Credit Hire: Cancellation Regs

Occasionally, just occasionally, there is pleasure in taking a moment to feel gratified.

Of course, any such feeling is risky. Should there be the merest hint of hypocrisy, the febrile digital world will catapult the remains of that nice feeling into outer darkness.

Oh well, there’s little difference going to hell in a handbasket or any other more luxurious means. By the way, I’ve tried but failed to find the origin of this expression.

My gratification comes from beating TNT!

The risk I face by publishing, is that TNT will appeal out of spite, the Judgement of Deputy District Judge Hay will be overturned, and I shall regret my brief moment of gloating.

The Facts

Mr Aggouche, our client, had driven to a warehouse. He parked, got out of his car, walked a few paces, then heard a bang as a TNT lorry reversed into his car.

The TNT driver was angry. He abused Mr Aggouche. Despite the witness evidence of a security guard, the TNT driver alleged that Mr Aggouche drove into the TNT lorry.

There was a trial. The Judge believed Mr Aggouche and the witness. Evidently, the Judge did not believe the TNT driver.

TNT not only knew there was a reliable independent witness, they interviewed him themselves. Although we asked for the statement TNT had obtained from the witness, they simply evaded the question.

The fact that TNT contested the case to trial on liability suggests an element of grudge. But, then again, they have deep pockets hence can afford to fund a grudge match.

The real fight

This was not about liability, but the value of the claim.

In short, credit hire charges.

TNT don’t like claims for credit hire charges.

The whole motor insurance industry don’t like claims for credit hire charges – that is, unless they are profiting by it.

Much like the referral fee argument, insurers condemn credit hire charges publicly, whilst they, no doubt, profit privately.

This probably cannot be said of TNT, however, who simply don’t like credit hire claims.

The new Dimond

At the end of the 1990’s the motor insurance industry thought they were going to be able to destroy the credit hire industry. It all came down to the case of Dimond –v- Lovell.

Whilst this case made its way through the Courts to the House of Lords (now the Supreme Court, or whatever) insurance companies stopped paying credit hire charges. Hire companies went bust or contracted, starved of cash.

But Dimond –v- Lovell didn’t kill credit hire. It made it leaner, and, perhaps surprisingly, more insurer friendly.

In the post Dimond credit hire world, insurers and corporates struggled to find compelling arguments to crush credit hire charges. Indeed, the Courts seemed to have shifted (a little) in favour of Claimants.

The snappily named Cancellation of Contracts made in a Consumer’s Home or Place of Work 2008 (I shall simply call it the Cancellations Regs) changed that.

The Cancellation Regs gifted to motor insurers, and corporates like TNT, a new magic wand. Failure to serve a cancellation notice meant credit hire charges were unrecoverable.

The way credit hire works is like this: a consumer enters an agreement to pay hire charges but payment is deferred for a specified period not exceeding 12 months.

As long as this is a bona fide contract, the consumer is liable to pay, and therefore the at-fault insurer is liable to pay.

The Cancellation Regs add a further hurdle: The necessity to serve a cancellation notice on the consumer. If the credit hire company fails to serve a cancellation notice, they cannot enforce their agreement against the hirer. If they cannot enforce the agreement against the hirer, the hirer cannot enforce it against the at fault insurer.

Insurers rub their hands in glee. The Courts agree.

Why does Mr Aggouche’s case matter?

Because Deputy District Judge Hay has set out clear legal arguments showing that the Cancellation Regs do NOT apply to all apparently consumer transactions.

In Mr Aggouche’s case, he needed a hire vehicle for his work and for domestic use (he has three young children and his car was the only one in the household). He is a Public Carriage Office (PCO) licensed taxi driver.

DDJ Hay concluded Mr Aggouch was NOT a consumer for the purposes of the Cancellation Regs. Because he was NOT a consumer, the fact that he may have signed a credit hire agreement without being given a cancellation notice didn’t matter. The agreement he signed was bona fide so TNT had to pay the £10,000 of hire charges.

DDJ Hay researched the underlying legal issues himself. He established that where there is a dual purpose with respect to a contract, that is to say, a contract which covers both a professional purpose and a domestic purpose, the professional purpose means that the contract is NOT a consumer contract. Unless the professional purpose is “negligible”.

There are many credit hire businesses that hire out PCO plated vehicles. This Judgement will apply to them and could effect both how they enter into their contractual agreements and whether the TNT’s of the Defendant business can resist claims for hire charges under the Cancellation Regs.

Of course, DDJ Hay decision comes from the lowliest of Judges in a County Court. Nevertheless, the Judgement is well argued and persuasive, and should, I believe, be used to support Claimants.

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