Credit hire

Credit hire cases continue to be a major source of litigation. In joined cases Pattni v First Leicester Buses Ltd; Bent v Highways and Utilities Construction and Anr [2011] EWCA Civ 1384 the Court of Appeal has once again reviewed the area. The judgment of Aikens LJ signals a change in terminology and also lays down the approach to be taken where the claimant has used credit hire facilities where there was no justification to do so.

The facts

In the first of the cases, Pattni, Mr Pattni’s Porsche was damaged by the negligence of the defendant bus company on 9 April 2008. The vehicle required repairs, and on 12 April 2008 Mr Pattni hired a replacement vehicle on credit hire terms, at a cost of about £500 per day. It was not disputed that the vehicle hired was a reasonable substitute. The hire lasted for 40 days and the total charge was over £25,000, close to one-third of the value of the Porsche itself. The trial judge held that the time spent on repairs was unreasonably long, and reduced the period of compensation to 29 days. He also held that Mr Pattni had the means to hire a replacement vehicle without resorting to credit hire and, had he done so, the daily rate for the vehicle (the ‘basic hire rate’, or BHR, a term which Aikens LJ preferred to ‘spot rate’) would have been around £370.50. That figure for a period of 29 days gave rise to a figure of £10,744.50. Mr Pattni was under the credit hire agreement obliged to pay interest on that sum from the period between the end of the hire and the date of the judgment, and he sought to recover the interest from the defendant. He argued that he could recover interest either because he was bound to pay it under the hire agreement or, if that was wrong, then he was entitled to recover interest on the basis that without the hire agreement he would have paid the hire charges up front and would have thus been deprived of the use of his money until the date of the judgment. Failing that, Mr Pattni sought interest under the general provisions of s96 of the County Courts Act 1984.