Personal injury judgements - Zoan vs Rouamba

Fair Trading - Consumer credit - Agreement - Plaintiff hiring replacement vehicles after damage to car caused by defendant - Deferred payments for car hire - Hire agreement providing for payment on or before 12 months after date of agreement - Whether payment required within a period "not exceeding 12 months beginning with" date of agreement - Whether "exempt" consumer credit agreement - Whether enforceable - Consumer Credit Act 1974, (c. 39), ss. 8(2)(3), 16(5) - Consumer Credit (Exempt Agreements) Order 1989 (S.I. 1989 No. 869), art. 3(1)(a)(i)

The plaintiff's car was damaged in a road traffic accident which was entirely the fault of the defendant. In addition to the cost of repair, he claimed for the hire of replacement vehicles while the repairs were being undertaken. He made four contracts with a vehicle hire company on the company's standard terms which provided, by clause 10, that the company could "allow the hire charges to remain outstanding until a date on or before 12 months after the date of this agreement" and that those charges together with interest thereon were to become immediately due and payable by the hirer at latest "upon the occurrence of . . . the first anniversary" of the agreement. The defendant denied liability under three of the four contracts on the grounds that the contracts were regulated consumer credit agreements under the Consumer Credit Act 1974 which had been improperly executed and were therefore unenforceable because they did not comply with the Act of 1974 and the regulations made thereunder, with the result that the plaintiff had sustained no loss in respect of them. The judge, holding that the agreements were exempt agreements under article 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 19891 because clause 10 required the payments to be made "within a period not exceeding 12 months beginning with the date of the agreement" and were therefore enforceable, awarded damages for the cost of hiring the replacement vehicles under all four contracts. On appeal by the defendant: -
Held, allowing the appeal, that the usual meaning of the words "after" or "from" in the context of reckoning time was that the day after or from which the period was to be reckoned was not included within the period, and "the first anniversary" of an agreement was one day later than the last day of the period of 12 months including the date of the agreement; that, assuming that the hire company intended clause 10 to bring the agreement within the definition of exempt agreement in article 3(1)(a)(i) of the Order of 1989, it had not been established that the plaintiff knew or should be taken to have known that and so it could not be inferred that the plaintiff shared the hire company's intention; that, on a true construction of clause 10, the period allowed for payment was 12 months and one day and the three contracts did not fall within the definition of exempt agreement in article 3(1)(a)(i); and that, accordingly, the three contracts were regulated consumer credit agreements which, having been improperly executed, were unenforceable and so the plaintiff had suffered no loss in respect of those contracts (post, pp. 1520A-B, 1521C-D,1523A-D).

1 Consumer Credit (Exempt Agreements) Order 1989, art. 3(1): see post, p. 1516C-D.

Young v. Higgon (1840) 6 M. & W. 49 and In re Lympne Investments Ltd. [1972] 1 W.L.R. 523 applied. Hare v. Gocher [1962] 2 Q.B. 641, D.C.; Trow v. Ind Coope (West Midlands) Ltd. [1967] 2 Q.B. 899, C.A. and Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749, H.L.(E.) distinguished. Investors Compensation Scheme Ltd. v. West Bromwich Building Society [1998] 1 W.L.R. 896, H.L.(E.) considered.

Appeal from Judge Charles Harris Q.C. sitting at Northampton County Court. By a summons dated 8 December 1998 the plaintiff, Nigel Zoan, claimed damages for loss and damage caused by the negligence of the defendant, Beatrice Rouamba, when a vehicle being driven by the defendant had collided with the plaintiff's vehicle on or about 3 May 1997. The special damages claimed included the sum of £25,833.48 incurred in hiring replacement vehicles whilst his was being repaired. On 19 July 1999 Judge Charles Harris Q.C. gave judgment for the plaintiff for, inter alia, the full amount of the hire charges claimed but gave the defendant permission to appeal.

By a notice of appeal dated 12 August 1999 the defendant appealed on the grounds that the judge had erred in concluding that three credit hire contracts between the plaintiff and Swift Rent-A-Car Ltd. were exempt from the Consumer Credit Act 1974 by reason of article 3(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989 (S.I. 1989 No. 869) and that he should have found that the contracts were not exempt and were therefore unenforceable by reason of the Act of 1974. By a respondent's notice to affirm dated October 1999, the plaintiff contended that the judge's decision should be affirmed on the additional grounds that article 3(1)(a)(i) of the Order of 1989 should be interpreted to the effect that the 12-month period excluded the date of the agreement and that the credit hire contracts were not consumer credit agreements. The facts are stated in the judgment of the court.

Hilary Heilbron Q.C. and Tim Kevan for the defendant. Ian Hunter Q.C. and Fred Philpott for the plaintiff

Cur. adv. vult.

21 January 2000. Chadwick L.J. handed down the following judgment of the court.

1. This is the judgment of the court in an appeal, with leave of the trial judge, from that part of the order of Judge Charles Harris Q.C., made in the Northampton County Court on 19 July 1999, giving the plaintiff damages for the cost of hiring substitute vehicles while his own vehicle, damaged by the defendant's negligence, was off the road.

2. The facts are simple. Mr. Zoan owns and drives a Jeep Grand Cherokee motor car. It was damaged in a road traffic accident by a vehicle driven by Mrs. Rouamba, the defendant. The accident was entirely the defendant's fault. Happily no one was injured. Mrs. Rouamba was insured, and her insurers conducted her defence. They admitted liability, and paid for the vehicle to be repaired. But they refused to pay for two heads of damage. The first, the diminution of value of the plaintiff's vehicle, because the repairs did not restore it to its pre-accident value, need not concern us beyond noting that the plaintiff recovered £1,300 under that head.

3. But additionally, the plaintiff claimed the cost of hiring equivalent vehicles over the repair period while his vehicle was off the road. He recovered damages of £25,833.48 under that head of claim. The defendant now appeals as to £10,702.45 of the damages awarded in relation to hire charges.

4. There were four separate contracts of hire, one for each vehicle. The plaintiffs concede that the judge was right to treat them separately. Each of those contracts was on the standard form contract of Swift Rent-A-Car Ltd. ("Swift"). One aspect of Swift's business was the hiring out of replacement cars to those whose vehicles were off the road as a result of accidents that were not their fault. Swift under their contract extended credit to the hirer, so that, if he got on with his action, he would not have to pay the hire charges until he got his damages. Swift were notified of this appeal, but have not applied to be heard.

5. For the purposes of this appeal, there is one defence only: namely that three of the four contracts of hire for the replacement vehicles were "improperly executed and unenforceable" because of the pleaded failure to comply with the statutory requirements of the Consumer Credit Act 1974, and the regulations made thereunder. The case below focused entirely on whether the three car hire agreements were exempt from that statutory regime on the ground that condition 10 of those agreements complied with article 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989. Both sides made concessions to define the issue for the judge: "The plaintiff in fact conceded that, if these agreements were not exempt agreements, then they were indeed unenforceable and, as the law currently stands, that he could not recover from the defendant as a result of Dimond v. Lovell [2000] 1 Q.B. 216. The defendant in turn agreed that the fourth agreement was indeed exempt since the amount of credit exceeded £15,000."

6. The judge's reference to Dimond v. Lovell [2000] 1 Q.B. 216 requires some explanation. For a long time many plaintiffs whose vehicles were put off the road by the negligence of others did not claim that head of damage. This benefited negligent drivers and their insurers. Car hire companies saw this niche in the market, and entered the market to fill it, with apparent commercial success. Motor insurers counter-attacked, claiming that such agreements were champertous, and therefore unlawful. This claim failed in their Lordships' House in Giles v. Thompson [1994] 1 A.C. 142. We take Lord Mustill's analysis of the forensic history, at pp. 154-155:

"The question has arisen in this way. A substantial proportion of motor accidents take place in circumstances where there is little room for doubt that one party is exclusively to blame: typically, where the car of one driver (hereafter 'the motorist') is stationary, for example at a traffic light, and where a car driven by another person ('the defendant') is carelessly driven into the back of it. There are two types of damages which may be awarded to the motorist in any resulting litigation. First, there are damages for any personal injury which the motorist may have suffered. These will usually comprise general damages for pain, suffering and loss of amenity, and special damages for past and future loss of earnings. Secondly, there are damages related to the loss of or damage to the motorist's vehicle. These will or may have two elements: a figure representing the diminution in value of the motorist's vehicle, and another figure representing the financial loss suffered by the motorist because he or she cannot use the vehicle whilst it is either being replaced (if written off) or undergoing repairs. In practice these various elements are dealt with in various ways. The damage to the car itself is settled between insurers, apart from the excess on the motorist's policy, which he may not trouble to pursue except as an appendage to a larger claim. The motorist's claim for personal injuries may be substantial in amount, and will be made the subject of an action, if the motorist can finance the action either from his own resources, or from some form of insurance, or (if he is of very limited means) by legal aid. There remains the claim for loss of use of the car. In principle, if such a claim is made it will often be quantified by reference to the cost of hiring a substitute vehicle, and will be recoverable upon proof that the motorist needed a replacement car whilst his own was off the road. I say 'if such a claim is made' for two reasons. First, because the loss of use is not recoverable under a comprehensive policy, so that there are no subrogated insurers to stand behind the claim, and in situations where there is no personal injury claim and where the damage to the motorist's vehicle is dealt with as between insurers there are few motorists who will have the time, energy and resources to go to law solely to recover the cost of a substitute vehicle. Secondly, because there are many motorists who lack the inclination or the ready cash to hire a substitute on the chance of recovering reimbursement from the defendant's insurers. Thus, there exists in practical terms a gap in the remedies available to the motorist, from which the errant driver, and hence his insurers, frequently profit. In recent years a number of commercial concerns (hereafter 'the companies') have identified this gap and have sought to fill it in a manner advantageous alike to motorists and to themselves, by offering to motorists with apparently solid claims against the other parties to collisions the opportunity to make use of the company's cars whilst their own are off the road. The terms on which this opportunity is given are said to be, in broad outline, as follows. (1) The company makes a car available to the motorist whilst the damaged car is under repair. (2) The company pursues a claim against the defendant, at its own expense and employing solicitors of its choice, in the name of the motorist for loss of use of the motorist's car. (3) The company makes a charge for the loan of the replacement car, which is reimbursed from that part of the damages recovered by the motorist from the defendant or his insurers which reflects the loss of use of the motorist's car. (4) Until this happens the motorist is under no obligation to pay for the use of the replacement car. (5) These arrangements are conditional on the co-operation of the motorist in pursuing the claim and any resulting legal proceedings. (6) The companies aim to confine the scheme to cases where the motorist is very likely to succeed in establishing the defendant's liability, without any contributory negligence on the part of the motorist. Transactions on these general lines have been entered into in large numbers, to the discomfort of the defendants' insurers, who have been faced with claims of which an element reflects the cost of a replacement vehicle which would not have been hired but for the existence of the scheme. The insurers have counter-attacked by alleging that the hiring agreements are champertous and accordingly unlawful, or otherwise contrary to public policy. Whilst no longer contending that actions which include an element of damages referable to charges made, or said to be made, by the companies are an abuse of the process of the court, and should be therefore struck out in their entirety, the insurers say that damages cannot be awarded for the hiring charges, since to do so would enable the motorist to rely on an unlawful contract."

7. We know from Dimond's case [2000] 1 Q.B. 216 that in Giles v. Thompson [1994] 1 A.C. 142 no point on the Consumer Credit Act 1974 arose. In Dimond's case [2000] 1 Q.B. 216, another head of illegality was raised, successfully on this occasion. That case involved a different car hire company operating on a different contract. It is presently under appeal to their Lordships' House. The defendants assert that the issue in this case (as defined above) was not dealt with in Dimond'scase, and that the question whether a clause providing payment within a year and a day achieves exemption from the Consumer Credit Act 1974 is the major defence being litigated in a large number of credit hire cases going through the court. No application was made to stay this hearing to await the result of the appeal in Dimond'scase. Nor was it suggested that we were bound by Dimond's case on the point in this appeal. So we proceeded to hear this appeal.

8. It is common ground that, if the relevant hire agreements are properly to be regarded as consumer credit agreements within the meaning of section 8(2) of the Consumer Credit Act 1974, the short question raised by this appeal is whether the words used in condition 10.1 of the agreements are apt to take those agreements out of the regulatory regime imposed by that Act and the Consumer Credit (Agreements) Regulations 1983 (S.I. 1983 No. 1553) and the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 (S.I. 1987 No. 2117).

9. The question whether or not a replacement vehicle hire agreement under which the obligation to pay the hire charge was deferred pending resolution of a claim by (or in the name of) the hirer against a third party was capable of being regarded as a consumer credit agreement for the purposes of the Act of 1974 was considered by this court in Dimond v. Lovell [2000] 1 Q.B. 216. This court held that it was. In particular, it was held: (i) that such an agreement, if made with an individual hirer, was a personal credit agreement within section 8(1) of the Act; and (ii) that if the amount of the credit provided did not exceed the limit prescribed under section 8(2) - £15,000 at the time relevant to this appeal - the agreement was a consumer credit agreement. Subject to one point - to which we are about to refer - the plaintiff did not seek to reopen that question on this appeal.

10. The amount of the deferred hire charge in Dimond v. Lovell was well within the limit prescribed under section 8(2) of the Act of 1974. In the present case, however, the amount payable under the fourth of the hire agreements exceeded the prescribed limit. It was accepted by the defendant that that fourth agreement fell outside section 8(2) and was not a consumer credit agreement. But it was also accepted, by the plaintiff, that - as the judge had held - the four agreements had to be treated as separate contracts; so that the fact that the amount payable under all four agreements (taken together) exceeded the prescribed limit did not lead to the conclusion that the first three agreements could not be consumer credit agreements.

11. In this court, however, the plaintiff sought for the first time to rely on the fact that, although the credit actually provided under each of the first three agreements was less than £15,000, the agreements themselves imposed no limit. At the time when each agreement was made it was possible that the amount of the credit to be provided under it would exceed £15,000 - as, in the event, happened in the case of the fourth agreement. The plaintiff sought, by way of respondent's notice under R.S.C., Ord. 59, r. 6(1)(b), to contend that an agreement which, as made, provided for credit without limit could not be a consumer credit agreement within section 8(2) of the Act; notwithstanding that, in the events which happened, the credit actually provided under the agreement did not exceed the limit prescribed by that section.

12. That respondent's notice (the only copy of which we have seen is unsigned and undated) was never lodged with the court, and did not get into the core bundle, though we are told it was received by the defendants on 13 October, some time out of time. Accordingly we were surprised to be confronted with it at the hearing of the appeal when the time estimate for the hearing already seemed tight. We refused to admit it out of time, for reasons which follow.

13. First, the effect of this point would have brought Dimond's case centre stage, and thus would potentially cause an over-run to another day in a tight schedule. And the connection with Dimond's case appears to bring this new point close to, if not caught by, the stay imposed by Sir Richard Scott V.-C. on Dimond cases.

14. Second, if this point is right, it has taken a long time to emerge, and so is just the sort of point on which the views of, and filter imposed by, the judge at first instance would have been particularly valuable.

15. Third, both those points are strengthened by the fact that this new point is put forward as a test case. It is entirely different from and unrelated to the illegality defence which is already before the court. It is unsatisfactory for a test case not to have the benefit of the decision at first instance, particularly when the point sought to be put in issue was conceded before the judge.

16. Fourth, if it is a proper point to be tested by a test case, there will be no difficulty (apart from Sir Richard Scott V.-C.'s stay on all Dimond cases) preventing such a test case being set up at short notice.

17. We should make it clear that we have not formed any view on the merits of the point itself; or on the question whether, having regard to the decision in Dimond v. Lovell, it could succeed in this court.

18. The position, therefore, is that this appeal has been argued on the basis that the first three agreements ("the relevant agreements") are consumer credit agreements within section 8(2) of the Act. The issue is whether they are also regulated agreements.

19. A consumer credit agreement is a regulated agreement for the purposes of the Act of 1974 if it is not an "exempt agreement;" that is to say, if it is not an agreement specified in or under section 16 of the Act: see section 8(3). Section 16(5) gives power to the Secretary of State to provide by Order that the Act shall not regulate consumer credit agreements where the number of payments to be made by the debtor does not exceed the number specified for that purpose in the order. That power was exercised by the making of the Consumer Credit (Exempt Agreements) Order 1977 (S.I. 1977 No. 362). Paragraph 3(1) of the Order of 1977 provided that the Act of 1974 should not regulate a consumer credit agreement which fell within one of a number of descriptions. Those descriptions included, at paragraph 3(1)(a)(i), a debtor-creditor-supplier agreement for fixed sum credit under which the number of payments to be made by the debtor did not exceed four.

20. Fixed sum credit is defined by section 10(1) of the Act of 1974. It means any facility under a personal credit agreement whereby the debtor is enabled to receive credit (whether in one amount or by instalments), not being running-account credit within section 10(1)(a). A debtor-creditor-supplier agreement is defined by section 12 of the Act of 1974. The expression includes a restricted-use credit agreement falling within section 11(1)(a) of that Act. A restricted-use credit agreement is a regulated consumer credit agreement to finance a transaction between the debtor and the creditor. It was held by this court in Dimond v. Lovell [2000] 1 Q.B. 216, 232 para. 69 in the judgment of Sir Richard Scott V.-C. with which the other members of the court (Thorpe and Judge L.JJ.) agreed, that a replacement vehicle hire agreement in terms which (so far as material in this context) are indistinguishable from those of the relevant agreements in the present case was an agreement for fixed sum credit within section 10(1)(b), a restricted-use credit agreement within section 11(1)(a) and a debtor-creditor-supplier agreement under section 12(a) of the Act of 1974. On the basis that the relevant agreements are consumer credit agreements for the purposes of section 8(2) of the Act of 1974 it is not in dispute that, if not exempt agreements, they would be debtor-creditor-supplier agreements for fixed-sum credit.

21. The Order of 1977 was revoked and replaced by the Consumer Credit (Exempt Agreements) Order 1980 (S.I. 1980 No. 52); and the Order of 1980 was, in turn, revoked and replaced by the Consumer Credit (Exempt Agreements) (No. 2) Order 1985 (S.I. 1985 No. 757); but the relevant provisions in paragraph 3(1)(a)(i) remained unchanged until the coming into operation of the Consumer Credit (Exempt Agreements) Order 1989.

22. The Order of 1989 was made in the light of an E.E.C. Council Directive of 22 December 1986 (87/102/E.E.C.). The Directive, which had as its expressed objective the provision of "a certain degree of approximation of the laws, regulations and administrative provisions of member states concerning consumer credit," was to have no application to credit agreements under which the consumer was required to repay the credit either within a period not exceeding three months or by a maximum number of four payments within a period not exceeding 12 months: see article 2.1(g). No doubt it was with that provision in mind that paragraph 3(1)(a)(i) of the Order of 1989 was in a more restrictive form than that which had appeared in the earlier Orders. The relevant paragraph in the Order of 1989 is in these terms:

"The Act [of 1974] shall not regulate a consumer credit agreement which is an agreement of one of the following descriptions, that is to say - (a) a debtor-creditor-supplier agreement being either - (i) an agreement for fixed-sum credit under which the total number of payments to be made by the debtor does not exceed four, and those payments are required to be made within a period not exceeding 12 months beginning with the date of the agreement . . ."

23. Where, under some legislative provision, an act is required to be done within a fixed period of time "beginning with" or "from" a specified day it is a question of construction whether the specified day itself is to be included in, or excluded from, that period. Where the period within which the act is to be done is expressed to be a number of days, months or years from or after a specified day, the courts have held, consistently since Young v. Higgon (1840) 6 M. & W. 49, that the specified day is excluded from the period; that is to say, that the period commences on the day after the specified day. Examples of such an "exclusive" construction are found in Goldsmiths' Co. v. West Metropolitan Railway Co. [1904] 1 K.B. 1 ("the powers of the company for the compulsory purchase of lands for the purposes of this Act shall cease after the expiration of three years from the passing of this Act") and in In re Lympe Investments Ltd. [1972] 1 W.L.R. 523 ("the company has for three weeks thereafter neglected to pay"). In Stewart v. Chapman [1951] 2 K.B. 792 ("a person . . . shall not be convicted unless . . . within 14 days of the commission of the offence a summons for the offence was served on him") Lord Goddard C.J. observed, at pp. 798-799, that it was well established that "whatever the expression used" the day from which the period of time was to be reckoned was to be excluded.

Personal injury judgements -
Zoan vs Rouamba

Fair Trading - Consumer credit - Agreement - Plaintiff hiring replacement vehicles after damage to car caused by defendant - Deferred payments for car hire - Hire agreement providing for payment on or before 12 months after date of agreement - Whether payment required within a period "not exceeding 12 months beginning with" date of agreement - Whether "exempt" consumer credit agreement - Whether enforceable - Consumer Credit Act 1974, (c. 39), ss. 8(2)(3), 16(5) - Consumer Credit (Exempt Agreements) Order 1989 (S.I. 1989 No. 869), art. 3(1)(a)(i)

The plaintiff's car was damaged in a road traffic accident which was entirely the fault of the defendant. In addition to the cost of repair, he claimed for the hire of replacement vehicles while the repairs were being undertaken. He made four contracts with a vehicle hire company on the company's standard terms which provided, by clause 10, that the company could "allow the hire charges to remain outstanding until a date on or before 12 months after the date of this agreement" and that those charges together with interest thereon were to become immediately due and payable by the hirer at latest "upon the occurrence of . . . the first anniversary" of the agreement. The defendant denied liability under three of the four contracts on the grounds that the contracts were regulated consumer credit agreements under the Consumer Credit Act 1974 which had been improperly executed and were therefore unenforceable because they did not comply with the Act of 1974 and the regulations made thereunder, with the result that the plaintiff had sustained no loss in respect of them. The judge, holding that the agreements were exempt agreements under article 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 19891 because clause 10 required the payments to be made "within a period not exceeding 12 months beginning with the date of the agreement" and were therefore enforceable, awarded damages for the cost of hiring the replacement vehicles under all four contracts. On appeal by the defendant: -
Held, allowing the appeal, that the usual meaning of the words "after" or "from" in the context of reckoning time was that the day after or from which the period was to be reckoned was not included within the period, and "the first anniversary" of an agreement was one day later than the last day of the period of 12 months including the date of the agreement; that, assuming that the hire company intended clause 10 to bring the agreement within the definition of exempt agreement in article 3(1)(a)(i) of the Order of 1989, it had not been established that the plaintiff knew or should be taken to have known that and so it could not be inferred that the plaintiff shared the hire company's intention; that, on a true construction of clause 10, the period allowed for payment was 12 months and one day and the three contracts did not fall within the definition of exempt agreement in article 3(1)(a)(i); and that, accordingly, the three contracts were regulated consumer credit agreements which, having been improperly executed, were unenforceable and so the plaintiff had suffered no loss in respect of those contracts (post, pp. 1520A-B, 1521C-D,1523A-D).

1 Consumer Credit (Exempt Agreements) Order 1989, art. 3(1): see post, p. 1516C-D.

Young v. Higgon (1840) 6 M. & W. 49 and In re Lympne Investments Ltd. [1972] 1 W.L.R. 523 applied. Hare v. Gocher [1962] 2 Q.B. 641, D.C.; Trow v. Ind Coope (West Midlands) Ltd. [1967] 2 Q.B. 899, C.A. and Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] A.C. 749, H.L.(E.) distinguished. Investors Compensation Scheme Ltd. v. West Bromwich Building Society [1998] 1 W.L.R. 896, H.L.(E.) considered.

Appeal from Judge Charles Harris Q.C. sitting at Northampton County Court. By a summons dated 8 December 1998 the plaintiff, Nigel Zoan, claimed damages for loss and damage caused by the negligence of the defendant, Beatrice Rouamba, when a vehicle being driven by the defendant had collided with the plaintiff's vehicle on or about 3 May 1997. The special damages claimed included the sum of £25,833.48 incurred in hiring replacement vehicles whilst his was being repaired. On 19 July 1999 Judge Charles Harris Q.C. gave judgment for the plaintiff for, inter alia, the full amount of the hire charges claimed but gave the defendant permission to appeal.

By a notice of appeal dated 12 August 1999 the defendant appealed on the grounds that the judge had erred in concluding that three credit hire contracts between the plaintiff and Swift Rent-A-Car Ltd. were exempt from the Consumer Credit Act 1974 by reason of article 3(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989 (S.I. 1989 No. 869) and that he should have found that the contracts were not exempt and were therefore unenforceable by reason of the Act of 1974. By a respondent's notice to affirm dated October 1999, the plaintiff contended that the judge's decision should be affirmed on the additional grounds that article 3(1)(a)(i) of the Order of 1989 should be interpreted to the effect that the 12-month period excluded the date of the agreement and that the credit hire contracts were not consumer credit agreements. The facts are stated in the judgment of the court.

Hilary Heilbron Q.C. and Tim Kevan for the defendant. Ian Hunter Q.C. and Fred Philpott for the plaintiff

Cur. adv. vult.

21 January 2000. Chadwick L.J. handed down the following judgment of the court.

1. This is the judgment of the court in an appeal, with leave of the trial judge, from that part of the order of Judge Charles Harris Q.C., made in the Northampton County Court on 19 July 1999, giving the plaintiff damages for the cost of hiring substitute vehicles while his own vehicle, damaged by the defendant's negligence, was off the road.

2. The facts are simple. Mr. Zoan owns and drives a Jeep Grand Cherokee motor car. It was damaged in a road traffic accident by a vehicle driven by Mrs. Rouamba, the defendant. The accident was entirely the defendant's fault. Happily no one was injured. Mrs. Rouamba was insured, and her insurers conducted her defence. They admitted liability, and paid for the vehicle to be repaired. But they refused to pay for two heads of damage. The first, the diminution of value of the plaintiff's vehicle, because the repairs did not restore it to its pre-accident value, need not concern us beyond noting that the plaintiff recovered £1,300 under that head.

3. But additionally, the plaintiff claimed the cost of hiring equivalent vehicles over the repair period while his vehicle was off the road. He recovered damages of £25,833.48 under that head of claim. The defendant now appeals as to £10,702.45 of the damages awarded in relation to hire charges.

4. There were four separate contracts of hire, one for each vehicle. The plaintiffs concede that the judge was right to treat them separately. Each of those contracts was on the standard form contract of Swift Rent-A-Car Ltd. ("Swift"). One aspect of Swift's business was the hiring out of replacement cars to those whose vehicles were off the road as a result of accidents that were not their fault. Swift under their contract extended credit to the hirer, so that, if he got on with his action, he would not have to pay the hire charges until he got his damages. Swift were notified of this appeal, but have not applied to be heard.

5. For the purposes of this appeal, there is one defence only: namely that three of the four contracts of hire for the replacement vehicles were "improperly executed and unenforceable" because of the pleaded failure to comply with the statutory requirements of the Consumer Credit Act 1974, and the regulations made thereunder. The case below focused entirely on whether the three car hire agreements were exempt from that statutory regime on the ground that condition 10 of those agreements complied with article 3(1)(a)(i) of the Consumer Credit (Exempt Agreements) Order 1989. Both sides made concessions to define the issue for the judge: "The plaintiff in fact conceded that, if these agreements were not exempt agreements, then they were indeed unenforceable and, as the law currently stands, that he could not recover from the defendant as a result of Dimond v. Lovell [2000] 1 Q.B. 216. The defendant in turn agreed that the fourth agreement was indeed exempt since the amount of credit exceeded £15,000."

6. The judge's reference to Dimond v. Lovell [2000] 1 Q.B. 216 requires some explanation. For a long time many plaintiffs whose vehicles were put off the road by the negligence of others did not claim that head of damage. This benefited negligent drivers and their insurers. Car hire companies saw this niche in the market, and entered the market to fill it, with apparent commercial success. Motor insurers counter-attacked, claiming that such agreements were champertous, and therefore unlawful. This claim failed in their Lordships' House in Giles v. Thompson [1994] 1 A.C. 142. We take Lord Mustill's analysis of the forensic history, at pp. 154-155:

"The question has arisen in this way. A substantial proportion of motor accidents take place in circumstances where there is little room for doubt that one party is exclusively to blame: typically, where the car of one driver (hereafter 'the motorist') is stationary, for example at a traffic light, and where a car driven by another person ('the defendant') is carelessly driven into the back of it. There are two types of damages which may be awarded to the motorist in any resulting litigation. First, there are damages for any personal injury which the motorist may have suffered. These will usually comprise general damages for pain, suffering and loss of amenity, and special damages for past and future loss of earnings. Secondly, there are damages related to the loss of or damage to the motorist's vehicle. These will or may have two elements: a figure representing the diminution in value of the motorist's vehicle, and another figure representing the financial loss suffered by the motorist because he or she cannot use the vehicle whilst it is either being replaced (if written off) or undergoing repairs. In practice these various elements are dealt with in various ways. The damage to the car itself is settled between insurers, apart from the excess on the motorist's policy, which he may not trouble to pursue except as an appendage to a larger claim. The motorist's claim for personal injuries may be substantial in amount, and will be made the subject of an action, if the motorist can finance the action either from his own resources, or from some form of insurance, or (if he is of very limited means) by legal aid. There remains the claim for loss of use of the car. In principle, if such a claim is made it will often be quantified by reference to the cost of hiring a substitute vehicle, and will be recoverable upon proof that the motorist needed a replacement car whilst his own was off the road. I say 'if such a claim is made' for two reasons. First, because the loss of use is not recoverable under a comprehensive policy, so that there are no subrogated insurers to stand behind the claim, and in situations where there is no personal injury claim and where the damage to the motorist's vehicle is dealt with as between insurers there are few motorists who will have the time, energy and resources to go to law solely to recover the cost of a substitute vehicle. Secondly, because there are many motorists who lack the inclination or the ready cash to hire a substitute on the chance of recovering reimbursement from the defendant's insurers. Thus, there exists in practical terms a gap in the remedies available to the motorist, from which the errant driver, and hence his insurers, frequently profit. In recent years a number of commercial concerns (hereafter 'the companies') have identified this gap and have sought to fill it in a manner advantageous alike to motorists and to themselves, by offering to motorists with apparently solid claims against the other parties to collisions the opportunity to make use of the company's cars whilst their own are off the road. The terms on which this opportunity is given are said to be, in broad outline, as follows. (1) The company makes a car available to the motorist whilst the damaged car is under repair. (2) The company pursues a claim against the defendant, at its own expense and employing solicitors of its choice, in the name of the motorist for loss of use of the motorist's car. (3) The company makes a charge for the loan of the replacement car, which is reimbursed from that part of the damages recovered by the motorist from the defendant or his insurers which reflects the loss of use of the motorist's car. (4) Until this happens the motorist is under no obligation to pay for the use of the replacement car. (5) These arrangements are conditional on the co-operation of the motorist in pursuing the claim and any resulting legal proceedings. (6) The companies aim to confine the scheme to cases where the motorist is very likely to succeed in establishing the defendant's liability, without any contributory negligence on the part of the motorist. Transactions on these general lines have been entered into in large numbers, to the discomfort of the defendants' insurers, who have been faced with claims of which an element reflects the cost of a replacement vehicle which would not have been hired but for the existence of the scheme. The insurers have counter-attacked by alleging that the hiring agreements are champertous and accordingly unlawful, or otherwise contrary to public policy. Whilst no longer contending that actions which include an element of damages referable to charges made, or said to be made, by the companies are an abuse of the process of the court, and should be therefore struck out in their entirety, the insurers say that damages cannot be awarded for the hiring charges, since to do so would enable the motorist to rely on an unlawful contract."

7. We know from Dimond's case [2000] 1 Q.B. 216 that in Giles v. Thompson [1994] 1 A.C. 142 no point on the Consumer Credit Act 1974 arose. In Dimond's case [2000] 1 Q.B. 216, another head of illegality was raised, successfully on this occasion. That case involved a different car hire company operating on a different contract. It is presently under appeal to their Lordships' House. The defendants assert that the issue in this case (as defined above) was not dealt with in Dimond'scase, and that the question whether a clause providing payment within a year and a day achieves exemption from the Consumer Credit Act 1974 is the major defence being litigated in a large number of credit hire cases going through the court. No application was made to stay this hearing to await the result of the appeal in Dimond'scase. Nor was it suggested that we were bound by Dimond's case on the point in this appeal. So we proceeded to hear this appeal.

8. It is common ground that, if the relevant hire agreements are properly to be regarded as consumer credit agreements within the meaning of section 8(2) of the Consumer Credit Act 1974, the short question raised by this appeal is whether the words used in condition 10.1 of the agreements are apt to take those agreements out of the regulatory regime imposed by that Act and the Consumer Credit (Agreements) Regulations 1983 (S.I. 1983 No. 1553) and the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987 (S.I. 1987 No. 2117).

9. The question whether or not a replacement vehicle hire agreement under which the obligation to pay the hire charge was deferred pending resolution of a claim by (or in the name of) the hirer against a third party was capable of being regarded as a consumer credit agreement for the purposes of the Act of 1974 was considered by this court in Dimond v. Lovell [2000] 1 Q.B. 216. This court held that it was. In particular, it was held: (i) that such an agreement, if made with an individual hirer, was a personal credit agreement within section 8(1) of the Act; and (ii) that if the amount of the credit provided did not exceed the limit prescribed under section 8(2) - £15,000 at the time relevant to this appeal - the agreement was a consumer credit agreement. Subject to one point - to which we are about to refer - the plaintiff did not seek to reopen that question on this appeal.

10. The amount of the deferred hire charge in Dimond v. Lovell was well within the limit prescribed under section 8(2) of the Act of 1974. In the present case, however, the amount payable under the fourth of the hire agreements exceeded the prescribed limit. It was accepted by the defendant that that fourth agreement fell outside section 8(2) and was not a consumer credit agreement. But it was also accepted, by the plaintiff, that - as the judge had held - the four agreements had to be treated as separate contracts; so that the fact that the amount payable under all four agreements (taken together) exceeded the prescribed limit did not lead to the conclusion that the first three agreements could not be consumer credit agreements.

11. In this court, however, the plaintiff sought for the first time to rely on the fact that, although the credit actually provided under each of the first three agreements was less than £15,000, the agreements themselves imposed no limit. At the time when each agreement was made it was possible that the amount of the credit to be provided under it would exceed £15,000 - as, in the event, happened in the case of the fourth agreement. The plaintiff sought, by way of respondent's notice under R.S.C., Ord. 59, r. 6(1)(b), to contend that an agreement which, as made, provided for credit without limit could not be a consumer credit agreement within section 8(2) of the Act; notwithstanding that, in the events which happened, the credit actually provided under the agreement did not exceed the limit prescribed by that section.

12. That respondent's notice (the only copy of which we have seen is unsigned and undated) was never lodged with the court, and did not get into the core bundle, though we are told it was received by the defendants on 13 October, some time out of time. Accordingly we were surprised to be confronted with it at the hearing of the appeal when the time estimate for the hearing already seemed tight. We refused to admit it out of time, for reasons which follow.

13. First, the effect of this point would have brought Dimond's case centre stage, and thus would potentially cause an over-run to another day in a tight schedule. And the connection with Dimond's case appears to bring this new point close to, if not caught by, the stay imposed by Sir Richard Scott V.-C. on Dimond cases.

14. Second, if this point is right, it has taken a long time to emerge, and so is just the sort of point on which the views of, and filter imposed by, the judge at first instance would have been particularly valuable.

15. Third, both those points are strengthened by the fact that this new point is put forward as a test case. It is entirely different from and unrelated to the illegality defence which is already before the court. It is unsatisfactory for a test case not to have the benefit of the decision at first instance, particularly when the point sought to be put in issue was conceded before the judge.

16. Fourth, if it is a proper point to be tested by a test case, there will be no difficulty (apart from Sir Richard Scott V.-C.'s stay on all Dimond cases) preventing such a test case being set up at short notice.

17. We should make it clear that we have not formed any view on the merits of the point itself; or on the question whether, having regard to the decision in Dimond v. Lovell, it could succeed in this court.

18. The position, therefore, is that this appeal has been argued on the basis that the first three agreements ("the relevant agreements") are consumer credit agreements within section 8(2) of the Act. The issue is whether they are also regulated agreements.

19. A consumer credit agreement is a regulated agreement for the purposes of the Act of 1974 if it is not an "exempt agreement;" that is to say, if it is not an agreement specified in or under section 16 of the Act: see section 8(3). Section 16(5) gives power to the Secretary of State to provide by Order that the Act shall not regulate consumer credit agreements where the number of payments to be made by the debtor does not exceed the number specified for that purpose in the order. That power was exercised by the making of the Consumer Credit (Exempt Agreements) Order 1977 (S.I. 1977 No. 362). Paragraph 3(1) of the Order of 1977 provided that the Act of 1974 should not regulate a consumer credit agreement which fell within one of a number of descriptions. Those descriptions included, at paragraph 3(1)(a)(i), a debtor-creditor-supplier agreement for fixed sum credit under which the number of payments to be made by the debtor did not exceed four.

20. Fixed sum credit is defined by section 10(1) of the Act of 1974. It means any facility under a personal credit agreement whereby the debtor is enabled to receive credit (whether in one amount or by instalments), not being running-account credit within section 10(1)(a). A debtor-creditor-supplier agreement is defined by section 12 of the Act of 1974. The expression includes a restricted-use credit agreement falling within section 11(1)(a) of that Act. A restricted-use credit agreement is a regulated consumer credit agreement to finance a transaction between the debtor and the creditor. It was held by this court in Dimond v. Lovell [2000] 1 Q.B. 216, 232 para. 69 in the judgment of Sir Richard Scott V.-C. with which the other members of the court (Thorpe and Judge L.JJ.) agreed, that a replacement vehicle hire agreement in terms which (so far as material in this context) are indistinguishable from those of the relevant agreements in the present case was an agreement for fixed sum credit within section 10(1)(b), a restricted-use credit agreement within section 11(1)(a) and a debtor-creditor-supplier agreement under section 12(a) of the Act of 1974. On the basis that the relevant agreements are consumer credit agreements for the purposes of section 8(2) of the Act of 1974 it is not in dispute that, if not exempt agreements, they would be debtor-creditor-supplier agreements for fixed-sum credit.

21. The Order of 1977 was revoked and replaced by the Consumer Credit (Exempt Agreements) Order 1980 (S.I. 1980 No. 52); and the Order of 1980 was, in turn, revoked and replaced by the Consumer Credit (Exempt Agreements) (No. 2) Order 1985 (S.I. 1985 No. 757); but the relevant provisions in paragraph 3(1)(a)(i) remained unchanged until the coming into operation of the Consumer Credit (Exempt Agreements) Order 1989.

22. The Order of 1989 was made in the light of an E.E.C. Council Directive of 22 December 1986 (87/102/E.E.C.). The Directive, which had as its expressed objective the provision of "a certain degree of approximation of the laws, regulations and administrative provisions of member states concerning consumer credit," was to have no application to credit agreements under which the consumer was required to repay the credit either within a period not exceeding three months or by a maximum number of four payments within a period not exceeding 12 months: see article 2.1(g). No doubt it was with that provision in mind that paragraph 3(1)(a)(i) of the Order of 1989 was in a more restrictive form than that which had appeared in the earlier Orders. The relevant paragraph in the Order of 1989 is in these terms:

"The Act [of 1974] shall not regulate a consumer credit agreement which is an agreement of one of the following descriptions, that is to say - (a) a debtor-creditor-supplier agreement being either - (i) an agreement for fixed-sum credit under which the total number of payments to be made by the debtor does not exceed four, and those payments are required to be made within a period not exceeding 12 months beginning with the date of the agreement . . ."

23. Where, under some legislative provision, an act is required to be done within a fixed period of time "beginning with" or "from" a specified day it is a question of construction whether the specified day itself is to be included in, or excluded from, that period. Where the period within which the act is to be done is expressed to be a number of days, months or years from or after a specified day, the courts have held, consistently since Young v. Higgon (1840) 6 M. & W. 49, that the specified day is excluded from the period; that is to say, that the period commences on the day after the specified day. Examples of such an "exclusive" construction are found in Goldsmiths' Co. v. West Metropolitan Railway Co. [1904] 1 K.B. 1 ("the powers of the company for the compulsory purchase of lands for the purposes of this Act shall cease after the expiration of three years from the passing of this Act") and in In re Lympe Investments Ltd. [1972] 1 W.L.R. 523 ("the company has for three weeks thereafter neglected to pay"). In Stewart v. Chapman [1951] 2 K.B. 792 ("a person . . . shall not be convicted unless . . . within 14 days of the commission of the offence a summons for the offence was served on him") Lord Goddard C.J. observed, at pp. 798-799, that it was well established that "whatever the expression used" the day from which the period of time was to be reckoned was to be excluded.


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