A fundamental element of a successful Credit Hire claim is to establish the need for a replacement vehicle, which ties in with the common Law duty to mitigate losses.
If a claimant’s own vehicle is deemed unroadworthy or not fit for use, as a result of an accident, the claimant is entitled to a like for like replacement vehicle on credit. (Subject to the proof of other elements such as impecuniosity, etc.)
However, this is not an axiomatic right and the need for such a replacement vehicle has to be proved on a balance of probabilities in a court.
For example: The claimant is a PCO/taxi driver and his vehicle is deemed unroadworthy, the claimant is; loosely speaking entitled to a credit hire vehicle to continue to ply his trade.
Similarly in another example, the claimant is a teacher who uses his car to drive to work and to drop his kids to school. Following an accident his vehicle is unroadworthy and yet again, in general terms he is entitled to a credit hire vehicle for social domestic, pleasure and commuting purposes.
The claimant must prove his need to hire a replacement vehicle and although the burden will usually be easy to satisfy, the need for a hire car is not self-proving: Giles v Thompson [1994] 1 AC 142 per Lord Mustill at 167.
As such in order to establish a successful claim for Credit Hire the claimant has to establish that he had an actual and genuine need for a replacement vehicle.
The element of need is not a self-proving element which needs to be proved by evidence which in turn means the claimant has an evidentiary burden which he needs to satisfy in order to succeed with his claim for Credit Hire.
The claimant must prove his need to hire a replacement vehicle, although the burden will usually be easy to satisfy. The need for a hire car is not self-proving (ie: not axiomatic); Giles v Thompson [1994] 1 AC 142 per Lord Mustill at 167.
This principle finds its foundation in the common law principle of Duty to mitigate losses; meaning that a victim of a tort should only keep his expenses to reasonable minimum and what would be deemed fair and reasonably by a Court of law.
In Singh v Aqua Descaling Ltd 2008 Walsall CC; Judge Oliver-Jones QC; 12 June 2008.
Mr. Singh the claimant was an owner of a private taxi company and rented out taxi’s to self-employed Taxi drivers on a £35 per week fee basis. One of his cars on the fleet was involved in an accident. Mr. Singh provided the driver with a credit hire vehicle at £1300 per week.
Court held that, inter alia, that Mr. Singh did not drive the car himself and therefore had no need for a Credit Hire replacement vehicle. His correct course of action would be for a loss of profit claim.
This is similar to when a claimant has access to an additional vehicle – If a claimant involved in a collision has access to another vehicle, he should use his 2nd car as opposed to using a Credit Hire vehicle which is in keeping with this duty to mitigate losses.
Therefor it is vital to note that by virtue of the fact that a claimant has been involved in an accident does not ipso facto entitle him to a Credit Hire vehicle. Need has to be established and this need has to be a reasonable need. Seehra v Aviva Insurance 2010; Agheampong v Allied Manufacturing Ltd – [2008] LTL 01.09.08
Impact of Coronavirus on Credit hire.
Amongst many industries already effected by the COVID-19 the Taxi industry has been severely affected.
Uber has recorded a 70% drop in work – https://www.theverge.com/2020/3/19/21186865/uber-rides-decline-coronavirus-seattle-sf-la-nyc.
As such, a Defendant insurer may well be within their right to refuse a Credit hire claim in its entirety, for a Taxi driver, on the basis that there was no need for a replacement vehicle, due to the lack of work at the present juncture of the Corona outbreak.
A court would be inclined to agree with this argument, as not having any work on account of the outbreak, but having a credit hire taxi, billing up between £110.29 + VAT to £250 + VAT per day, parked on your garage is not mitigating losses nor is there a need for such an excess.
The correct course of action should be a claim for loss of income.
This potential defence to credit hire is not limited to Taxi claims. In the above example, if the teacher is not commuting to work and the vehicle is needed only for a weekly shopping as allowed by the present government edict the correct course of action would be to use another means of transport ie: taxi or public transport and claim the incurred sum from the Defendant.
As such during this outbreak Credit Hire companies should exercise extreme caution and diligence in providing credit hire, as the sums claimed may not be recoverable at all.
However there is some light at the end of the tunnel in that, in a case of a taxi claim, if the Taxi driver retains detailed records (in the form of receipts, can office booking records or Uber Job list – just to list a few) of each and every job he takes on whilst utilising the credit hire vehicle and if such work shows a reasonable usage of the vehicle to generate a reasonable income, then and only then may establish need and in turn the credit hire maybe recoverable in full.
Please contact Lanka Rathnayake – Director at Freeman Harris Solicitors – Credit hire specialist for any further queries on credit hire.
