As in England, credit hire continues to be an evolving area in Scotland. Until recently, there had been a relative dearth of Scottish case law. However, there have been several court decisions issued in the last few months that provide a useful insight into how Scottish courts are approaching credit hire claims.

Like for Like Replacement

Clark v The City of Edinburgh Council [2010] CSOH 144

The claimant sought damages of around £13,000 from the defendants in respect of car hire charges incurred following the damage caused to his vehicle. His car was a 14-year old Toyota Celica which had been classified as falling within the “sports car” grouping of the ABI GTA. The claimant hired an 18-month old Honda Civic Type R, worth around £18,000 new, for a period of 79 days, charged at £120.56 per day. The court held that it was unreasonable to describe a 14-year old car with a value of £1,700 as being the equivalent of the car hired. The claimant was provided with a car which was far superior in every sense to his own. The court held that the defendants were liable for the cost of hire at the spot rate of £39 per day.
The main point to note is that the court took the view that the age of the original car had to be taken into account in deciding what level of replacement was appropriate, not just the make or type.

The full judgement can be read by clicking here.

Enforceability of Credit Hire Contracts

David Lyle v UK Insurance Limited, Sheriff Holligan, 7 September 2010 (unreported)

The claimant’s BMW 530 car was damaged in a collision. Liability was admitted. A replacement car was delivered to the claimant’s place of work where he signed the paperwork. There was no discussion between the claimant and the agent from the credit hire company as to the terms and conditions on which he accepted the vehicle. No discussion took place about hire charges and the claimant was not aware that he was entering into a credit hire agreement. He believed that he was entitled to a better car and payment for the hire car would not be his responsibility. The defendants argued that as the claimant was not given notice of his right to cancel the agreement, the agreement was unenforceable in terms of the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008. The claimant argued that the purpose of the Regulations was to protect consumers from doorstep selling and that it was merely circumstance that the car was delivered to the claimant’s workplace. The court held that the Regulations applied in this case and, as no notice period was given, the contract was unenforceable.

This decision is in similar terms to the English case of Chen Wei v Cambridge Power and Light [Claim No.9CB02546] and is a significant development in credit hire claims. The Regulations apply to any credit hire agreement signed on or after 1 October 2008, albeit the contract must be signed by the claimant at his home or place of work. If this information is not available then it should be requested from the claimant’s agents, together with a copy of the credit hire agreement itself. We have not heard the last of this issue and it is only a matter of time before the Court of Appeal rule on this issue.

Impecuniosity

Jim Walker v Chesapeake Hillington Limited, 11 October 2010 (unreported)

The claimant sought to claim hire costs in the sum of around £13,000. The defendants’ agents repeatedly asked the claimant to confirm whether he was impecunious at the date of hire, but he failed to respond. The defendants’ agents sought authority from the court to ordain the claimant to provide this information, an unusual step in Scotland. The defendants argued that it was unsatisfactory and unfair to leave this issue to be determined at trial. The court held that the defendants were entitled to fair notice of the claimant’s claim and whether this aspect of it could be promptly maintained. The court reiterated that the burden of proving impecuniosity lay with the claimant.

The full judgement can be read by clicking here.

Tkachuk v Stevenson [2010] SLT (Sh Ct) 238

The claimant in this credit hire case was a professional rugby player. The court held whilst he was entitled to hire an alternative car, he could only do so from a credit hire company if he was impecunious and did not have the financial means to hire at spot hire rate. Following analysis of the claimant’s finances, the court held that it was not too onerous for the claimant to use his savings or credit card and therefore he had not suffered a loss. The court held that had any award would be made with reference to spot rates.

These cases emphasise the importance for insurers to make full disclosure applications for a claimant’s financial information in hire cases. Claimants in Scotland who do not wish to face this level of scrutiny of their finances are increasingly accepting that they were not impecunious at the date of hire.
Necessity of Repairs and Impecuniosity

Arthur Clelland v Quinn Direct [22 October 2010] (unreported)

The claimant sought recovery of credit hire charges of around £13,000 for hiring a Jaguar XK Coupe to replace his damaged TVR. The claimant required his vehicle to be repainted by a specialist TVR paint shop. A full respray was applied to secure a uniform colour to the betterment of the vehicle. The claimant argued that the entire repainting of his vehicle was required to restore it to its pre-accident condition. The court held that the entire cost of the repair was recoverable and that the claimant acted reasonably in having his vehicle repaired at the specialist company. At the time of hire, the claimant was a director of a firm with annual profits of £30,000; he operated two credit cards, each in debit, one to the extent of £5,700 and the other to a credit limit of £15,000. The court held that the claimant was not impecunious and in a financial position, through his credit card, to hire a vehicle on the hire market. Damages for hire costs were therefore based on spot rates.

The full judgement can be read here by clicking here.

For Further Information

For further information please contact Douglas Keir, Andrew Lothian, or your usual contact at Anderson Strathern.