Burdis v Livsey ; Clark v Ardington Electrical Services ; Dennard v Plant ; Sen v Steelform Engineering Company Ltd ; Lagden v O'Connor
| Jurisdiction | England & Wales |
| Judge | Lord Justice Aldous,LORD JUSTICE TUCKEY,LORD JUSTICE ALDOUS,Lord Justice Tuckey |
| Judgment Date | 01 May 2002 |
| Neutral Citation | [2002] EWCA Civ 510 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | B2/2001/2112 B2/2001/2108 B2/2001/1254 B2/2001/2102,B2/2001/2112 B2/2001/2108 B2/2001/2102 B2/2001/1254 |
| Date | 01 May 2002 |
[2002] EWCA Civ 510
Lord Justice Aldous
Lord Justice Tuckey and
Lord Justice Jonathan Parker
B2/2001/2112
B2/2001/2113
B2/2001/2108
B2/2001/1254
B2/2001/2102
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
Royal Courts of Justice
Strand,
London, WC2A 2LL
ON APPEAL FROM QUEEN'S BENCH DIVISION
AND OXFORD COUNTY COURT
MR JUSTICE GRAY
HHJ CHARLES HARRIS QC
Mr I. Milligan QC, Mr B. Williams and Mr N. Hext (instructed by Herbert Smith as London agents for Stephens & Scown) for the Claimants/Appellants Clark, Dennard, Sen and Lagden.
Mr C. Symons QC, Mr M. Grant and Mr J. Hough (instructed by Morgan Cole and Hugh James Ford Simey) for Ardington, O'Connor and Steelform.
Mr I. McLaren QC and Mr S. Turner (instructed by Corries) for Plant.
Mr I. Milligan QC, Mr B. Williams and Mr P. McGrath (instructed by Betesh Partnership) for Burdis.
Mr J. Stuart-Smith QC and Mr M. Grant (instructed by Royal &Sun Alliance) for Livsey
Mr M. Brindle QC and Mr P. Goodall (instructed by Freshfields Bruckhaus Deringer) for Centrus (Intervener) by way of written submissions only.
This is the judgment of the Court to which all the members have contributed.
Introduction
This is the third round of a contest between the motor insurance market and credit hire companies which provide the innocent victims of motor accidents with car repair and hire services at little or no cost to them. The commercial success of such schemes has substantially increased the cost of motor claims borne by insurers. This has no doubt motivated their sustained legal attack on the schemes. Their first line of attack was that the car hire agreements were champertous. This failed in Giles v Thompson [1994] AC 142. Next, it was contended that the hire agreements were regulated consumer credit agreements which did not meet the statutory requirements laid down by the Consumer Credit Act 1974 so were unenforceable. This succeeded in Dimond v Lovell [2000] 2 WLR 1121, although Lord Hoffman described it as "a technical defect which more sophisticated drafting can easily correct". At both these earlier stages of the contest the House of Lords accepted that the credit hire companies fulfilled a real need and bridged a gap in the market and noted that there were many county court cases awaiting their decisions which they obviously hoped would put an end to further controversy. This was not to be.
In four of the cases before us the challenge is now to the whole scheme to provide credit for repairs and car hire which is said to be a pretence designed to avoid the restrictions imposed by the 1974 Act. Alternatively it is contended that the agreements are still unenforceable under specific provisions of the Act. Substantial issues relating to the measure of damages are also raised. Again thousands of cases in county courts up and down the country await the decisions of the higher courts on these issues.
Four sample cases were tried by His Honour Judge Charles Harris QC in the Oxford County Court last year with a view to appeal. His judgment is now reported at [2002] Lloyds Rep IR 138. A similar exercise the previous year failed when the sample cases he tried ( Seddon v Tekin and others [2001] GCCR 2865) settled shortly before the appeals were due to be heard by this court. In each of our four cases the credit hire company standing behind the claimants is one or more of the subsidiaries in the Helphire group of companies. Various insurers stand behind the defendants. In the fifth case, Burdis v Livsey, the credit hire company involved is Accident Assistance. This is an appeal from a decision of Gray J ( [2001] 1 WLR 1751) on one of the issues of damages which potentially arises in the other cases as well.
Some facts
In order to illustrate and understand the many issues we have to resolve it is convenient to set out the facts of one of the cases. For this purpose we have taken Sen v Steelform Engineering Ltd. We gratefully adopt Judge Harris's account of the facts in that case which were not in dispute.
"Dr. Sen, a very precise witness, was involved in an accident on 31st May 1999 when his Ford Fiesta was hit from behind by the defendant's BMW while he paused at a roundabout near Bicester. He took his car to a garage he knew, Midland Link Motors. Someone there told him about Helphire and how it would provide a hire car and deal with the repairs for him. He said he was told at the garage that if he took out an Angel policy then if the repair hire and engineers fees were not recovered from the other driver Angel would indemnify him for his losses. He confirmed that he would like to do this on the telephone from the garage to Helphire. He did not wish to prejudice his seven year no-claims bonus. He completed an accident report form on 2nd. June 1999 and the following day a Helphire vehicle hire agreement, credit hire agreement (51 weeks) and a credit repair agreement were also filled in. He sent Angel a cheque for £10 dated 4th June 1999 by way of premium for the insurance.
He was provided with a Vauxhall Astra which he had for only three days, 3rd to 5th June 1999, whilst he visited his mother in Birmingham. The hire charges in his case were £190.35p and an invoice was addressed but not sent to Dr. Sen on 9th June 1999. Also on 9th June Angel wrote to Dr. Sen confirming receipt of his £10 and stating that he was covered by its Cost Cover policy commencing on 3rd June 1999 … Midland Link Motors prepared but did not send Dr. Sen an invoice for the sum of £326.30p plus VAT. These repairs were of the simplest kind, all that was needed was one bumper and some rear lights. There was no engineers claim.
On 3rd April 2000 Helphire wrote to McMurray [solicitors] reminding them that Dr. Sen's charges would shortly be due under the terms of the agreement and asking them to get him to sign the claim on the Angel policy if he wished to claim. McMurray's wrote to Dr. Sen on 20th April and Dr. Sen signed this on 17th May 2000. On 11th June 2000 Angel wrote to McMurray "as requested by our mutual client we have now paid all the money that they (sic) owed to the Helphire group….. We act for the underwriter who now has subrogated rights in respect of the sum paid to Helphire please accept this letter as our instructions to act."
The Agreements
The Vehicle Hire agreement signed by Dr Sen provided that the period of hire was not to exceed 12 weeks. Unless the hirer entered into a credit hire agreement the hire was payable at its commencement or otherwise upon demand. The hire charges were not shown on the agreement when it was signed.
The relevant terms of Dr Sen's credit hire agreement are as follows:
"1. Provided that you are not found to have caused or contributed to the accident, you are entitled to a replacement vehicle, whilst yours is unroadworthy or being repaired, at the expense of the driver at fault or his insurers ("the Third Party").
2. Helphire's credit hire scheme enables you to hire a vehicle from Helphire on credit. The credit is provided whilst Helphire pursues a claim on your behalf against the Third Party. This is done through Helphire's own legal department or by solicitors nominated by Helphire ("the solicitors"). The solicitors will be instructed by you and will act for you.
3. Subject to Conditions 10 and 14 the Credit period expires when the claim has been concluded either by completing negotiations with the Third Party or by a decision of the Court. At that point you will be liable to pay Helphire's hire charges, but if it has been established that you were not at fault, the hire charges will be recovered by Helphire, or the solicitors, from the Third Party. ….
9. Helphire's provision of credit for the Hire Vehicle is on the condition that:
(i) Helphire may bring a claim for the hire charges against the Third
Party in your name or nominate the solicitors for you to instruct in bringing the claim in accordance with Condition 2. ….
(iii) You will co-operate fully in the bringing of the claim to include coming to court to give evidence in the unlikely event that this is necessary…
(v) Any cheques made out in your name which include an amount for hire charges may be paid into Helphire's bank account even if they include any other money due to you. If this happens Helphire will immediately send the other money to you.
(vi) If the hire charges are paid to you for any reason then you will pay them to Helphire immediately …..
10. You will pay the whole of the hire charges immediately if demanded by Helphire … should any of the following occur ….
This agreement will not apply to any Vehicle Hire Agreement
where the Hire Vehicle has been hired for a period exceeding 12
weeks.
14. The credit period extended by this Agreement shall expire in any event fifty-one weeks from the date of this Agreement. At the expiry of the credit period you shall then become liable to pay the hire charges in full. If the charges are subsequently recovered from the Third Party, Helphire will refund them to you."
The other Helphire claimants entered into the same agreement except that for Dennard and Lagden the credit period was only twenty-six weeks.
The credit repair agreement contains similar terms to those of the credit...
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