Allianz wins landmark credit hire case

Allianz has won a landmark case over credit hire firm Accident Exchange, which attempted to charge £33,450 for use of a replacement car.

In a long-running case, the final claim was reduced to just £3,000 in the Court of Appeal.

Judge Sir Mark Potter has held that it was wrong in both logic and law to adopt the spot hire rate as a fair approach to the measure of the claimant’s damages for loss of use.

As a result, the general damages of £12,000 awarded at the first trial (which Allianz proved that there was no need for a hire car in the first place) was reduced still further to just £3,000

Martin Saunders, Allianz motor and casualty claims manager said: “This is a victory for common sense that will sit comfortably with the premium paying policyholder. We have fought this case from the start on the grounds of reasonableness and we are very satisfied with the eventual result.”

The background to the case is that Beechwood Birmingham Ltd, a large Audi dealership trading under the name of “Beechwood Audi”, entered into an agreement with Accident Exchange under which they were to receive a commission of 10% of any credit hire recovered on behalf of their customers as well as a commitment by Accident Exchange to purchase a vehicle from the dealership for every eight hires referred to them.

When the dealerships’ own Audi A6 2.7 TDi Quattro S Line Saloon was damaged in an accident they decided to refer themselves to Accident Exchange and went on to claim £33,345.40 special damages for the hire of a replacement prestige Audi vehicle from them for a period of 120 days whilst their vehicle was undergoing repair.

Allianz disputed the claim and was able to demonstrate that at any one time the claimant would have had at least 64 other vehicles in its possession which could have been used instead of the damaged vehicle. In view of this the Judge at the first instance

In allowing Allianz’s appeal, Judge Potter drew extensively on the long history of shipping cases dealing with the quantification of such damages where a commercial organisation had been deprived of a chattel.

Judge Potter directed that the parties should agree an award of general damages based upon interest on the capital value of the motor vehicle at 5% for the period of loss, plus a modest sum for its depreciation.

When dealing with such claims in the future, this case should assist defendants in defeating any assertions made by CHOs and their representatives that:

• They do not need to prove a need for hire.
• There is no distinction to be made between a commercial enterprise and a private motorist
• Even if they do not prove a need for hire they are entitled to general damages based upon loss of use at spot hire rates