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Aggett v Anning

16 July 2001
The issues

Credit Hire – Three Months Exemption Clause From Hire Agreement Regulations

The facts

The Claimant hired two cars from Crash Care. The Second Claimant, Aston Rothbury Factors Limited were added. Aston Rothbury had entered in factoring agreements with companies within the Crash Care Group. The factors ran it as a test case. The Defendant (represented by Huw Hamill and instructed by Jessica) argued that the agreements entered into by the Claimant were not exempt and in particular it was not an exempt consumer hire agreement; but if not exempt the requirements of the consumer credit agreement regulations had not been complied with; and that if this was right the agreement was irredeemably enforceable pursuant to section 127 (3); and if unenforceable the Claimant had no liability in respect of which he could claim indemnity from the Defendant.

The decision

Judge Overend found that that agreements in questions were both regulated consumer hire agreements and regulated consumer credit agreements. The chief virtue of the case probably lies in the fact that the Judge accepted that it was a consumer hire agreement. A consumer hire agreement is exempt under Section 15 if it is not capable of subsisting for more than three months. Credit hire companies generally put in a three month limitation to the period of hire. We have argued (for years!) that a three month limitation to hire is not the same as a three month limitation to the agreement which can of course subsist for far longer than three months and for far longer than three months. The Judge agreed that on the wording of the statute the three month period had to relate not the period of “balement” (i.e. actual hire) but the period during which the agreement governing that hire subsisted. Consequently this agreement was a regulated consumer hire agreement.

The Judge went on to find that the agreement did not comply with Sections 60 to 65 of the Consumer Credit Act in that it did not contain the necessary prescribed terms.

In particular, the Judge found that it was not enough simply to put in daily rates and surcharges at the beginning of the agreement. This did not amount to “a term stating the amount of credit” because the calculation needed to find the total amount was too complicated. Secondly there was no estimate of the total number of days that the hire period might have lasted. Finally there was no reference to the maximum financial output which might result if the hire ran for the full three month period.

It was not therefore properly executed. Since it was improperly executed in that it did not contain the prescribed terms it was irredeemably unenforceable pursuant to Section 127 (3) of the Consumer Credit Act (and following Lord Hoffman’s judgment in Dimond v Lovell).

Although with a number of agreements being signed credit hire is a dying area for many insurers. There is still a great deal of litigation current not least to the apparent despair of Lord Justice Tookey in the Court of Appeal. This case should short of appeal itself to the Court of Appeal, be a significant blow to Crash Care.

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