Darren Bent v Highways and Utilities Construction 2011

This is a first for me – writing about a case where one of the parties used to be in my fantasy football team (he’s not now, Demba Ba partners Van Persie). Of course this case is not about football it’s about the far more exciting issue of determining the correct BHR (basic hire rate or “spot rate”) for a credit hire vehicle.

This judgment was delivered along with the case of Pattni v First Leicester Bus Limited. In both cases the claimants were not “impecunious” (see Lagden v O’Connor [2003] UKHL 64)

In Darren Bent v Highways Utilities Construction [2011] EWCA Civ 1384 the Court of Appeal three issues arose to be determined:

1. The correct method of calculating the BHR;
2. Whether a car should have been hired on the 7 day rate or the cheaper 28 day rate;
3. If he 28 day is preferred what discount should be applied to the 7 day rate?

The case has a very useful summary of the background law at paragraphs 29 to 41. As far as the first issue is concerned Aikens LJ who gave the judgment of the court said at para 73,

To summarise, the questions are: (i) did the claimant need to hire a replacement car at all; if so, (ii) was it reasonable, in all the circumstances, to hire the particular type of car actually hired at the rate agreed; if it was, (iii) was the claimant “impecunious”; if not (iv) has the defendant proved a difference between the credit hire rate actually paid for the car hired and what, in the same broad geographical area, would have been the BHR for the model of car actually hired and if so what is it; if so, (v) what is the difference between the credit hire rate and the BHR?

For present purposes the important point to note is that (assuming the answer to questions (i), (ii) and (iv) above is “yes” and that to (iii) is “no”) the aim of the judge’s fact finding exercise is to ascertain the BHR for the model of car that the claimant actually hired and to do so on an objective basis.

The court held the trial judge had erred in law. There was evidence available of the BHR for an Aston Martin DB9, the car Darren Bent hired whilst his Mercedes CLS 63 AMG Coupé was being repaired. The figures were £470, £500, £691 and £695. The claimant was seeking to recover £573.28. In the circumstances the appellant failed to prove that the BHR for an Aston Martin DB9 was less than £573.28.

The court accepted the appellant’s argument that the car should have been hired on a 28 day rate as it was reasonably apparent from the outset that the repairs would take a considerable time – the discount to be applied was 12%. Mr Bent was awarded 94 days hire at £504.48 plus VAT, which is a tad under 50 grand.

See the related case of Pattni v First Leicester Bus Limited.

If you have any comments on this case please add them below.

To find out more about mediating credit hire claims call me on 0845 056 3625

Pattni v First Leicester Buses Limited

The Court of Appeal has delivered its judgment in Pattni v First Leicester Buses Limited [2011] EWCA Civ 1384. The judgment also includes the case of Darren Bent v Highways and Utilities Construction. In both cases the claimants were not “impecunious” (see Lagden v O’Connor [2003] UKHL 64.

Can the claimant recover interest on the BHR in a credit hire claim?

This was the issue in the case. Aikens LJ gave the judgment and suggested that the term Basic Hire Rate (BHR) should be substituted for the more familiar term “spot rate”. The claimant had been involved in a RTA. He was entirely innocent. His car, a Porsche 911 Coupé, was damaged and needed repairing. He took out a credit hire agreement on an Audi R8. I’m no petrol head (I owned a Renault Scénic not long ago) although I do know both cars are German and quite expensive. Anyway that doesn’t matter – it was accepted that the Audi was a suitable replacement vehicle.

It was held that the claimant could recover 29 days hire at a basic hire rate of £370.50 per day for a grand total of £10,744.50. The claim had been for 40 days hire at £500 a day. The claimant wanted interest on that sum from the end of the hire period. The judge at first instance, and Swift J on appeal, said they couldn’t have it, notwithstanding the fact that the hire agreement specifically provided that the hirer would pay interest on the charges for the period.

Court of Appeal decision

The claimant advanced three arguments:

1. The claimant reasonably entered into the credit hire agreement as a direct result of the tort. The claimant’s contractual liability to pay interest  at the agreed rate was reasonably foreseeable and so is a loss which is recoverable from the defendant. It is well established by authority that a contractual liability to pay money which is incurred as a direct result of a tort constitutes a recoverable loss from the tortfeasor.
2. When the judge was assessing the damage suffered as a consequence of the defendant’s tort he should have taken into account the fact that if the claimant had hired a car in the usual way, by paying in advance, he would have lost the use of his money. Therefore the judge should have awarded both the BHR and interest on that sum as two heads of the damages recoverable for the loss of use of the claimant’s car.
3. The claimant is entitled to statutory interest pursuant to section 69 of the County Courts Act 1984 to reflect the loss of use of funds that the claimant would have incurred if he had hired a replacement car on a standard basis (ie. by paying in advance).

All three arguments were rejected and the appeal was dismissed. Of the first argument Aikens LJ said at paragraph 61,

In my view it is clear that the interest charge for which Mr Pattni is under a liability to Swift by the terms of the Agreement constitutes the cost of an “additional benefit” given to the credit hirer , viz. the benefit of delayed payment of the credit hire charges until the “Claim” against the other driver has been finalised. On the analysis of both Lord Hoffmann and Lord Hobhouse in Dimond v Lovell, this is not a recoverable loss in the case of a hirer who is not “impecunious”, in the sense described by Lord Hope in Lagden v O’Connor.

As to the second and third arguments the court held the claimant simply hadn’t suffered any loss as the interest liability was deferred to settlement of the claim.

See the related case of Darren Bent v Highways and Utilities Construction.

For information on mediating credit hire claims call me on 0845 056 3625.

If you have a comment to make on this case please add it below.

The Law Society intervened in the case of Sibthorpe & Anor v London Borough of Southwark [2011] EWCA Civ 25 because of the importance to the legal profession of the issue in question. Was an indemnity for adverse costs, provided by a solicitor to its client in a CFA, champertous? The defendant in this housing disrepair claim said it was making the CFA unenforceable.
The matter went to the Court of Appeal and the Master of the Rolls give the leading judgment. There was no challenge to the validity of the CFA other than for the indemnity clause which read:

If you lose, you pay your opponent’s charges and disbursements. You may be able to take out an insurance policy against this risk. If you are unable to obtain an insurance policy against this risk, we indemnify you against payment of your opponent’s charges at the end of the case if you lose. This means that we will pay those charges.

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The court accepted that “no case has been cited in which it has been held to be champertous for a person to agree to run the risk of a loss if the action in question fails, without enjoying any gain if the action succeeds.” The various judicial definitions of champerty all envisaged a gain if the action succeeded rather than a loss if it failed. Therefore to rule this CFA as champertous would be expanding the definition. The court did not feel able to do that and so the CFA was valid and enforceable. Lord Neuberger said :

Access to justice is an essential ingredient of a modern civilised society, but it is difficult to achieve for the great majority of citizens, especially with the ever reducing availability of legal aid. This has been accompanied by a shift in legislative policy towards favouring the relaxation of previously tight professional ethical constraints, in order to enable a variety of more flexible funding arrangements (which some applaud and others believe give too much weight to consumerism and involve expensive regulation). In these circumstances, I find it hard to accept that, by shouldering the risk of an adverse order for costs against his client, a solicitor is acting contrary to public policy, which is, of course, the basis for the law of champerty. It is one thing to say, in relation to contracts with those who conduct litigation, that the reach of champerty should not be curtailed by the courts. It is quite another to say that, in relation to such contracts, the law of champerty should be expanded.

The case is important currently for this type of case where ATE insurance is difficult to find or prohibitively expensive. It may have even greater importance if Lord Jackson’s proposals to restrict the recoverability of ATE premiums is enacted.

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Mediation is confidential.

That is a fundamental requirement for the process to work although there are exceptions. Every mediation agreement makes confidentiality a contractual agreement between the parties, their representatives and the mediator. In California confidentiality is enshrined in statute (Evidence Code, § 1119, subds. (a), (b).). In a recent California Supreme Court case the question arose whether or not confidentiality applied to the private discussions between a mediating client and attorneys who represented him.

Cassel v Wasserman, Comden, Casselman & Pearson LLP

The Petitioner had agreed a settlement to a business litigation dispute in mediation. He then sued his attorneys “for malpractice, breach of fiduciary duty, fraud, and breach of contract. His complaint alleged that by bad advice, deception, and coercion, the attorneys, who had a conflict of interest, induced him to settle for a lower amount than he had told them he would accept, and for less than the case was worth.”

The trial court granted a motion to exclude all evidence of private attorney-client discussions immediately preceding, and during, the mediation concerning mediation settlement strategies and defendants’ efforts to persuade petitioner to reach a settlement in the mediation. The Court of Appeal then overturned this order on a majority verdict on the basis that

… mediation confidentiality statutes are intended to prevent the damaging use against a mediation disputant of tactics employed, positions taken, or confidences exchanged in the mediation, not to protect attorneys from the malpractice claims of their own clients.

The Supreme Court’s view was that the majority decision of the Court of Appeal contravened the explicit language of the statute. It was clear from the statute that confidentiality is not confined to communications that occur between mediation disputants during the mediation proceeding itself. They reversed the decision saying:

We must apply the plain terms of the mediation confidentiality statutes to the facts of this case unless such a result would violate due process, or would lead to absurd results that clearly undermine the statutory purpose. No situation that extreme arises here. Hence, the statutes’ terms must govern, even though they may compromise petitioner’s ability to prove his claim of legal malpractice.

Part 36 is a self contained code.

In Gibbon v Manchester City Council [2010] EWCA Civ 726 Lord Justice Moore-Bick ruled on two cases raising similar issues concerning the interpretation and effect of Part 36 of the Civil Procedure Rules. Is Part 36 subject to the general law of offer and acceptance or is it a self-contained code? To cut to the chase Lord Justice Moore-Bick said at paragraph 6:

Basic concepts of offer and acceptance clearly underpin Part 36, but that is inevitable given that it contains a voluntary procedure under which either party may take the initiative to bring about a consensual resolution of the dispute. Such concepts are part of the landscape in which everyone conducts their daily life. It does not follow, however, that Part 36 should be understood as incorporating all the rules of law governing the formation of contracts, some of which are quite technical in nature. Indeed, it is not desirable that it should do so. Certainty is as much to be commended in procedural as in substantive law, especially, perhaps, in a procedural code which must be understood and followed by ordinary citizens who wish to conduct their own litigation. In my view, Part 36 was drafted with these considerations in mind and is to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended.

Offers must be formally withdrawn.

Moore-Bick LJ

Mrs Gibbon was suing Manchester City Council after she tripped and fell in a playground. Her solicitors had rejected a part 36 offer from the Council and made their own part 36 offer for £2,500. The Council made another lower offer and finally they themselves made a part 36 offer for £2,500. The claimant rejected this. The Council then purported to accept the claimant’s offer of £2,500 which they said had not been withdrawn in accordance with part 36. The Court of Appeal unanimously held that the Council was entitled to accept the offer – contrary to the position in common law.

The court made it clear offers must be expressly withdrawn:

In my view that leaves no room for the concept of implied withdrawal; it requires express notice in writing in terms which bring home to the offeree that the offer has been withdrawn.

Have there been any offers?

In preparation for any mediation I ask the parties what offers have been made. It is now going to be necessary for representatives to consider their answer to this more carefully and identify which part 36 offers are still capable of acceptance. They may need to do some tidying up which could lead to the potentially harmful spectre of offers being withdrawn before the mediation.

Clients at my mediations have all heard me say something along the lines of “the beauty of mediation, of course, is that it is confidential and without prejudice” which is true. But what does that mean? There are circumstances in which statements made or documents disclosed in a mediation can be used in evidence in some subsequent proceedings.

In Farm Assist Limited v The Secretary of State for the Environment, Food and Rural Affairs (DEFRA) an experienced Mediator, Jane Andrewartha, a partner in Clyde & Co. LLP, applied to set aside or vary under CPR 34.3 a witness summons seeking her attendance at the trial of the action . Her application was dismissed by Mr Justice Ramsey sitting in the Technology and Construction Court.

Ramsey J reviewed the recent line of authorities including Re D (Minors) (Conciliation: Disclosure of Information [1993] Fam 231, D v NSPCC [1978] A.C. 171, Brown v Rice [2007] EWHC 625 (Ch), Aird v Prime Meridian [2006] EWCA Civ 1866, Cumbria Waste Management v Baines Wilson [2008] EWHC 786 and Muller v Lindsay & Mortimer [1994] 1 PNLR 74. He summarised confidentiality and privilege in mediation succinctly at paragraph 44:

Therefore, in my judgment, the position as to confidentiality, privilege and the without prejudice principle in relation to mediation is generally as follows:

(1) Confidentiality: The proceedings are confidential both as between the parties and as between the parties and the mediator. As a result even if the parties agree that matters can be referred to outside the mediation, the mediator can enforce the confidentiality provision. The court will generally uphold that confidentiality but where it is necessary in the interests of justice for evidence to be given of confidential matters, the Courts will order or permit that evidence to be given or produced.

(2) Without Prejudice Privilege: The proceedings are covered by without prejudice privilege. This is a privilege which exists as between the parties and is not a privilege of the mediator. The parties can waive that privilege.

(3) Other Privileges: If another privilege attaches to documents which are produced by a party and shown to a mediator, that party retains that privilege and it is not waived by disclosure without prejudice privilege.

The judge held that it was in the interests of justice that the Mediator should give evidence as to what was said and done in the mediation. He gave five reasons for this decision which are set out in paragraph 53. Reason (5) is somewhat circuitous – it is in the interests of justice because

whilst the Mediator has a right to rely on the confidentiality provision in the Mediation Agreement, I consider that this is a case where, as an exception, the interests of justice lie strongly in favour of evidence being given of what was said and done.

I don’t find that explanation satisfactory. Why does it lie strongly in favour …? Presumably it is because of reason (1).

The Mediator, as is common, had provisions in the mediation agreement that the parties would not call the Mediator as a witness. Paragraph 13 of the agreement said :

13. None of the parties to the Mediation Agreement will call the Mediator as a witness, consultant, arbitrator or expert in any litigation or arbitration in relation to the Dispute and the Mediator will not voluntarily act in any such capacity without the written agreement of all the Parties.

Mr Justice Ramsey’s view was that this term of the agreement could not be enforced by the Mediator because the phrase “in relation to the Dispute” meant limited to litigation or arbitration in relation to the underlying dispute – namely work performed by FAL for DEFRA during the foot and mouth outbreak. The current dispute was something different, namely was the settlement agreement entered into under duress? He said, obiter, that even if it did apply it would not lead to the witness summons being set aside, rather it would be a factor for the court to consider in deciding whether, in the interests of justice, the Mediator should be called as a witness.

So, I look forward to seeing you in court soon!

I have added a library of mediation related case law.

The list is far from exhaustive and I will in due course categorise it properly and add mouse-over notes to save unnecessary linking to irrelevant cases. Please add comments or suggestions on how the service could be improved for you, after all that’s who it’s for. Please also send me relevant cases that should be added.