Car hire and mitigation of loss: an intervention success story: Powell v Palani


By Maxine Best

It was only a matter of weeks ago that I encouraged readers to look to 2017 for any future changes to the credit hire landscape. Nevertheless, it appears I was too hasty.

The case of William Powell v Babu Palani was heard on 5th September 2016 at Birmingham County Court before His Honour Judge McKenna.

In particular in this case, HHJ McKenna dealt with the reliance placed by the Defendant upon an “intervention letter” in which a replacement vehicle, free of charge to the Claimant, was offered on the Defendant’s behalf.

Key Facts

  • Road Traffic Accident – 14th October 2014
  • Liability admitted by the Defendant who collided with the rear of the Claimant’s vehicle
  • Whilst the Claimant’s vehicle was being repaired, he commenced the hire of a replacement vehicle by way of credit hire agreement.
  • The hire period was from 16th October 2014 to 24th December 2014 – 70 days in total.
  • Hire charges were claimed in the sum of £21,113.76.
  • Issues taken by the Defendant were need, period, rate and intervention.

The intervention letter written on the Defendant’s behalf was dated 23rd October 2014 and contained the following material paragraphs:

“The replacement vehicle whilst free to yourself will be billed to us at £85.50 plus VAT per day for one to two days’ hire, £71.50 plus VAT per day for three to six days’ hire, £63.50 plus VAT per day for seven-plus days’ hire. This is considerably less than the rate charged under the Association of British Insurers’ agreed settlement rates and will be even lower than the daily rate of a replacement vehicle from a credit hire supplier. The vehicle supplied to you will be a Mercedes S-Class three-litre or something similar.

However, if you do not require a prestige vehicle, we are also able to provide a vehicle similar to a Ford Mondeo two-litre for £46.50 plus VAT per day for one to two days’ hire, £40.50 plus VAT per day for three to six days’ hire and £34.50 plus VAT per day for seven days’ hire plus. If your vehicle is off the road and you are already in a replacement hire vehicle we recommend that you check the terms and conditions of hire. Unless the replacement hire vehicle is a free courtesy vehicle provided by the garage you may be found liable for the cost of the hire if we refuse payment. We would therefore like to substitute this vehicle with a vehicle supplied by us at no cost to you”.


HHJ McKenna identified that the principal issue in the case was whether a Copley-compliant (referring to the conclusion set out in Copley v Lawn [2009] EWCA Civ 580) intervention offer, which is refused by the Claimant, is an example of the Claimant failing to mitigate his loss.

The Judge asked himself the following question – are the contents of the intervention letter sufficient, when looked at objectively, to make it clear what the cost of hire to the Defendant would be for the purposes of enabling the Claimant to make a realistic comparison with the cost that he was already incurring? In his judgment, the answer was yes.

Mr Powell had given evidence to suggest that he had read the letter, and despite having some queries about the clarity of the content, he did not make any further enquiries. Instead he simply passed the letter onto the hire company from whom he had received the replacement vehicle. He did not pursue that offer.

Therefore, HHJ McKenna found “in ignoring the Defendant’s offer, the Claimant failed to act reasonably and the consequence of that is that the Claimant is only entitled to recover the costs which the Defendant has shown he could reasonably have incurred and I would therefore limit the recovery of hire charges in this case accordingly” [Paragraph 10].

Note: HHJ McKenna did not accept the submission that the “intervention letter” was, in effect, too late as it post-dated the entering into of hire with Claimfast. He considered this to be “neither here nor there” [Paragraph 8].


Claimants will often argue two key points in relation to intervention as were argued by Ms Mulla in this case.

  1. As far as the Claimant was concerned, their current hire agreement should not cost them anything so when they receive an offer of an alternative vehicle on terms which make no practical difference to the Claimant, it is unreasonable to expect them to change from the vehicle (and associated agreement) they already have.
  2. The content of the intervention offer is not sufficiently clear to enable the Claimant to make an informed comparison and decision.

This case prioritises the latter of the two arguments, concluding that if the terms of the offer are sufficiently clear to make a realisitic comparison, the Claimant has failed to mitigate their loss. It appears HHJ McKenna is of the view the timing of the letter is irrelevant. If the offer contains the requisite information, it would be unreasonable for the Claiment to refuse it, no matter whether he is currently subject to an alternative agreement or not.

The case is also a useful example of the content of an intervention offer that may be considered adequate by a court.

[Full transcript can be found here].




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