On 17th June 2011, Mr Justice McCloskey once again disallowed the ABI rate and awarded the full rate of hire claimed by Crash Services. He held that the Defendant, in this case, had not had not established that the Plaintiff’s failure to avail of a lower rate from another commercial provider constituted a failure to take reasonable steps in mitigation of his loss.
This case was an appeal from the District Judge’s court and concerned a dispute over rate of hire only. In the lower court the District Judge had awarded the Plaintiff a daily rate of £37.33 per day, stating that he was “awarding the ABI rate”. The Plaintiff was involved in a road traffic accident on 2nd April 2010 (Good Friday) and, following a referral from a repairing garage, he entered into a hire agreement with Crash Services the following day, hiring a Vauxhall Vectra at a daily rate of £48.50. He did not enquire about the rental rate, nor was there any discussion about this. He knew nothing about the vehicle hire facilities of other providers in the market. He hired this vehicle for 21 days while repairs were being carried out to his own vehicle. The duration of hire was not in dispute.
McCloskey J set out in his judgment the governing principles of credit hire litigation. The Plaintiff must only hire a replacement vehicle if it is reasonably necessary and he also has a duty to mitigate his loss. He considered that prima facie the credit hire invoice was the normal measure of damages as it was the result of the Plaintiff’s steps to mitigate the loss which would otherwise accrue for general damages for inconvenience and disturbance arising from the loss of use of his vehicle. The burden therefore rested on the Defendant to establish that the Plaintiff failed to take reasonable steps to mitigate his loss and/or acted unreasonably in the steps taken to produce this credit hire invoice. He emphasised that in applying this principle the court must, at all times, act on evidence produced .
Evidence was presented on behalf of the Defendant that a suitable vehicle at the rate of £37.33 per day would have been available to the Plaintiff from Independent Car Hire Limited (ICH) and Ram (NI) Limited at the relevant time. McCloskey J noted however that in addition to this daily rate ICH added collision damage waiver and a delivery and collection charge to the daily rate and RAM adds a standard administration fee of £25 to the daily rate. Therefore he held that the competing rate produced by the Defendant was in fact £44.33.
In allowing the Plaintiff’s appeal McCloskey J held that the Plaintiff, in following the guidance of a repairing garage and engaging Crash Services, had acted “entirely reasonably at all times.” There was nothing unreasonable about the Plaintiff’s unawareness of either ICH or RAM. ICH, from the perspective of a member of the public, broadcasts its services through the medium of a single line advertisement in the yellow pages of the telephone directory. ICH does not operate a website. Members of the public account for less than 2% of their business. RAM is a small scale operation in Belfast (many miles from the Plaintiff’s home) operating a fleet of 40 vehicles. RAM’s manager testified that a credit hire Google search would not elicit its existence. Although the rates produced by ICH and RAM were lower than the Crash rates McCloskey J noted that “the mere existence of a somewhat lower daily rate does not, ipso facto, render unreasonable a rather higher daily rate” (£9 more per day).
McCloskey J held that in this case the Defendant had not established that the failure to avail of a lower rate from another commercial provider constituted a failure to take reasonable steps in mitigation of his loss. The full Crash rate was allowed and Vat was calculated (in accordance with Regulation 90 of the VAT Regulations 1995) at 20% being the rate applicable at the date of payment not the date that the invoice was first raised.