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Further guidance from the Court of Appeal on the basic hire rate

In Stevens v Equity Syndicate Management Ltd [2015] EWCA Civ 93 the Court of Appeal added to the guidance given in Pattni v First Leicester Buses Ltd;

Bent v Highways and Utilities Construction [2011] EWCA Civ 1384 on calculating the basic hire rate (formerly called the spot hire rate) in a case where a claimant had hired on credit, but was not impecunious and could have afforded to pay up front for hire. It was noted that reports on rates would often produce a very wide range of available rates in the Claimant’s locality for cars in the same group, with differing details such as the amount required as an excess. At first instance in Stevens, the Judge took an average of the rates provided in a rates report, after disregarding any rates that did not have a nil excess. The Claimant was given permission to appeal. The Claimant contended that as one of the rates at the top of the range in the report was close to the credit hire rate, the Defendant had failed to show that there was a difference between the credit hire rate paid and the basic hire rate. 

The Court of Appeal dismissed the appeal and found that the Judge at first instance should in fact have awarded a slightly lower rate. Finding the basic hire rate, in order to strip out the irrecoverable element in the credit hire rate, is an objective exercise and it does not matter what the individual claimant would have done had he paid for hire up front. A judge faced with a range of hire rates should identify rates for the type of car actually hired by the Claimant, available in the Claimant’s locality. If this still leaves a range of rates, the judge should take the lowest reasonable rate quoted by a mainstream supplier or, if there is no mainstream supplier, by a local reputable supplier. The Claimant’s submission that the highest rate should be taken was rejected as manifestly unjust. The lowest rate was regarded as the best way to objectively assess the basic hire rate, in a decision that will obviously be welcomed by Defendants.

Jane Clifton / 1st Apr 2015


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