The Claimant arranged a replacement car from a credit hire company whilst her vehicle was being repaired. However, the Defendant's insurers refused to pay the hire charges on the basis that:
- the hire agreement had not been prepared in accordance with the Consumer Credit Act 1974 (‘the Act') and was therefore unenforceable; and
- the charges of £364.63 for an 8 day period of hire were unreasonable.
Box Legal Limited: After the Event Insurance Providers
- The Claimant was provided with credit in that the payment of the hire charges was deferred until the conclusion of her case and therefore, as a personal credit agreement, it was a ‘regulated agreement' within the meaning of ‘the Act'. The Claimant's and hirer's agreement did not contain all of the ‘prescribed terms', and therefore it was unenforceable. As the agreement was unenforceable the Claimant had no liability to the credit hirer and therefore the hire charges could not be recovered from the Defendant's insurer. Once this point was conceded, it was then argued, on behalf of the Claimant/credit hirer, that the Claimant had been unjustly enriched because she had had the use of the car for nothing and consequently she should be required to pay the hire charges. If the Court had agreed then as this was a liability caused as a result of the accident and the hire charges could be recovered from the Defendant's insurers. However, this was dismissed on the basis that to accept this argument would be inconsistent with the purposes of ‘the Act'. Parliament intended that if a consumer credit agreement was not executed correctly then the debtor should not have to pay, and this meant that Parliament had contemplated the debtor might be enriched.
- On the basis of the above findings, no specific judgment was required on the amount of the hire charges however comment was made, in obiter, as the point was of general importance to credit hire companies and insurance companies. By a majority, it was stated that a Claimant could not recover any additional fee applied by the credit hire company, on the basis of any additional services provided, e.g. providing credit. Therefore, the damages recoverable for loss of use are limited to the ‘spot rates' quoted by ordinary car hire companies.
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