Evolving arguments: Clark v Ardington [2003] QB 36

A number of conjoined cases proceeded to trial before HH Judge Harris QC and then were determined by the Court of Appeal in a number of appeals heard at the same time and known familiarly as Clark v Ardington[2003] QB 36.

The cases involved considerations of the enforceability of the credit hire agreements in those cases, which are largely of historical interest, although enforceability arguments were to get a second wind, some 5 years later and remain of potential application today. Of ongoing significance are the observations on the recoverability of the credit hire charges, and the consideration of what was a reasonable rate, and how this might be determined.

For many years the first Commandment taught to those representing claimants in credit hire cases, was “Thou shalt do nothing that might imperil the ratio of the Court of Appeal in Clark v Ardington.” In recent years this seems to have been forgotten, given a number of interesting appeals pursued to the Court of Appeal in recent years, which I shall look at in due course.

The Court of Appeal stated, rejecting the notion that average rates could be looked at, that the normal legal principles of the common law should apply:

146 We believe that Mr Milligan’s criticisms of the judge’s adoption of Mainz plus 10% are justified, as were his criticisms of the suggestion that it provides a working solution. If Mainz plus 10% is justified to arrive at the reasonable charges incurred in hiring a replacement car, then it must be capable of application whether or not an accident hire company is involved. That cannot be right. A person who needs to hire a car because of the negligence of another must, subject to mitigating his loss, be entitled to recover the actual cost of hire not an average derived from the Mainz report. If the principle adopted by the judge is correct then it would seem appropriate also to apply that principle to the cost of car repair, namely a claimant may only recover the average of the charges of garages. But a person whose car is damaged should in appropriate circumstances recover the cost to him of repair and loss of use. His recovery should not be restricted to an average of car repair or hire rates nor should he be able to recover that average cost if the actual cost is less. We believe that the solution is to apply normal legal principles.

The Court of Appeal emphasised the fundamental principles of compensation and how this could include in appropriate cases recovering charges at what were termed the “top of the range” of car hire rates:

147 The fundamental principle is that a person whose car has been damaged is entitled to compensation for the loss caused. In a case where such loss includes loss of use and he establishes a need for a replacement, he is entitled to the cost of hiring a replacement car. He can go round to the nearest car hire company and is prima facie entitled to recover the amount charged whether or not the charge is at the top of the range of car hire rates. However the basic principle is qualified by the duty to take reasonable steps to mitigate the loss. What is reasonable will depend on the particular circumstances.

The Court of Appeal further noted that in principle it is a relatively straightforward exercise to quantify what is the appropriate rate, in any given case.

148 We do not anticipate that the application of the correct legal principles will lead to disproportionate costs in small cases. The claim will be based on evidence as to the rate charged by a car hire company in the relevant area. Perhaps the rate will be at the top end of the range of company rates. Thereafter the evidential burden passes to the insurers to show that it would not have been reasonable to use that particular car hire company and that the reasonable course would be to use another company which charged a lower rate. What is reasonable and whether a loss is avoidable are questions of fact, not law, which district and county court judges regularly decide. It can arise in many different types of cases, ranging from damage to chattels to a failure to take action. We do not believe that a decision on such issues in respect of car hire charges will be any more difficult than in respect of car repair charges.

The cases also raised a number of interesting points such as the disavowal of ABI GTA rates as a tool for assessment by the courts (they were not market rates), the intriguing suggestion that where repairs went on for too long a period, the repairing garage might be joined in for a contribution by the insurers (how? on what basis did they owe the insurers a duty of care not to cause pure economic loss?) and perhaps above all impecuniosity, which was elevated to the House of Lords through one of the conjoined cases, that of Lagden. 

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