UK: Legal Developments In The Credit Hire Market

Last Updated: 25 June 2009
Article by Fiona Butler, Andrew Christon and Angela Wilkes

When the Court of Appeal gave their judgment in the case of "Clark v Ardington (2002)", did they anticipate that 7 years on the court system would once more become flooded with claims or did they expect their judgment to put a nail in the coffin of credit hire litigation?


The first attack on the credit hire industry took place 15 years ago with the case of Giles v Thompson and the allegation that credit hire agreements were champertous : an argument which failed.

However in Dimond v Lovell (2002) the Law lords denounced that credit hire agreements were regulated agreements and if improperly executed were unenforceable against the hiree and could not therefore be recovered from the defendant.

The final challenge was mounted against the entire scheme, credit hire and repairs in the Clark v Ardington case. The Court of Appeal was clear: the scheme was not a pretence, sloppy enforcement was merely a commercial party choosing not to enforce their strict legal rights.

The remainder of the decision was framed in such a way that challenge to claims for credit hire seemed dead and buried. But with credit hire claims rising in not only cost but volume we take a look at the recent developments, practices and legal challenges facing the credit hire and motor insurance industries.


In the recent reported decision of Company Call Centre Technology Ltd v Sheehan* the appeal judge upheld an earlier decision to dismiss the claim for hire charges on the basis that there was no evidence that the claimant had a liability to pay the hire charges incurred. The claimant's employee had received the hire agreement together with its terms and conditions for signature 4 months after the hire period had ended and the replacement car had been returned.

Thus whilst the Court of Appeal may have firmly put to bed the allegation of pretence and enforceability, it would appear that commercial practice does not override the basic contractual principle that past consideration is not good consideration and the liability to pay hire charges still needs to be established and should not be overlooked, because sloppiness in sending documentation after a hire period has ended is not commercial practice that avoids legal principle.


"The claimant must prove his need to hire a replacement vehicle although the burden will usually be easy to satisfy. Advocates will frequently remind you that the need for a hire car is not self proving" District Judge Paten advises his brethren in the winter edition of the District Judge's Law Bulletin reminding them of Giles v Thompson.

And herein lies the problem in challenging "need for hire". The burden of proof lies squarely with the claimant but is a fairly low threshold. However, perhaps that threshold is about to change.

The interventionist approach (adopted by more pro-active insurers) is widely thought to be changing the tide, raising the evidential bar for claimants who ignore alternatives to credit hire.

Innovative and practical methods are being deployed to provide otherwise "would be credit hirers" with real alternatives to credit hire. Probably the best known and most topical are the TNT drivers offering any Third Party motorist who is unfortunate enough to have an RTA with one of their lorries a free replacement vehicle.

On the face of it a genuine and real alternative, that saves cost and does not inconvenience the accident victim.

The court's approach to "need for hire" in the wake of the TNT Scheme and schemes like them remains to be seen. This type of scheme was considered by the Court of Appeal in May and we currently await its judgement. It presents the Appeal Court with a real opportunity to limit the claimant's damages to the actual cost of the replacement vehicle or possibly wiping out damages completely.

Insurers hope to see this type of scheme offering a genuine alternative to credit hire as a scheme recognised by the courts as an effective way of providing a replacement vehicle without incurring expensive credit hire charges.

Judges may also welcome clarification from the Appeal Court. Only recently before the District Judge sitting in Southampton were questions raised why motor insurers were not in more regular contact with the Third Party motorists to offer alternative schemes to credit hire. Well Judge – they are!

Hopefully both insurers and the judiciary will see more scheme's such as the TNT Scheme being utilised by motor insurers where third party replacement vehicles are provided quickly, cheaply and without inconvenience. Such schemes must then be the way forward and a genuine alternative to credit hire.


It is well versed that the reason for credit hire charges being more costly than the local hire rates is the cost of the 'convenience' services provided. According to the judge in Dimond v Lovell 'the law does not entitle the plaintiff to recover damages for additional services provided by the car hire company or for the worry or nuisance caused by the accident'.

However, if a claimant can show he or she is impecunious then they are entitled to recover the higher credit rate as opposed to the local rate. A point raised in the House of Lords case, Lagden v O'Connor. Impecunious signifies an inability to pay car hire charges without making sacrifices the claimant could not reasonably be expected to make.

It is standard practice for some courts to order and defendant lawyers to seek either by a Part 18 request or application for disclosure, details of the claimant's financial means.

Only recently in Southampton County Court, did a claimant struggle to recall what transactions he had made in 2005 which were listed in his current account bank statement. He faced questions about his savings and that of his wife, a named driver on the credit hire agreement. It is an uncomfortable place for a claimant to be.

The judge found that, despite the claimant's decision to change career and his unemployment at the point of the accident, he had the facility to obtain finance without placing an undue burden on his family, rejecting argument that alternative means of funding a replacement car would have been open ended and an unfair risk for the claimant.

Did the Law Lords envisage when raising the phrase 'impecunious' that trials before county court judges would become in the main investigations into the financial accounts of an innocent claimant motorist? Surely not. The issue of what renders someone impecunious in one geographical region may not be sufficient in another. Does it have any bearing whether your accident is in the North or South of the country? What about age? If you are a prudent 40-50 year old who has had a successful career, perhaps mortgage and child free, with little or no debt, then you are less likely to be impecunious than the 23 year old who is just out of university with student debt and a relatively modest income.

Whatever your view, the issue is now common place for lawyers and the respective industries but not for the innocent motorists who find themselves in court.

Period Of Hire And Contribution Claims

Following Clark v Ardington contesting the period of hire can often prove difficult. Mrs Clark's car repairs should have been completed within 5 days but due to factors beyond her control were completed in 10. The Court of Appeal recommended that if delay is caused by a repairing garage a defendant should seek a contribution for the unjustified length of repair.

But despite this recommendation, there remains much debate about whether a defendant can actually seek a contribution from the repairing garage within the ambit of the Civil Liability Contribution Act 1978. There are no reported cases where a defendant has been successful in doing so.

The issue recently came before the Court in Tiller v Green. The credit hire organisation (CHO) refused to compromise the claim for hire charges alleging that the repairing garage was responsible for the period of hire due to delay by failing to accurately estimate for the repairs, omitting areas of damage and quoting for the wrong parts. At trial the repairing garage established that they had followed the correct procedures and that it was the CHO who had failed to authorise the repairs, despite being chased by the garage on several occasions. The court found that once the repairs had been authorised they were carried out correctly and within a reasonable timeframe.

As a result the contribution proceedings were dismissed. The court found that the defendant's insurers were responsible for the hire charges only during the period of repair. The unreasonable delays in authorisation and the hire charges incurred during this period fell at the door of the CHO.

All is therefore not necessarily as it first may seem. Full enquiries and disclosure from the repairing garage made as early as possible, may result in a reduction in hire charges maybe not through contribution proceedings against the repairing garage but via highlighting delay in another quarter. It seems for the moment however that breaking the chain of causation in claims for lengthy hire periods remains difficult.


The challenges to credit hire charges are far from dead and buried. The awaited decision of the Appeal Court on refusal by a claimant of a free replacement vehicle by a defendant may well change the practice of the motor insurance industry in its entirety and place another nail in the coffin in credit hire litigation for now. In a further 15 years time no doubt there will be further challenges or issues which arise and are frequently being argued before the courts.

*The Credit Hire Team at Browne Jacobson acted for the defendant in Company Call Centre Technology Ltd v Sheehan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.