Fleet hire and need

A sub species of hire claims that poses particular challenges to litigators are those claims which concern what may be called “fleet hire”. They may range from claims concerning PSVs to recovery trucks and involve organisations from coach companies down to the small business operating 3 or 4 specialised vehicles.

The golden prize for those defending such claims is to establish that notwithstanding that the claimant’s vehicle has been damaged and is off the road, either awaiting repair or written off, it is unreasonable for a claimant to hire a replacement vehicle, and any claim for damages should not be for the cost of hire, but for a much more modest amount based on damages for loss of use of a profit earning chattel.

These arguments revolve around the familiar question of “need” for a replacement vehicle, one of the three key variables of daily rate of hire and duration of hire, which govern the calculation of quantum in a hire claim. The relevant principles are well known and most litigators in this area will be familiar with the case of Beechwood Birmingham Ltd v Hoyer Group UK Ltd [2010] EWCA Civ 647. In that case the Court of Appeal noted:

26. Again, as stated in the unanimous judgment of the Court of Appeal (per Aldous LJ) in
Burdis v Livsey [2003] QB 36 at paras. 147-148:

“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 … 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.” (emphasis added)

27. The judgment continued:

“148. We do not anticipate the application of the correct 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.” (emphasis added)

28. That claim of course related to a situation where a replacement car had been hired and the issue arose as to the rate of hire recoverable. However, the principle that a claimant must take reasonable steps to mitigate his loss applies across the piece and is equally applicable where the issue is whether there was a need to hire a replacement car at all: see for instance Park Lane BMW v Sarah Whipp, a decision of His Honour Judge Charles Harris QC in the Oxford County Court (Case No. 7B00829), 20 May 2009, in which the principles of mitigation were applied in relation to a large car dealership which had hired a replacement vehicle which was not identical to that damaged, without calling evidence as to what other cars it owned or were available to it. In that case after a careful review of the authorities, the Judge referred to the “long established principle that a claimant must prove … that a replacement car was
reasonably necessary” and observed:

“It will not be difficult for an ordinary motorist who loses the use of his only car to prove his need. It will generally not be too difficult for a commercial organisation which, for example, lost the use of a van which was daily employed for delivery. It might have been possible for Park Lane to have called evidence to establish that it had or would have had the need to use the limousine showing what his diplomatic commitments were or were expected to be and explaining what the substitute car was in fact used for. But it did not bother to do so. Consequential loss, special damage of the type here, does not prove itself.”

The question that then arises, is, in a Fast Track case, where the giving of standard disclosure is limited by questions of proportionality, how far does a claimant need to go in giving disclosure to prove need? Particularly when need has been thought to be a low hurdle to surmount? Conversely how does a defendant go about defeating arguments on need?

My own experience suggests that irrespective of the threshold for establishing need, these cases tend to turn upon disclosure and if necessary specific disclosure. A wise defendant faced with a large hire claim for a boutique or unusual vehicle, will seek disclosure not only of the identity of the other vehicles in the claimant’s fleet at the material time, but will seek disclosure of those documents which demonstrate the use being made of the vehicles. This can include contractual documentation. It can include delivery invoices. It can include movement logs. All of these documents can then be utilised to create a spreadsheet, to check if for example, there was spare capacity in the fleet, so that “need” is not actually made out.

Conversely a claimant will seek to rely upon the low threshold of the “need” requirement: pointing out that he did not retain an extra vehicle for it to be sitting idle, and rely upon the proportionality of the search that is undertaken, at the time of disclosure. Alternatively, he may find himself compiling his own spreadsheet, to show how deeply committed his vehicles were.

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