Zenith Personal Injury Current Awareness


15 May 2018

Christopher Rafferty

For those with an interest (perhaps in the broadest sense of the word) in credit hire litigation, the long-running war between credit hire organisations (‘CHOs’) and motor insurers continues with a judgment from Mr Justice Turner in the QBD.

In the appeal of Miss Katherine Ann Irving -v- Morgan Sindall plc [2018] EWHC 1147 (QB) Turner J was presented with two key questions faced by practitioners in the vast majority of claims which include an element of credit hire:

1.      Can a Claimant still recover for the hire charges incurred even in circumstances where the CHO has expressly informed the Claimant that there would be no personal liability?

2.      How badly off does a Claimant need to be before the test of impecuniosity is satisfied?

As with most claims for credit hire the facts in this appeal are simple; Miss Irving was involved in a road traffic collision for which she was entirely blameless; the Defendant’s insurers took an inordinately long time to scrounge up the interim PAV cheque resulting in hire charges in excess of £20,000.

Contingent Liability

In the first instance the claim was heard before HHJ Saffman sitting in the County Court at Leeds. The usual credit hire agreements formed part of the evidence; however, as we so often witness, under cross-examination Miss Turner gave several (entirely honest) answers which were at best unhelpful to the CHO. When asked about responsibility for the hire charges she replied:

‘I believed... those charges would be recovered from the third party insurer with the accident not being my fault’.

She was also adamant that if the £20,000 bill was to fall on her shoulders, she would be completely unable to pay it.

HHJ Saffman found in his initial judgment that he would have to be

‘satisfied that the Claimant was obliged to pay them’

before he could award the Claimant the balance of the hire charges. He was not so satisfied and consequently did not make any such award.

Turner J proceeded in his analysis on the basis that the Claimant would have no personal liability to pay the hire charges if the claim did not succeed. The Defendant drew attention to the formative case of Giles -v- Thompson (in the month of its 25th anniversary no less) which referred to various other cases at Part V of the lengthy judgment. After some brief discussion of the authorities, Turner J concluded that nothing therein suggests that recovery of a contingent debt (as in the index appeal and most other credit hire claims) is precluded.

Moreover Turner J then went on to consider the altogether more modern case of Wakeling -v- Harrington [2007] EWCH 1184 (Ch) wherein it was determined (considering the text of Consumer Credit Law and Practice by Prof. Goode) that:

‘whilst an obligation to repay is an essential characteristic of a loan... it is not necessary that the borrower should incur a personal obligation to repay out of his own monies. It suffices that payment is to be made from a designated fund.’

Turner J concluded as a result that HHJ Saffman had erred in his application of Miss Irving’s evidence to the cogency of the credit hire agreements and found that they were, in fact, enforceable. Interestingly however the judgment leaves some space for future interpretation, with Turner J expressly noting that HHJ Saffman’s decision was made ex tempore and without the benefit of submissions on relevant authorities. This is unlikely to be the last we hear on this point.


This was an altogether more straightforward issue for the High Court to deal with. On a quick calculation the evidence broadly suggested that Miss Turner could avail herself of, at most, approximately £700/month in terms of income with a further £250 in savings and £500 available on credit.  A second account was overdrawn by £700. Given that the PAV of her vehicle was in the region of £775, it should have been pretty clear that Miss Irving was impecunious in the Lagden sense.

However HHJ Saffman found that Miss Irving was pecunious on the basis that she could have depleted her funds immediately and purchased a replacement vehicle. This overlooked the crucial context that not only had a fortnight had elapsed before her car was written off (quite expeditious in claims of this nature), but she would have needed some further time thereafter to source a new vehicle. Throughout this period she would of course have needed a replacement hire vehicle, incurring charges which she plainly could not afford.

Even if Miss Irving could have replaced her vehicle immediately without recourse to a hire vehicle, she nonetheless would have left herself in a precarious financial position – something that she could not reasonably be expected to do. As Turner J notes in his judgment,

‘impecuniosity need not amount to penury’.


The issue of contingent liability is much the more important of those discussed in this judgment, and the fact that the hire agreement remained enforceable in circumstances where the Claimant was led to believe that she would not be responsible for the hire charges by the CHO will be of significant comfort to Claimants hereafter.

I am certain however that this issue will be revisited; in the meantime, neither side appears to be waving the white flag in this long-standing battle.

Current Awareness

By the Personal Injury team