Bunting v Zurich; what comes next?

If ever there was a need for a joined up and unified approach to litigating credit hire claims, I cannot think of a better trigger than the judgement handed down by Mr Justice Pepperall last week.


By way of context, I can remember clearly the moment in March 2014 when I received an e-mail from True Solicitors attaching the draft judgment from Burnett J (as he was then) in the case of Stevens v Equity Management Ltd. At the time, I was in a meeting with a few other people and I as I scrolled down the judgment on my iPhone, two things became abundantly clear. The first was that I needed to book an appointment at Specsavers but, more importantly, was the glaring realisation that we had lost badly and had some serious work to do to protect the value of our debtor book.

I can also remember, for a few minutes at least, that the room became very warm as I realised the implications of the judgment not just for AX, but for the rest of the credit hire industry as well. However, as I looked around the faces in the room, I had to work out how to break the news and how to plan for a different world as soon as the judgment was handed down. When the judgment was handed down, I remember speaking to Alan Gilbert. I was critical of Mr Justice Burnett and Alan told me that he was a bright guy who he had instructed previously when he was at the bar. That information wasn’t helpful because it suggested to me that perhaps there was a sea-change of opinion emerging from the judiciary especially when the industry was, at the time, being scrutinised by the Competition and Markets Authority. I have long since maintained that the credit hire industry won the battle with the CMA but lost the war with the establishment.

Change was clearly in the wind. I can remember DJ Mitchell remarking at first instance, in the case of Clayton v EUI, about “this nonsense invented by the insurance industry” and, in respect of using our rate evidence to award the daily rate, how “it would stick in my craw … and I am going to have to take a rough and ready approach”. And how can anyone forget that hanging seaweed out of the window was “within the wide ambit” and seeing which way the wind blew could be part of a Judge’s finding of fact?

Rate Evidence

Turning to the decision in Bunting v Zurich Insurance, and to provide some context to the current position, Dean Roberts, the managing director of DPR Solutions (admin@dprsolutionsltd.com) has put together a helpful and detailed note. It is written with the caveat that the official judgment has yet to be circulated, but it does a good job of setting out the errors in the Which Rate evidence that Pepperall J appears to have ignored.

Many of you will know Dean. He has been in the credit hire for many years and he understands the issue of rate evidence better than anyone that I know. I think that his preliminary observations are important, especially compared with Steven Turner’s note of the judgment, something which I think is more of a marketing document issued in support of the insurance industry. I also think that there is still scope to challenge the rate evidence in first instance hearings.

More importantly, there is also a basis for challenging any defendant rate evidence by cross examining the rate witness and testing his ability to provide evidence of fact, especially where that evidence is given under cover of the revised statement of truth which creates a personal liability for contempt. Of course, all of that is unless the courts decide, or are persuaded, to issue pre-trial directions that allow screen shots of websites to be introduced as unimpeachable evidence of basic hire rate, something I would not discount knowing how FOIL have targeted the issue of BHR so high in their priorities.

If anyone would like to see a copy of Dean’s note, you can either email him or me. I have opened a discussion thread on the Credit Hire Forum where it is available for members to review and comment. Please note: a subscription is required to access the Forum section of the website.

What Next

In practical terms, if Auxillis apply for permission to appeal the decision in Bunting (and assuming that permission is granted), I suspect that it will be more than a year before any appeal is listed for hearing.

In both McBride and Clayton, permission to appeal was refused on the papers and we had to request an oral hearing in order to proceed. That option is no longer available and so Bunting may remain a fixture in the environment in which credit hire claims are fought for many years to come. In fact, I have no doubt that it will mark the starting point for an escalation of interest and subsequent onslaughts from Steven Turner, Keoghs and DAC Beachcroft. Never has the claimant credit hire industry been more in need of a unified, co-ordinated and forward-looking approach, as opposed to the reactive approach it adopts today.

Personally, I think that Auxillis are in a really difficult position with regard to any appeal and I say that from personal experience with the way McBride, Clayton and Stevens played out. When I saw the first judgment in Stevens. I felt a tremendous responsibility that we had appealed something, and the judge had got it wrong. After 40 years in the space I knew better than to blame the efforts or approach of the solicitor or the advocate. In retrospect, we got it wrong but, as we all know, hindsight is a wonderful tool for predicting what you should have done in the first place.

As regards Auxillis and dealing with this judgment, I think that they are damned if they do and damned if they don’t. Whilst there is a perfectly sensible view that they have nothing to lose by lodging an appeal. I think that may be too simplistic an approach to take and not something that anybody should bank on. Bunting doesn’t feel like a case with the right atmospherics for a favourable appeal but what do I know?

Well, I think I know that the real priority for the credit hire industry has to be on practical matters and not looking to critique how we got where we are today or what Auxillis may, or may not, decide to do (if they can), to move things on. For me, every CHO needs to be focused upon four simple things:

  1. CHOs need to assess, on a case by case basis, whether litigation is now a less attractive option on cases that have already been issued and, where there are Part 36 offers in place, whether those offers should now be accepted;

  2. The industry needs to determine how best to deal with the issue of rate evidence going forward. This is not something that should happen in a series of isolated silos. There is as much danger of a larger CHO acting in isolation and making matters worse as there is of a smaller CHO doing the same. Fortunately, the courts are broadly closed for business and so this gives the industry a window of opportunity to debate, discuss, formulate and agree a strategy. Now is the time, and Bunting is the opportunity, where constructive and intelligent debate needs to take place;

  3. As an aside, consideration should also be given as to whether, helped by Mr Justice Pepperall’s oblique reference to the issue of impecuniosity, that approach may now offer a way through some of these basic hire rate issues, and

  4. Of more concern, perhaps, and recognising that post Stevens there was no review of the GTA rate for almost five years (when some rates increased, some were unchanged and some fell), what are the prospects for the GTA and protocol rates moving forward?   

The Credit Hire Forum

I set out the case for a forum to address potential issues like this about a month ago. I said that the aim was to fill a gap; to act as an interface for best practice across Credit Hire litigation to deal more effectively with better resourced but less agile opponents.

I said that success would be defined by the ability to share information and extend relationships across all facets of the credit hire sector, both GTA and non-GTA subscribers and CHO and non-CHO members to create a more productive dialogue between those engaged in litigating Credit Hire claims and those asking them to do so. In addition to creating a united front, the Forum was focused on four things:

  • Improving the channels of communication to empower better informed pre-litigation conduct by CHOs which is both more effective and less prone to challenge;

  • The development of coherent litigation strategies inspired by a shared appreciation of evolving defendant initiatives;

  • Building industry collaboration, without risk to each other’s IPR, to deliver more profitable and effective litigation, and

  • Anticipating and responding to regulatory, statutory or other legislative or industry challenges.

The Forum is not an Association; it does not look to impose on members a particular method of litigating claims and nor does it encourage litigation where other means of settling claims are more effective. Nor does it look to expose members to the risk of prejudicing their intellectual property.

Membership is open to those solicitors and counsel that are actively engaged in credit hire litigation, that recognise the increased regulatory, economic and jurisprudential challenges faced by the credit hire industry and who wish to align their strategic and tactical focus to better effect. Associate membership is offered to all others with an interest in supporting credit hire litigation, including credit-hire operators, engineers, rate experts, investigators and agents and others with an interest in furthering the interest of the credit-hire industry.

The challenge I have set is to bring together the lead players within the sector, to influence the shape of credit hire litigation in the best interest of those CHOs forced to litigate to recover their outstanding debt.

We now have 14 solicitor members together with half a dozen counsel and half a dozen CHOs. The cost of membership is just £85 a month for a CHO, £100 a month for a barrister and just £300 a month for a solicitor (you can also pay annually). It is at moments like this that I question whether people focus too much on the price and too little on the value of something. In terms of the price, in just one decision from a High Court judge (but do remember that Pepperall J also determined the appeal in Hussain v EUI), literally millions of pounds of credit hire debt have just been written off debtor books across the entire industry.

In any event, like Dean, I have also written a note about the practical and operational consequences of Bunting based on my experience post Stevens. A copy of that note will also be available in the Credit Hire Forum. There has never been a more important time for the credit hire industry to align and focus on how to address the multitude of issues that insurers and defendant solicitors have on their list of priorities.

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