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18 June 2014

Pleading impecuniosity

Pleading impecuniosity
18 June 2014

Pleading impecuniosity

Pleading impecuniosity

Impecuniosity & Credit Hire

In Opoku v Tintas [2013] All ER (D) 81 (Jul) the Court of Appeal held that impecuniosity relates not just to rate of hire but also to the period of hire and the need to hire at all. If a Claimant cannot show that he was impecunious then at best he will be limited to spot hire rates. Following Opoku Claimants are at increased risk of a finding that it was not reasonable to hire on a credit basis for the period claimed as the vehicle should reasonably have been repaired or replaced sooner.

Opoku has been widely reported however the more recent case of Zurich v Umerji [2014] EWCA Civ 357 also has significant implications for impecunious credit hire Claimants. r16PD8.2(8) has been a part in the CPR since its inception and reads;

The claimant must specifically set out the following matters in his Particulars of Claim where he wishes to rely on them in support of his claim É (8) any facts relating to mitigation of loss or damage.

In Zurich the Court of Appeal held that a claim for credit hire is a claim for expenditure reasonably incurred in mitigation of the primary loss, i.e. the loss of use. Footnote 2 of Zurich v Umerji [2014] EWCA Civ 357 states;

Para. 8.2 (8) of the Practice Direction reads rather oddly in the light of the well-established principle that the burden of proof on the issue of mitigation is on the defendant (see McGregor on Damages, 18th ed., para. 7-019); and we were told by both counsel that in this field it is not generally observed. I can see that it is hard on a claimant to expect him to anticipate and rebut points made about avoidable loss: it seems obviously preferable that he should plead his primary loss, wait and see what criticisms are made, and then if necessary plead to those criticisms by way of Reply. But the position is different in the case of a claim for expenditure reasonably incurred in mitigation of the primary loss. In such a case the claimant should plead his case as to reasonableness, including any assertion of impecuniosity: see para. 37 below.

Para 37 of the Judgment states;

A claim for the cost of hire of a replacement vehicle is, strictly, a claim for expenditure incurred in mitigation of the primary loss, namely the loss of use of the damaged vehicle: see the speech of Lord Hope in Lagden v O’Connor at para. 27 (p. 1077H). The burden is thus on the claimant to prove (and therefore plead) that such expenditure was reasonably incurred: see the authorities reviewed by Sir Mark Potter P in Beechwood Birmingham Ltd v Hoyer Group UK Ltd [2011] QB 357, at paras. 25-28 (pp. 367-8). There is no doubt a grey area about how much needs to be pleaded and proved to establish reasonableness before the evidential burden shifts to the defendant to show that the expenditure was unreasonable. But in this kind of case it is clearly right that a claimant who needs to rely on his impecuniousness in order to justify the amount of his claim should plead and prove it. I note in this connection that the Claimant’s advisers plainly thought that it was incumbent on him to address the point in his witness statement, which was served at an early stage in the proceedings: see para. 13 above.

Defendants are increasingly seeking to contend that the Claimant cannot rely on impecuniosity and is therefore limited to spot hire rates (or shorter period of hire / no hire at all) where the Claimants case as to the reasonableness of hiring on a credit basis is not fully set out in the Particulars of Claim. It’s now at best very risky and probably wrong when pleading a credit hire case simply to leave it at The Claimant was impecunious at the time of the hire. Ive changed my template for credit hire impecuniosity pleadings to;

“The Claimant needed a vehicle whilst his own vehicle was unroadworthy by reason of the accident. The Claimant was impecunious at the time of the accident and throughout the period of hire. As a result of the Claimants impecuniosity the Claimant was not in a financial position either to hire a replacement vehicle on the spot hire market or to [purchase another vehicle / have his own vehicle repaired*]. The Claimants financial position was such that his only reasonable means of replacing his vehicle whilst it was unroadworthy was to hire a replacement vehicle on a credit hire basis.”

*delete as appropriate

Id advise anyone pleading impecuniosity for credit hire purposes to do likewise.

Peter Harthan


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