McBride v UK Insurance Ltd (Rev 1), Court of Appeal - Civil Division, March 15, 2017, [2017] EWCA Civ 144

Resolution Date:March 15, 2017
Issuing Organization:Civil Division
Actores:McBride v UK Insurance Ltd (Rev 1)

Case No: (1) B2/2015/1054/CCRTF

(2) B2/2014/3494/CCRTF

Neutral Citation Number: [2017] EWCA Civ 144




Lower Court Claim Number 3YQ70083



Lower Court Claim Number 2IR76777

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 15/03/2017






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Mr Steven Turner & Mr Edward Ramsay (instructed by Keoghs LLP) for the Respondent in McBride

(2) Mr Richard Spearman QC & Mr Stuart Nicol (instructed by True Solicitors) for the Appellant in Clayton

Mr Jonathan Hough QC & Mr Stephen Bailey (instructed by Horwich Farrelly Solicitors) for the Respondent in Clayton

Hearing date: 22 February 2017

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JudgmentLord Justice Flaux :


  1. These two appeals are the latest round in the long-running battle between the motor insurance market and the credit hire companies. Both appeals raise issues as to the effect of the nil excess provided by Accident Exchange Limited (``AEL''), which was the credit hire company in both cases. In the first appeal, McBride v UK Insurance Ltd, AEL, which stands behind the claimant, seeks permission to appeal on two further grounds of appeal which were adjourned to the full Court by Underhill LJ at the permission hearing. One of those grounds contends that the judge erred in law in assessing quantum by applying the judgment of this Court in Stevens v Equity Syndicate Management [2015] EWCA 93; [2015] 4 All ER 458, because that case is inconsistent with earlier decisions of this Court and was wrongly decided.

  2. Given that it will be necessary to consider the proceedings and judgments in the courts below in detail, particularly in Clayton, I will continue to refer to both appellants, who, in each case, were the claimants in the court below, as ``the claimant'' and to the respondent insurers as ``the defendant'', in order to avoid any confusion.

    The facts and judgment in McBride

  3. The claimant's Jaguar XJ Supersport V8 5.0l motor car (in insurance group P10) was damaged in an accident due to the negligent driving of the defendant's insured. The car was rendered unroadworthy. The defendant organised and paid for the repairs which took a protracted period of time. The claimant was a company director who used his car extensively for business, social and domestic purposes, commuting from the south coast to London five days a week, a daily commute of some 150 miles.

  4. During the period that he was without his car and it was being repaired, the claimant hired a broadly equivalent car, a Jaguar XK 5.0l (also in insurance group P10) from AEL. The daily hire charge was £409 (a discount from the daily rate shown on the original Vehicle Rental Agreement of £649.31). In addition, AEL provided collision damage waiver (``CDW'') at £10 per day, the effect of which was to reduce AEL's default insurance excess of £2,500 to nil. There were also charges for hiring satnav equipment, an additional charge to reflect the claimant's penalty points and £120 delivery and collection. The total hire period was 77 days and the total charges incurred were £40,215.11 inclusive of VAT.

  5. In circumstances where it is reasonable for a claimant to hire a replacement car for his own vehicle and to do so on credit hire terms, it has been established since the judgments of the majority of the House of Lords in Dimond v Lovell [2002] 1 AC 384 (to which I return in more detail below), that the claimant cannot recover as damages for the loss of use of his car the full amount of the credit hire, save in cases where the claimant is impecunious in the sense of not being able to afford to hire a replacement car in the normal way by payment in advance: see the decision of the majority of the House of Lords in Lagden v O'Connor [2003] UKHL 64; [2004] 1 AC 1067, not relevant in the present cases because neither claimant was impecunious. In cases of pecunious claimants such as the present claimants, the damages recoverable will be the sum attributable to the basic hire rate (BHR) of the replacement car. The burden is on the defendant to demonstrate by evidence that the credit hire rate exceeds the BHR of an equivalent vehicle to that hired from the credit hire company. Where such a difference is demonstrated, that takes account of the additional services that a credit hire company provides to a claimant, such as credit, the cost of claims handling and recovery, the risk of not recovering from the defendant driver and an element of profit, all elements of betterment which the majority of the House of Lords in Dimond v Lovell held have to be ``stripped out'' and are not recoverable as damages.

  6. So it was that, at the trial in the present case (as in the multitude of credit hire cases which come before the County Court), both parties produced evidence of the basic hire rate. The defendant produced evidence of hire charges for a number of allegedly comparable cars to a 5 litre Jaguar XJ, three of which were Mercedes S350s which were not in the P10 category, which left a Jaguar XJL from Civilised Car Hire at a hire rate £242.62 a day with a £1,500 excess and a Mercedes CL500 from Prestige Car Hire at a hire rate of £320.96 a day with a £3,000 excess. The terms of both hire companies said of CDW that it was ``to be confirmed on booking''.

  7. The claimant produced a table of basic hire rates for cars in insurance group P10 compiled by APU Limited (a sister company of AEL) which showed ranges of daily hire rates from £1,000 (Signature Car Hire and Sport Car Hire) to £225 offered by three companies, Coretec Cars, Dream Car Hire and Premiere Velocity. In the case of each of those three companies, the table stated that there was a ``Non waivable excess'' of £2,000.

  8. In his judgment, the District Judge found in favour of the claimant on most issues, holding that the claimant did have a need for a replacement vehicle and that it was reasonable for him to hire the model of Jaguar which he did. The judge also found that it was reasonable to have hired the car for 74 out of the 77 days.

  9. When it came to the quantum of damages, the judge referred to the decision of the Court of Appeal in Stevens v Equity Syndicate Management (which had come out only the week before the hearing) and in particular to the guidance given in [35] and [36] of the judgment of Kitchin LJ (set out at [47] below) which the judge quoted. That guidance was to the effect that the lowest reasonable rate quoted by a mainstream car hire company or a reputable local company would be a reasonable approximation of the basic hire rate for the Dimond v Lovell exercise.

  10. In the light of that judgment the judge in the present case said that: ``What I am seeking to to find out what is the appropriate basic hire rate for the vehicle actually hired by the claimant in this case. It is not an exact science and we have to get an approximation. So I am looking for the lowest reasonable rate quoted by a mainstream supplier for the hire of a vehicle of the kind actually hired''. He then considered the evidence of basic hire rates produced by the parties. In relation to the defendant's two comparable vehicles, the Jaguar XJL and the Mercedes CL500, the judge noted that in relation to CDW the terms were ``to be confirmed on booking'' and accepted the claimant's submission that one simply did not know what the cost of reducing the excess to nil would be in circumstances where the burden was on the defendant to provide the relevant figures. Accordingly, the judge said he was turning to the claimant's figures.

  11. He noted that he had heard of some of the car hire companies in the claimant's table, but not all, but said that he was prepared to accept that they were all mainstream suppliers. In determining the lowest reasonable rate, in accordance with the judgment in Stevens, he said that since the lowest figure of £225 was quoted by three companies, it was not a rogue figure and must be reasonable. He held that the lowest reasonable rate quoted by a mainstream supplier was £225 per day. With the addition of VAT that became £270 per day. Accordingly, he awarded damages of £19,980 for 74 days hire.

    The grounds of appeal in McBride

  12. The claimant puts forward four grounds of appeal in his Amended Appellant's Notice which in summary are:

    (1) The judge erred in law in applying the test of ``the lowest reasonable rate quoted by a mainstream supplier'' in accordance with Stevens, as that case is inconsistent with earlier decisions of the Court of Appeal in Pattni v First Leicester Buses Ltd and Bent v Highway and Utilities Construction Limited (No. 2) [2011] EWCA Civ 1384; [2012] RTR 17 (referred to hereafter as ``Pattni/Bent (No. 2)'') and Burdis v Livsey [2003] EWCA Civ 510; [2003] QB 36.

    (2) Alternatively, even if it was right to apply Stevens, the judge erred in law in his approach to the BHR because there was no evidence that the three suppliers who quoted £225 a day were ``mainstream suppliers''.

    (3) In any event, the judge erred in his assessment of the BHR because having said that the defendant's BHR evidence was to be disregarded because it did not demonstrate the cost of hiring at a nil excess, it was irrational to then rely on the claimant's BHR evidence which also failed to demonstrate the cost of hiring at a nil excess. He should have concluded that the defendant had not proved that the credit hire rate exceeded the BHR.

    (3A) Alternatively, he had erred by failing to make a reasonable adjustment to the £225 rate to allow for the cost of an excess waiver so as to facilitate a...

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