Credit hire vehicles: the latest round

W v Veolia Environmental Services (UK) Plc [2011] EWHC 2020 (QB) (27 July 2011) is another round in the long-running struggle between providers of credit hire vehicles and the insurers of defendants in motor accident claims. Two issues arise in this case:

• The defendant said that the credit hire charges were irrecoverable because of the effect of The Cancellation of Contracts Made in a Consumer's Home or Place of Work etc. Regulations 2008 ("the Regulations"). 
• The claimant raised the second issue, that since the hire charges in this case had already been paid (by one insurance company to another) questions of unenforceability under the Regulations are irrelevant and the only question is whether the payment amounted to a failure to mitigate.

The claimant's 21-year-old Bentley was damaged when it was struck by the defendants' refuse vehicle. He entered into a credit hire agreement, hiring a modern Bentley at an eye-watering rate of £860 a day. Being an actuary, he argued that he had to have an impressive car, but a little surprisingly he was unable to pay to hire the car himself (which would have cost an eminently reasonable £485 a day). The car was delivered to his home, where he signed the hire documents and an application for insurance for the hire charges. The indemnit under this policy was limited to £100,000, but he exceeded that by £38,000 and the defendants' insurers refused to cover the charges.

The defendants sought to rely on the requirement under the Regulations that a cancellation notice be given to the hirer, and this had not been done. The court agreed with that point. They argued that, because of this omission, the hire agreement was unenforceable and therefore the claimant had suffered no loss. However, this position became more complicated when the insurance company paid the charges in full to the hire company - what the judge referred to as "a litigation tactic". So, whether or not he was obliged to do so, the claimant had effectively paid the hire charges and had therefore suffered a loss. His duty to mitigate his loss did not extend to challenging the hire charges on the basis that the agreement was unenforceable: all he had to do was hire a car and pay the charges he incurred. Had he not done so he would have had a claim for loss of use instead.

Not surprisingly given the sums involved it seems that an appeal is likely, so we might hear more of this yet.