This is an important Court of Appeal decision within the field of Credit Hire on a claimant’s duty to mitigate, even where he is impecunious.
The appeal arose from a claim for hire and storage, following a road traffic accident on 17 June 2010 in which the claimant’s Seat Alhambra, which he used as a minicab, sustained damage. The period of hire claimed was from the date of the accident to April 2012. The total cost of hire claimed was £130,000 plus £19,600 for recovery and storage. This was despite the fact that the cost of repair as estimated shortly after the accident was around £3,400 plus VAT.
The claim at first instance was heard by HHJ May QC at Central London County Court. The judge found that the claimant was impecunious, and as such, entitled to recover hire charges at the credit hire rate for the allowable period of hire.
Nevertheless, she found that at some point between June 2010 and February 2011, when the vehicle was inspected by the defendant’s insurer, the claimant could have obtained the means to have the car repaired, either by saving small sums or by using his credit card facility.
As such, she limited the period of hire to 9 months, and gave judgment in the sum of £63,796.04.
Giving the only reasoned judgment, with which Patten and McCombe LJJ agreed, Beatson LJ set out the four relevant legal principles:
“(1) A person’s claim for damages will be reduced if, and to the extent that he has failed to take reasonable steps to mitigate his loss…;
(2) In the context of credit hire claims, the courts emphasise the need for careful and proper control of the claims by the application of the doctrine of mitigation…;
(3) The practical way of recognising that rates are higher in credit hire cases… is to award damages by reference to the spot or “basic hire rate”…
(4) Where a person is “impecunious” in the sense of being unable to afford to hire a car from a conventional hire company at the spot or basic hire rate, the damages claimed will not be limited by reference to that rate…”
The appeal focused on one main issue; whether there was an inconsistency between the judge’s finding that the claimant was impecunious and that he had failed to mitigate his loss by failing to fund the repairs to his car. There were two elements for consideration on this point: 1) the basic principle of whether there came a point at which the claimant could reasonably be expected to fund the repairs, and 2) if a date did come, when was it reasonable for him to fund them, and was the judge’s finding that the date was March 2011 sustainable?
In relation to the first element, Beatson LJ found as follows:
“It does not…follow that because a person is not able to pay a conventional hire rate for similar cars to be used as minicabs for an open-ended period that it was unreasonable for him to fund a total cost of some £3,200 for the repair of the car.”
Significantly, he noted that “whether conduct by the victim of a tort is reasonable or unreasonable, and whether a loss is avoidable are questions of fact not law.” As such, the Court was cautious about interfering with the judge’s findings.
He found that the judge was entitled to conclude on the evidence before her that the claimant could reasonably have been expected to fund the repairs. The court had before it evidence of his earnings, bank accounts, and credit cards, and those of his wife. The judge was also entitled to take account of the fact that the claimant was, during the period of hire, saving on insurance and maintenance costs for which he would otherwise be responsible, and was, furthermore, incurring a liability of some £5,000 a month to the hire company, on which interest would after 11 months, begin to accrue.
In relation to the second element, although Beatson LJ could not find a logical basis for the March 2011 date, he found as follows:
“In the light of the background and the evidence as to Mr Opoku’s financial position, the judge was entitled to conclude that Mr Opoku could reasonably be expected to have found the means to have the car repaired by a combination of his existing credit card facility, the amount saved by not having to pay for insurance and maintenance, and by saving modest sums over the eight month period.”
Obiter Comments on a Judge’s Discretion
Beatson LJ made several observations which demonstrate the breadth of the trial judge’s discretion regarding a finding as to reasonable period. On one hand, he said that a judge might have found that, on the facts of the case, the claimant was entitled to instruct his own forensic engineer, which did not occur until October 2011. As such, that might be the relevant cut-off date. Conversely, he noted that other judges might have considered that the relevant date was November 2010, when it became clear that there was a real dispute and the vehicle was to be subjected to a forensic inspection.
This decision will be welcomed by defendants, who will seek to argue that notwithstanding a finding of impecuniosity, claimants are under a duty to mitigate their losses. Indeed, even in cases where impecuniosity is not asserted, the decision will still be of application where there is a dispute over the period of hire and its reasonableness. Beatson LJ’s obiter comments noted above make it clear, however, that findings in this regards are case specific and that judges have a wide discretion. Nevertheless, where it becomes apparent at an early stage that claims will be contested, and repairs may be delayed, claimants would be well-advised to consider funding the repairs themselves to avoid a finding that there has been an unreasonable failure to mitigate.