Credit Hire | Enforceability | Irving v Morgan Sindall

Please find a copy of the judgment by clicking here.

The recent appeal judgment in Irving v Morgan Sindall PLC [2018] EWHC 1147 (QB) by Mr Justice Turner is greatly appreciated for bringing much needed clarity over two issues credit hire practitioners regularly battle with:

  1. Where is the line drawn for impecuniosity to be established; and
  2. Must a claimant have a personal liability to pay the hire charges in order for it to be recoverable from the defendant?

His Honour Judge Saffman at trial dismissed a claim for credit hire charges amounting to £20,109.60 on the basis that he had “to be satisfied that the claimant is obliged to pay them” and in this case, her oral evidence “is that she is not”. Impecuniosity was pleaded but Miss Irving was held to be pecunious.  Mr Justice Turner allowed the appeal on both grounds.

Contingent Liability:

HHJ Saffman was not satisfied that Miss Irving was liable to pay the charges as it was elicited during cross examination that oral assurances were made by the credit hire company to her that she would not have to pay any car hire charges if the claim against the defendant failed. Her liability was held to be contingent, albeit appearing to contradict the written agreement. HHJ Saffman did not deal with the legal effect of oral evidence conflicting with written agreements and Mr Justice Turner’s judgment proceeded, albeit superficially, on the basis that her liability was contingent. Arguably, his judgment is only relevant to those cases where liability is without any dispute contingent upon a claim against the defendant, that failing, the claimant would have no personal liability to pay the charges.

HHJ Saffman did not refer to a jurisprudential basis in his finding. Mr Justice Turner referred to several authorities on point, including Giles[1993] ALL E.R., and found nothing that “precluded the recovery of a contingent debt (…) Indeed, the contrary would appear to be the case”. The question which the Master of the Rolls in Gilesasked himself was “if these plaintiffs recover reasonable charges reasonably incurred, they will be over compensated?”.Mr Justice Turner also referred to the case of Wakeling v Harrington [2007] EWCH 1184 (Ch) which similarly held that “whilst an obligation to repay is an essential characteristic of a loan, the manner in which the obligation is to be discharged may be restricted”.Mann J furthered that “it suffices that payment is to be made from a designated fund or from the proceeds of a specified asset”.In the present case, Mr Justice Turner concluded that HHJ Saffman was wrong to deem the oral assurances compromised her claim for credit hire charges.


Miss Irving pleaded impecuniosity at trial but HHJ Saffman considered her to be pecunious. Miss Irving had made full financial disclosure, which revealed that she had a wage of £472 per month, sometimes fluctuating to £700. The lowest that her account would reach was £250. She had an ISA savings account containing £250 and a credit card with a limit of £500.

HHJ Saffman considered that she could have raised approximately £900 by depleting her funds and could have bought a replacement vehicle, the pre-accident value of her vehicle being £775.

Mr Justice Turner deemed this approach to be wholly incorrect with the test laid out in Lagden v O’Connor [2004] 1 A.C 1067 that the disclosure must show that there was an “inability to pay car hire charges without making sacrifices the plaintiff could not reasonably be expected to make”.  Mr Justice Turner emphasised that Miss Irving was not aware that her car was written off until two weeks elapsed from the incident and a further two weeks would have been needed to find a replacement vehicle. During this four-week period, Miss Irving would have had to hire a car and when factoring in the cost of hire over this period in addition to a replacement vehicle, the amount that Miss Irving needed was not simply £775. This far exceeded HHJ Saffman’s approximation of £900 being available to Miss Irving. Mr Justice Turner clarified that impecuniosity does not mean “reducing her capital to the bare minimum and increasing her debt”as she “would have been exposing herself to the risk of a serious financial challenge in the event that a modest but unexpected financial reverse might have afflicted her before her claim was satisfied. Impecuniosity need not amount to penury”.


By taking a pragmatic approach to issues such as impecuniosity and contingent liability, Mr Justice Turner has sought to clarify admittedly grey areas within credit hire litigation and it will be interesting to monitor the reliance upon this judgment.


Sharon Hughes

5 July 2018

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