that the DJ had been entitled to accept the evidence of a 28 day hire period and adjust it upwards by 15% to take into consideration the differences in 7 day, 14 day and 28 day rates. Finally, Flaux LJ held that the DJ had been entitled to look at the nil excess waiver fee as a stand-alone product and give a 10% uplift of the daily rate to incorporate the waiver fee. Therefore the appeal was dismissed.
This case has confirmed that Defendants do not have to produce basic hire rate evidence which incorporates excess waiver fees and/or that courts do not have to consider excess waiver fees when comparing basic hire rate evidence with the credit hire rate claimed. Rather, the appropriate approach is for excess waiver fees to be considered separately from the comparison exercise. Furthermore, courts are entitled to accept credit hire rates which relate to a longer period of hire than that anticipated by a Claimant and then award an uplift to the basic rate to account for any differences in the rates for longer hire periods.