It was not there

When I started undertaking credit hire cases in the 1990s, the arguments of the day included the issue of enforceability, and in particular terms, whether a credit hire agreement was enforceable in that it complied with the Consumer Credit Act 1974 and the statuory regulations made under that Act. If it did not, the agreement was contended to be irredeemably unenforceable under section 127(3) of the Act, and the application of the rule against double recovery precluded the court from awarding damages in respect of the hire charges. Happy days.

Those arguments fell away after some years, both by reason of the credit hire organisations redrafting their credit hire agreements to take advantage of exemptions from the regulatory regime and also by the repeal of section 127(3): it was too crude a measure, with too disproportionate a penalty, and so enforceability arguments fell, or should have fallen into desuetude. Instead, as sometimes happens in law, the arguments simply evolved into a different shape.

A fashion arose to challenge the representations made before the execution of a credit hire agreement, alleging that if misrepresentation had taken place the credit hire agreement would be “unenforceable”. The point was usually taken in cross examination, with the representations being explored, and defence counsel asking the claimant if they wished to “get out of” the credit hire agreement, often without challenge from counsel for the claimant on the propriety of this line of questioning. In conseqence, I remember undertaking a number of appeals from this point to the Circuit Bench.

Earlier this month the High Court handed down judgment in the case of Parker v Skyfire Insurance Company Limited and Spectra Drive Limited [2024] EWHC 1060 (KB). The facts of the case are interesting, as they deal with the important issue of “Google Ad spoofing” whereby certain claims management companies, or introducers of work, might seek to capture claimants through masquerading, actively or passively, as the claimant’s own insurers, through manipulation of Google search rankings when a telephone number is searched for, in the aftermath of an accident. The case also concerns the hitherto growing tendency of disclosure being sought of telephone calls. 

But the real signifiance of the case, is what it means to the arguments of misrepresentation, which a defendant might wish to raise. In practical terms, it is not enought to establish a misrepresentation: rather the next and logical question, is where that takes a defendant, noting that misrepresentation does not itself void a contract: it only renders it potentially voidable, with the court then having to consider whether the claimant can actually rescind the contract. Rescission will not be granted, where a contract has been affirmed, notwithstanding any misrepresentation or if it is not possible to make restitution. Thus as the High Court judge observed:

42. In this case, Mr Parker has brought his claim to recover the credit hire charges in express reliance upon the contract with Spectra: see paragraph 10 of his Updated Schedule of Loss where it is pleaded that the agreements with Spectra are prima facie enforceable. He also opposed the application for non-party disclosure before the Recorder. Mr Parker was in attendance at the hearing below and even if he was unaware at that stage that he might potentially have a right to avoid the contract, he cannot have failed to grasp the point following that hearing. Yet he continues to maintain his opposition to the application on basis argued by his counsel that avoidance is not a realistic possibility. It is difficult to see how such a case could properly have been advanced by Mr Willems unless this represented Mr Parker’s instructions.

43. Mr Roberts argued that it would be counterintuitive to suppose that Mr Parker would choose to maintain a contract when he could readily extricate himself from any potential liability. However, in the present circumstances I regard it as no more than fanciful speculation to suppose that he might change his position in the witness box – even when subjected to the forensic rigour of Mr Roberts’ cross-examination. Quite apart from anything else, it could not be assumed that Spectra would accept any purported avoidance and it is difficult to see why Mr Parker would reasonably subject himself to the risk of uncertain litigation. Failure to do so would certainly not be categorised as an unreasonable failure to mitigate: see Armstead (supra) at [54]. In short, I cannot see any basis for suggesting that Mr Parker might seek to avoid the contract with Spectra in the future, having chosen not to do so hitherto.


45. As to this, the hire agreement is a contract for services which has now been fully performed. Mr Parker had the benefit and use of the car for nearly one year and it is difficult to see how he can make restitution in respect of those services received. In this respect, a contract for services is very different from, for example, a contract for the sale of goods where the goods themselves can be returned, even if it might be necessary to make some allowance for depreciation. Although there are indications that the courts might be prepared to adopt a slightly more flexible approach to restitution than in the past, it is still the case that a fully performed contract for services cannot be rescinded: Chitty (op.cit) paragraphs 10-139 to 10-140.

It may be accordingly that the misrepresentation defence has had its day.

In which case, the arguments will doubtless move on, evolve and credit hire will continue to be the gift that never stops giving, adding to the jurisprudence and the store of legal wisdom in the commonlaw, as it has so many years now. 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.