I am grateful to Lee Kipling from Winns, solicitors for sending me a copy of the decision of HH Judge Gosnell in Morris -v- MCE Insurance Company Ltd.( Morris v MCE Insurance (23.07.18) (Jud) (2)). A case where the judge allowed an appeal on a finding of fact.  It represents another skirmish in the “credit hire” war.


The claimant issued proceedings for car hire charges incurred after an accident. The only claim was for the hire of a replacement vehicle, totalling £21,430.25, plus some other expenses.  The claimant’s claim was dismissed after a Fast Track trial. The District Judge held that the claimant had not established that he had a liability to pay the cost of hire.



The judge reviewed the facts in detail and then considered the claimant’s (appellant’s) arguments.

11        I deal with that background and then move on to the legal submissions made by the appellant.  The first point the appellant makes is that the fact that the claimant has signed the agreement means the agreement is enforceable, even if the claimant didn’t fully understand all the provisions in the agreement he was signing.  Counsel for the appellant has taken me through the agreement in a little detail, but I accept that the agreement is a standard credit hire agreement, which not only imposes a charge for credit, but also imposes a liability on the claimant irrespective of whether it is recovered from a third party.  A fair reading of the agreement, including an entire agreement clause, is that there is a residual liability on the claimant to make payment if there is no successful recovery from a third party.
12        The appellant relies on the decision in Burdis v Livsey [2003] QB 36 (CA) to back up the proposition that the key question in cases such as this is whether an award of car hire charges would overcompensate the claimant in Burdis v Livsey .  It was pointed out that in circumstances where the claimant in fact had no payment to make there would be overcompensation if the claimant then claimed from the defendant insurance company the hire charges, not having to pay them to anyone else.
13        It was also pointed out that the Court of Appeal in a number of decisions likes Giles v Thompson  [1994] 1 AC 142, Dimond v Lovell  [2002] 1 AC 384 and Lagden v O’Connor [2004] 1 AC 1067 have accepted that realistically credit hire companies do not charge claimants for the hire charges if they are unsuccessful, even though they might have a legal right to do so.  I accept that that’s my experience of the industry.
14        So the first point which the appellant makes is that the claimant has signed an agreement.  He is bound by his signature as long as he understands, in general terms, that he’s signing a contract, even if he may not understand its full terms in advance.  I accept that that argument is made out.  I accept also the argument that it would be no more than a collateral warranty if the defendant could show that the claimant had been assured that there were no circumstances in which he would have to make payment.  I have got to say I don’t think the evidence in this case was that strong to make that contention anyway, but I accept that the legal effect of that would be a collateral warranty.
15        The second point I’m going to deal with very briefly, which is the contingent liability point, colloquially known as  “no win no fee”.  This, at the time the appeal was brought, was a matter of some debate, but it seems to me that that debate has been laid to rest by the decision of Turner J in Irving v Morgan Sindall PLC [2018] EWHC 1147.  In that case my colleague, Judge Saffman, dealt with a trial in which Miss Irving had, I think, received assurances that there would be no circumstances where she would have to pay anything at all.  On the background of that finding of fact, which wasn’t challenged on appeal, Turner J found that there was still a legal obligation for the defendant to compensate the claimant for the credit hire charges.  That was done on the basis of an interpretation of a number of authorities, but, in particular, in para. 21 of his judgment where he quotes Giles v Thompson as follows:
“As a general principle it is of course true that a plaintiff’s claim for special damage can only succeed to the extent of losses he has actually sustained and liabilities he has actually incurred. But the rule is not absolute: the proceeds of private insurance and charitable benevolence are, for differing reasons, disregarded. Nor, in my view, does it relieve the defendant of liability if the plaintiff’s liability to pay charges to a third party is contingent on his recovery against the defendant: that is the effect of Harlow & Jones Ltd. v Panex (International) Ltd [1967] 2 Ll. Rep. 509 at 531 and The Mathew [1990] 2 L1. Rep. 323 at 327-8. I further understand Donnelly v. Joyce [1974] QB 454 and McAll v. Brooks [1984] R.T.R. 99 to concentrate attention on the question whether the plaintiff has suffered a loss and away from the question what he will do with any money he may recover. The issue may be tested by asking whether, if these plaintiffs recover reasonable charges reasonably incurred, they will be over-compensated. They will not. Nor will the car hire companies. Neither will enjoy double recovery, or any windfall. The only windfall would be enjoyed by the insurance companies if the plaintiffs did not recover. I regard the insurance companies’ submission on this point as unsound.”
Mr Justice Turner found there was no suggestion of double recovery on the facts of the present appeal.  What he says was:
 “On no interpretation of the assurances given to the claimant on behalf of the credit hire company could she have been under the impression that  she would be entitled to keep any sums recovered in respect of hire charges to herself. In this context, I take the reticence of Lord Mustill to have been in respect of cases in which there is no legal obligation whatsoever upon the claimant to make any payment to the third party providing assistance and the benefit from which is thus truly ‘free’ and not where there is a debt, albeit contingent.”
And so on the facts of that case, which, in my view, were stronger for the defendant than the current case, Turner J found that Miss Irving should have been able to recover her credit hire charges against  Morgan Sindall PLC, and so, in a sense, that effectively disposes of this appeal.
16        However, I also agree with the final submission made initially by Mr Williams QC in the skeleton,  but was very ably dealt with today by Miss Gray, on the authority of Bee v Jenson [2007] EWCA Civ 923 where the court found:
“…if [the claimant] has in fact reasonably made arrangements for a hire car, there is no reason why he should not recover the cost of hire, whether or not he has rendered himself liable for the hire charges and whether or not the actual cost has been paid by him or somebody else…”
 I think in Bee v Jenson there was a third party who was liable for the costs of the hire charges.


17        I remind myself that I can only grant an appeal where I find that the judge below is wrong.  I think that is in Civil Procedure Rule 52.21 now.  I have considered carefully the facts of this case and applied the law to it, and I form the view that Judge Ellington was wrong.  I have some sympathy with him because he was dealing with an extempore judgment, no doubt at the end of a longish trial, and the law in relation to credit hire is  Byzantine in its complexity on occasions.  However, I am not convinced he had the factual foundation to make the finding of fact that he did, in any event, that the contract was unenforceable.  It seems, taking the defendant’s case at its highest, there wasn’t the material there to enable him to make that finding, but even if I’m wrong about that, and I respect his factual finding, then in law the claimant is still entitled to succeed in the credit hire claim because there was no question of double recovery.  It may be a contingent liability, but on the authority of Irving v Morgan Sindall PLC that’s still a liability.  Finally, on the authority of Bee v Jenson, even if she’d been provided with a free car that wouldn’t prevent recovery of the costs of hire if there’s an obligation on someone else to pay. 
18        So, taking all the factors in the round, I am prepared to grant the appeal and it seems to me the only order I can make is to set aside the previous order.  I am not sure there is any purpose in having a retrial because all the relevant issues were dealt with.

There is a short passage at the end of the judgment where the judge deals with an application, presumably by the defendant, about the need for a re-trial.  The judge rejected the application.

“I think he did deal adequately with need.  It’s a relatively simple point and it wasn’t too surprising on the facts that he found also.  I think that his judgment is clear in relation to issues of need, impecuniosity and period.  I think those findings were not effectively challenged on the appeal.  There is no respondent’s notice and, in the circumstances, I am satisfied that, other than getting the law wrong in relation to credit hire, all the matters were adequately dealt with below and so I think it would be disproportionate and, in a sense, pointless to have another trial. So, although I accept you have made your submissions on the basis of your instructions, I reject them”