Claiming credit hire charges as a bailee – claim dismissed

Published 6 March 2023

Iqbal v Dockray (Deputy District Judge Rose, 15 July 2022, County Court at Bradford)

This case is a welcome examination of the ability of a bailee of a vehicle to claim credit hire charges when that vehicle is damaged. It explores what a bailee can actually claim, and what the requirements are of a claimant to particularise and prove such a claim – in this instance the claimant failed to do so, leading to a substantial (albeit understated) claim being dismissed.

Background

On 23 February 2020 the claimant was driving a taxi which was struck by a vehicle being driven by the defendant. Liability was not disputed, and the claimant sought claims for credit hire, storage and repairs.

Despite the actual amount of the hire being itemised at £66,108, and £1,596 in respect of recovery and storage, giving a true valuation of £67,884 in respect of non-repair damages, the claimant restricted their claim to £45,000, based upon a Stage 2 offer made in the MOJ portal.

The claimant was not the owner of the taxi – he hired it from a private hire company and paid them a weekly sum to use the vehicle, but the taxi remained at all times the property of the private hire company.

After the accident, the claimant entered into hire agreements for a replacement taxi with a credit hire organisation. The claimant purported to have to continue to pay the private hire company for the use of the taxi – even though it was now damaged and unusable. The claimant hired a wheelchair-access vehicle from the credit hire organisation – he said he did so because he needed to service the private hire company’s customer base.

Defendant’s position

The defendant argued that whilst the claimant was entitled to bring a claim for loss of use as a bailee, the material issues were whose loss of use the claimant was actually claiming for and the measure of that loss.

Credit hire charges represent compensation for the loss of use of a vehicle – the taxi was principally the vehicle of the private hire company’ as the bailor, so it was their loss of use which needed compensating. The reasonableness of hiring a vehicle had to be measured with reference to the bailor’s standing and resources. As the private hire company had proven no loss to them as a result of damage to the taxi, nothing was recoverable.

Alternatively on the facts, the claimant was in fact claiming hire charges as if in the shoes of the private hire company – for instance in hiring a wheelchair access vehicle. Had the private hire company brought the claim, they would have had to prove the reasonableness of hiring rather than substituting the vehicle with one from their own resources, or alternatively claiming for loss of profits. As the claimant had not done so, the claim should be dismissed.

Judgment

The court concluded that the claimant’s claim was, properly construed, one made on behalf of the private hire company. Although the claimant made use of the taxi, the fact that the vehicle had been hired with the private hire company’s interests – and customer base – in mind, indicated this was actually a claim by the private hire company. Additionally, some invoices were in the private hire company’s name, notwithstanding that the claimant had signed the agreements.

In any event, the court noted that no evidence had been provided by the private hire company as to their losses. The claimant had not addressed the three Hussain v EUI Ltd [2019] EWHC 2647 (QB) exceptions in any detail – he had not addressed his potential loss of business; there was no corroboration of the alleged personal use for the vehicle; and the claimant had been debarred from relying on impecuniosity.

The claim was dismissed and the defendant recovered its costs from expiry of an offer of settlement made at Stage 2, thus restricting the claimant to £960 of costs against a claim of £8,337.12. The defendant recovered their costs incurred since Stage 2 in the sum of £7,368.40.

Discussion

Claims of this nature involve the interplay of a number of legal doctrines – bailment, mitigation of loss, reasonableness, remoteness and agency all have some relevance. The doctrines do not necessarily easily fit together. However some principles can be deduced from existing case law:

• A bailee is entitled to bring a claim for loss of use: see O’Sullivan v Williams [1992] RTR 309;
• A bailee makes such a claim even though it represents the bailor’s loss of use: see Armstead v Royal and Sun Alliance Insurance Co Ltd [2022] EWCA Civ 497*;
• A claim for hire charges is a claim for expenditure incurred in mitigation of loss of use: see Lagden v O'Connor [2003] UKHL 64;
• The claimant must prove that such expenditure is reasonably incurred: see Zurich Insurance Plc v Umerji [2014] EWCA Civ 357;
• Where a vehicle is used as a profit-earning chattel, loss of profit will be the measure of loss rather than hire charges, unless an exception is proven: see Hussain v EUI Ltd [2019] EWHC 2647 (QB).

Iqbal v Dockray is a welcome example of how these principles can be drawn together. Claimants who are not the owners of the vehicles involved in road traffic accidents should be aware of the potential difficulties in recovery if they expose themselves to a personal liability for charges as a bailee. Owners (and thereby bailors) of such vehicles should take a much more active role in repairing and replacing the vehicles, to the benefit of the bailee.

*NB: this claim is subject to ongoing appeal to the Supreme Court.

For more information or advice, please contact one of our experts in our Vehicle Hire and Damage Team.