In the case of Enterprise Rent A Car UK Ltd v Advantage Insurance Company Limited, Luke Matthews of the Keoghs Litigated Credit Hire Team defended a claim brought by Enterprise Rent A Car for the loss of use of one of their vehicles that was damaged in an incident with the defendant’s insured.
In dismissing the claim in its entirety, the judge found that other vehicles could have been redeployed within the claimant’s fleet at the affected branch and the appropriate case law was that of West Midlands Travel v Aviva Insurance UK Ltd [2013] EWCA Civ 887, not Armstead v Royal & Sun Alliance [2024] UKSC 6. As there was no evidence of depreciation upon which to calculate the loss, the claim had not been made out.
Following an incident on 12th August 2024, the defendant’s insured collided with the rear of a vehicle owned and operated by Enterprise. The damage required repairs and it was during this period of 34 days between 14th August 2024 and 16th September 2024 that the claimant (Enterprise) sought to recover from the defendant. The repairs were paid before proceedings were issued.
What was unusual about this claim was that Enterprise did not seek to evidence a loss of use or a loss of profit but instead issued a claim for the ABI GTA credit hire rate for the damaged Nissan Qashqai.
The claimant’s position was that the case of Armstead v Royal & Sun Alliance [2024] UKSC 6 applied. They argued that a claimant may claim any such sum, and that the defendant has to prove that the loss claimed is unreasonable.
This misapplication was unfortunate, in that it appeared to ignore the core facts of the decision in Armstead, namely that the loss to Auxillis was based on the loss arising from a contract entered into before the time of the incident and whether that was a reasonable pre-estimate of loss.
Armstead did not create or infer a licence to claim any unsubstantiated sum applied after the fact. The burden is still upon the claimant to first prove their loss.
This position also appears to have overlooked the fact that the defendant provided evidence from Enterprises’ own website, which boasted of “a fleet of approximately 150,000 vehicles” in the UK. This was in stark contrast to the Excel spreadsheet presented by Enterprise that showed only 168 vehicles, of which only ~86% were utilised throughout the period.
Keoghs argued on behalf of the defendant that reliance on availability at what appeared to be a single branch was an impermissibly narrow approach. It was clear that the overall fleet should be considered, and it is common that vehicles are deployed between branches to cover as need arises.
The claimed ABI GTA rate had no relation to Enterprise’s loss. Such rates are agreed credit hire rates between credit hire companies and subscribing insurers within the ABI GTA framework. It does not represent the cost of a vehicle being off the road and instead reflects hire charges incorporating overheads, operational costs and the provision of credit and profit, rather than the net loss suffered by Enterprise.
There was also no evidence that this was a credit hire vehicle or would have been hired on credit during the period the vehicle was off the road.
Despite a request for the claimant to provide the value of the damaged vehicle, so that the defendant could consider an offer based on the depreciation and interest on the capital value in line with the decisions in West Midlands and Beechwood Birmingham v Hoyer Group UK Ltd [2010] EWCA Civ 647, the claimant refused.
There was the preliminary issue before the court that the claimant had not filed their evidence until just two days before the trial. No application for relief was made ahead of the trial, but despite finding this was a serious breach of the court order and no good reason was provided, the judge allowed the evidence in due to the perceived prejudice it would have caused to the claimant’s claim, in that it would undoubtedly have failed without it.
The claimant argued that it was the defendant’s case to disprove the rate sought. With the claimant not evidencing that they could not have sufficed from their substantial fleet or any quantifiable loss, we maintained that the correct measure of their loss was one of loss of use based upon the depreciation and interest on the capital value, of which there was also no evidence.
The judge found that Enterprise could have redeployed vehicles within their fleet. The appropriate case law was that of West Midlands Travel v Aviva Insurance UK Ltd [2013] EWCA Civ 887.
In refusing to provide evidence of the value upon which to calculate depreciation or interest on the capital, once the court considered that this was the correct measure of the loss of use, the judge had no evidence upon which to base the depreciation. As a result, the case was dismissed in its entirety.
The decision in Armstead has not provided claimant fleet operators the ability to take a carte blanche approach to loss of use claims, nor has it inverted the burden of proof onto defendants to disprove a claimant’s claim.
The ABI GTA rate is not evidence of loss of use for a fleet provider. Where a claimant operates a fleet, it is trite law that they must evidence their loss of use and show they could not have sufficed from their available fleet.
If there is no evidence of a quantifiable special damage or that there was no available fleet, the correct measure of loss of use remains as interest on capital and depreciation.
For more information please contact:
Ieuan Poole, Associate
Luke Matthews, Case Handler
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