Legal Developments In The Credit Hire Market

When the Court of Appeal gave their judgment in the case of

"Clark v Ardington (2002)", did they anticipate

that 7 years on the court system would once more become flooded

with claims or did they expect their judgment to put a nail in the

coffin of credit hire litigation?

Background

The first attack on the credit hire industry took place 15 years

ago with the case of Giles v Thompson and the allegation

that credit hire agreements were champertous : an argument which

failed.

However in Dimond v Lovell (2002) the Law

lords denounced that credit hire agreements were regulated

agreements and if improperly executed were unenforceable against

the hiree and could not therefore be recovered from the

defendant.

The final challenge was mounted against the entire scheme,

credit hire and repairs in the Clark v Ardington case. The

Court of Appeal was clear: the scheme was not a pretence, sloppy

enforcement was merely a commercial party choosing not to enforce

their strict legal rights.

The remainder of the decision was framed in such a way that

challenge to claims for credit hire seemed dead and buried. But

with credit hire claims rising in not only cost but volume we take

a look at the recent developments, practices and legal challenges

facing the credit hire and motor insurance industries.

Enforceability

In the recent reported decision of Company Call Centre

Technology Ltd v Sheehan* the appeal judge upheld an earlier

decision to dismiss the claim for hire charges on the basis that

there was no evidence that the claimant had a liability to pay the

hire charges incurred. The claimant's employee had received the

hire agreement together with its terms and conditions for signature

4 months after the hire period had ended and the replacement car

had been returned.

Thus whilst the Court of Appeal may have firmly put to bed the

allegation of pretence and enforceability, it would appear that

commercial practice does not override the basic contractual

principle that past consideration is not good consideration and the

liability to pay hire charges still needs to be established and

should not be overlooked, because sloppiness in sending

documentation after a hire period has ended is not commercial

practice that avoids legal principle.

Need

"The claimant must prove his need to hire a replacement

vehicle although the burden will usually be easy to satisfy.

Advocates will frequently remind you that the need for a hire car

is not self proving" District Judge Paten advises his brethren

in the winter edition of the District Judge's Law Bulletin

reminding them of Giles v Thompson.

And herein lies the problem in challenging "need for

hire". The burden of proof lies squarely with the claimant but

is a fairly low threshold. However, perhaps that threshold is about

to change.

The...