Lagden v O'Connor (2003)
Lagden v O'Connor (2003)
The Issues:
The Claimant's vehicle was damaged and needed to be repaired. The Claimant was unemployed and in poor health and could not afford to hire a car for the period his vehicle was off the road, but he noticed a credit hire company's advert and used their services. Could the Claimant recover all the credit hire charges, or was he only able to recover ‘spot hire' rates?
Held:
In Dimond v Lovell (2000) the House of Lords found, by a majority, that a Claimant is unable to recover any additional charge applied by a credit hire company for providing the hire car on a credit basis. Because of the mitigation rule, the Claimant is limited to recover ‘spot hire' rates only, i.e. the amount it would have cost the Claimant to hire a vehicle by paying up front. However, Mrs Dimond had the money needed to hire a replacement car until she was reimbursed by the Defendant's insurer and in the present case the House found (by a majority of 3 to 2) that it would be unfair for this rule to be applied to those who could not afford to pay hire charges as otherwise they would be left with no means to find a replacement vehicle whilst their's was being repaired.
Therefore if the Claimant is not able to arrange a hire car from a normal hire car company, i.e. by paying up front, then they are entitled to recover credit hire charges in full, including any additional charges applied for the car being provided on a credit basis.
The test is whether the Claimant is ‘impecunious', which Lord Nicholls defined (at para 9) as having an inability to pay car hire charges without making sacrifices the Claimant could not reasonably be expected to make - although Lord Hope suggested that having a credit card would provide the Claimant the opportunity to hire a car at the ordinary rates from an ordinary hire car company (paras 35 to 37).
Comment:
In practice, it seems that judges tend to favour the ‘reasonable sacrifices' test, although the possession of a credit card will often be explored by a defendant.
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