Case No:  99/0863/2

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NORTHAMPTON COUNTY COURT
(HIS HONOUR JUDGE CHARLES HARRIS QC)

Royal Courts of Justice
Strand, London, WC2A 2LL

Friday,  21st January 2000
B e f o r e :

LORD JUSTICE HENRY
LORD JUSTICE CHADWICK
and 
LORD JUSTICE MAY
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	NIGEL ZOAN		
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	BEATRICE ROUAMBA		
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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040,  Fax No:  0171 831 8838
Official Shorthand Writers to the Court)
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Hilary Heilbron QC and Tim Kevan Esq (instructed by Messrs Rollinsons for the Appellant)
Ian Hunter Esq, QC and Fred Philpot Esq (instructed by Messrs Franklins for the Respondent)
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Judgment
As Approved by the Court

Crown Copyright ©

Friday,  21st January 2000
JUDGMENT
Lord Justice Chadwick:
1)	This is the judgment of the Court in an appeal, with leave of the trial judge, from that part of the order of His Honour Judge Harris QC, made in the Northampton County court on 19th July 1999, giving the claimant 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 claimant’s vehicle, because the repairs did not restore it to its pre-accident value, need not concern us beyond noting that the claimant recovered £1,300 under that head.

3)	But additionally, the claimant 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 appellant 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 respondents 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 Limited (“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 Paragraph 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. [1999 3 AER 1]

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 requires some explanation.  For a long time many claimants 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 agreement were champertous, and therefore unlawful.  This claim failed in their Lordships’ House in Giles -v- Thompson [1994] 1 AC 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 happened 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 by 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 that in Giles -v- Thompson no point on the Consumer Credit Act arose.  In Dimond’s case, another head of illegality was raised, successfully on this occasion.  That case involved a different care hire company operating on a different contract.  It is presently under appeal to their Lordships’ House.  The appellants assert that the issue in this case (as defined above) was not dealt with in Dimond’s case, 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 result of the appeal in Dimond.  Nor was it suggested that we were bound by Dimond 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 Regulations 1983 and 1987. 

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 [1999] 3 All ER 1. 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 respondent did not seek to re-open 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 appellant that that fourth agreement fell outside section 8(2) and was not a consumer credit agreement. But it was also accepted, by the respondent, 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 respondent 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 respondent sought, by way of notice under CPR 1/RSC/59r6(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 appellants on 13th October, some time out of time.  Accordingly we were surprised to be confronted with it at trial 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 centre stage, and thus would potentially cause an over-run to another day in a tight schedule.  And the connection with Dimond appears to bring this new point close to, if not caught by, the stay imposed by the Vice-Chancellor 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 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 the Vice-Chancellor’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. Paragraph 3(1) of the 1977 Order 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 - at paragraph 69 in the judgment of Sir Richard Scott, Vice-Chancellor, with which the other members of the Court (Lord Justice Thorpe and Lord Justice Judge) 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 1977 Order was revoked and replaced by the Consumer Credit (Exempt Agreements) Order 1980; and the 1980 Order was, in turn, revoked and replaced by the Consumer Credit (Exempt Agreements) (No. 2) Order 1985; 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 1989 Order was made in the light of an EC Council Directive of 22 December 1986 (87/102/EEC). 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 1989 Order was in a more restrictive form than that which had appeared in the earlier Orders. The relevant paragraph in the 1989 Order is in these terms:

"3(1)	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; or ..."

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 The Goldsmith’s Company v The West Metropolitan Railway Company [1904] 1 KB 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 WLR 523 (“the company has for three weeks thereafter neglected to pay”). In Stewart v Chapman [1951] 2 KB 792 (“a person ... shall not be convicted unless ... within fourteen days of the commission of the offence a summons for the offence was served on him”) Lord Goddard, Chief Justice, observed, at pages 78-9, 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. 

24)	Where, however, the period within which the act is to be done is expressed to be a period beginning with a specified day, then it has been held, with equal consistency over the past forty years or thereabouts, that the legislature (or the relevant rule making body, as the case may be) has shown a clear intention that the specified day must be included in the period. Examples of an “inclusive” construction are to be found in Hare v Gocher [1962] 2 QB 642 (“if within [the period of two months beginning with the commencement of this Act] the occupier of an existing site duly makes an application ... for a site licence”) and in Trow v Ind Coope (West Midlands) Ltd [1967] 2 QB 899 (“a writ ... is valid ... for 12 months beginning with the date of its issue”). As Lord Justice Salmon pointed out in Trow v Ind Coope, at page 923, the approach adopted in the Goldsmith’s Company case and Stewart v Chapman can have no application in a case where the period is expressed to begin on the specified date. He observed, at page 924, that “I cannot ... accept that, if words are to have any meaning, ‘beginning with the date of its issue’ can be construed to mean the same as ‘beginning with the day after the date of its issue’”. 

25)	The judge held that it was “obvious”, from the use of the expression “beginning with the date of the agreement” in paragraph 3(1)(a)(i) of the 1989 Order, that the period of twelve months prescribed by that paragraph included the date of the agreement. In our view he was plainly correct to reach that conclusion.  Notwithstanding the submissions advanced on behalf of the respondent, we can see no basis on which this Court could refuse to apply the reasoning which led the majority (Lord Justice Harman and Lord Justice Salmon) in Trow v Ind Coope to hold that there is a real difference between a direction that a period of time is to begin with a specified date and a direction  that  a period is to be reckoned from that date. 

26)	It was submitted that to give an inclusive construction to the expression used in paragraph 3(1)(a)(i) of the 1989 Order would be inconsistent with the obvious purpose of that paragraph; because it would fail to give effect to Council Directive 87/102/EEC.  We find it impossible to accept that submission. First, it seems to us impossible to say, with any confidence, that Article 2.1(g) was intended to exclude from the application of the Directive agreements under which the consumer was required to repay the credit within a period of twelve months commencing on the day after the date of the agreement, but not to exclude agreements under which the period of twelve months commenced on the date of the agreement itself. There is no reason to think that, in framing Article 2.1(g), the EC Council had in mind the approach to the reckoning of time developed in our domestic courts; nor that that approach would be followed in the European Court of Justice or in the courts of other Member States. Secondly, whatever might be the construction of Article 2.1(g) as a matter of EC law, there is nothing in the Directive which prevents a Member State from giving effect to its obligations thereunder by exempting only agreements under which the repayment period does not exceed twelve months commencing on the date of the agreement itself; and by not exempting agreements under which the repayment period is longer by one additional day. The penultimate recital to the Directive makes that clear. Thirdly, there can be no doubt that, in using the words “beginning with the date of the agreement” in paragraph 3(1)(a)(i) of the 1989 Order, the Secretary of State did intend to prescribe, for the avoidance of doubt, the day on which the period of twelve months is to commence; and, in the light of the decision of this Court in Trow v Ind Coope, must be taken to have known the effect (or, at the least, the likely effect) which those words would have as a matter of English law.

27)	On the basis, therefore, that the relevant agreements will not be taken out of the regulatory regime imposed by the Act of 1974 and the associated regulations by paragraph 3(1)(a)(i) of the 1989 Order unless repayment of the credit provided by each of those agreements is required, by the terms of the agreement, to be made within a period of twelve months which includes the date of the agreement, we turn to the provision for deferred repayment which is contained in condition 10.1. It should be considered in context. Condition 9 contains the primary obligation to pay hire charges. It is in these terms:

"9	Payment

Save where the Owner has agreed to provide credit pursuant to Condition 10 the Hirer shall pay to the Owner the Hire Charges within 14 days of the end of the Hire Period.
9.2	..."

28)	Condition 10 applies where, as occurred in the present case, the hire company, as “Owner”, allowed credit:

"10	Credit on the Hire Charges

10.1	   Where a Claim exists the Owner may at its complete discretion and subject to the provisions of this Condition allow the Hire Charges to remain outstanding until a date on or before 12 months after the date of this Agreement (the “Credit Period”).

10.2	   The Hirer agrees to pay to the Owner interest on any outstanding Hire Charges at the Interest Rate from the due date for payment of the Hire Charges provided for in Condition 9.1 until actual payment.

10.3	  The Hire Charges together with interest thereon shall become immediately due and payable by the Hirer upon the occurrence of the earliest of the following events:

10.3.1	the first anniversary of this Agreement;

10.3.2	..."

29)	“Claim” is identified as:

"... a claim by the Hirer to recover loss, including the cost of hiring the vehicle hereunder, resulting from damage sustained by the Hirer’s own vehicle involved in an accident, which claim is against a party other than the Owner or Hirer’s own insurers."

30)	The other events specified under condition 10.3 may or may not occur before the first anniversary of the agreement. When condition 10 is read as a whole it is, in our view, beyond argument that the date “12 months after the date of this Agreement” referred to in condition 10.1 is intended to be the same date as “the first anniversary of this Agreement” referred to in condition 10.3.1. That, of course, is consistent with giving to the words “12 months after the date of this Agreement” a construction which excludes from the twelve month period the day on which the agreement was made. To give to those words a construction which excludes the day from or after which the period is to be reckoned is, itself, to adopt the approach consistently adopted by the Courts in relation to similar expressions since Young v Higgon in 1840. 

31)	The problem to which that approach gives rise may be illustrated by reference to the first of the relevant agreements. The agreement is dated 3 March 1997. The first anniversary of 3 March 1997 is 3 March 1998. The last day of the period of twelve months after 3 March 1997 (excluding 3 March 1997 itself from that period) is 3 March 1998. But the last day of the period of twelve months beginning with the date of the agreement – that is to say, including 3 March 1997 within the period – is 2 March 1998. So the effect of giving to the words “12 months after the date of this Agreement” which are used in condition 10.1 of the agreement a construction which excludes the date of the agreement itself is that (where the hire company allows credit under condition 10) the period within which payment of the hire charges is required to be made is one day longer than the period prescribed by paragraph 3(1)(a)(i) of the 1989 Order. The agreement is not within the description set out under paragraph 3(1)(a)(i); it is not an exempt agreement for the purposes of section 8(3) of the Act of 1974; it is a regulated agreement to which the regulatory regime imposed by that Act applies.

32)	The judge sought to avoid that consequence by giving to the words “12 months after the date of this Agreement” in condition 10.1 a meaning which included the date of the agreement itself. He reminded himself of Lord Hoffmann’s summary of the principles by which contractual documents should be construed, set out in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at pages 912-3; and, in particular, to the principle (numbered 1 in Lord Hoffmann’s summary) that:

"Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in  which they were at the time of the contract."

33)	The judge went on, at pages 7G – 8G in the transcript of his judgment:

"Applying these principles, what would the parties, using the form of words in question in this case, reasonably have been understood to mean by one of Lord Hoffman’s (sic) “reasonable people” considering the matter. I think that the answer is tolerably clear. He would conclude that a year from the date of the agreement, not a year from the day after the agreement, was being specified.

A year and a day is a curious and unusual unit of time. Precisely a year, from and including a particular date, is not.

In the context of this contract, 12 months after a particular day would be understood to mean, and I find does mean, the same as 12 months from a day; 12 months including the date of the agreement. All the more so if the terms of the Consumer Credit Exempt Agreement 1989 (sic) are to be taken as part of “all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”, in Lord Hoffman’s expression. Certainly they would have been part of the car provider’s background knowledge, and it could have no conceivable reason for providing for a period which neatly avoided exemption.

The plaintiff, even though an experienced and successful businessman, would not, of course, have had the regulations explicitly in mind, although no doubt they were “available” to him or his advisers had he wanted them.

Against this relevant background, in my view, 12 months from and including the date of the agreement is what the parties in using those words would reasonably have been understood to mean by the expression, “12 months after the date of this agreement"

34)	The first difficulty in the judge’s reasoning, as it seems to us, is that, absent reliance on the 1989 Order, there is no basis for the conclusion that the expression “12 months after the date of this agreement” – or “12 months from the date of this agreement”, which the judge treated (correctly, in our view) as having the same meaning – would be reasonably understood to mean “12 months including the date of this agreement”. The usual meaning of the words “after” or “from” in the context of reckoning time, as the authorities make clear, is that the day “after” or “from” which a period of time is to be reckoned is not included within the period. There are good reasons for this. The event which gives rise to the need to determine when a limited period of time has ended (or will end) may itself happen at any time of the day on which it occurs. It is in order to avoid disputes as to fractions of a day – and to give to the party who must comply with the limit the maximum period for such compliance – that time is reckoned, in effect, from the last moment of that day; that is to say, the period begins to run from the first moment of the next day. To treat a period of a year “from the date of the agreement” as commencing at the first moment after the end of the day on which the agreement is made is not (as the judge appears to suggest) to construe the words as if they read “a year from the day after the agreement”.

35)	The second difficulty is that to construe the expression “12 months after the date of this agreement” as meaning “12 months including the date of this agreement” produces an inconsistency between the time restriction in condition 10.1 and that in condition 10.3.1. “The first anniversary of this Agreement” is, plainly, one day later than the last day of the period of “12 months including the date of the agreement”; the first anniversary of 1 January 2000 is 1 January 2001, not 31 December 2000. The judge’s reasoning does not address this point.

36)	The third difficulty is that, as the judge himself recognised, there is no basis for an assumption that the respondent, as “Hirer” under the relevant agreements, would have had the Act of 1974 or the 1989 Order in mind at the time when he signed those agreements. It is, perhaps, pertinent to recall that, until the decision of this Court in Dimond v Lovell [1999] 3 All ER 1 was handed down on 29 April 1999, the law was widely thought to be as expressed by Professor Goode in his work Consumer Credit Legislation 1999 – to which Sir Richard Scott, Vice-Chancellor, makes reference at paragraphs 63-66 of his judgment in that appeal. To attribute to the hirer under a replacement vehicle hire agreement made in 1997 knowledge that the transaction into which he was entering might be affected by consumer credit legislation and the provisions for exemption in an order made pursuant to an EC Directive is, in our view, to give to Lord Hoffmann’s  expression “knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract” a scope which he could not have intended.

37)	We accept, of course, that if the inquiry as to the meaning of the words in condition 10.1 of the relevant agreements has to be approached on the basis that both parties to those contracts knew (or must be treated as knowing) (i) that, unless exempted, the agreements would be within the regulatory regime imposed by the consumer credit legislation , (ii) that there were provisions in the 1989 Order which could be invoked to confer exemption – see the observations of Sir Richard Scott, Vice-Chancellor, at paragraph 51 of his judgment in Dimond v Lovell - and (iii) that those provisions were available only where the period for repayment of the credit did not exceed twelve months, then it becomes arguable that both parties knew that the time restriction in condition 10 of the relevant agreements had been included in order to take advantage of the exemption. Indeed, it might be said that, given that approach, it was obvious to the hirer that that was the purpose which the hire company hoped to achieve by including the time restriction in condition 10. On that basis it could have been argued that was the common purpose of both parties; and that that common purpose is not to be frustrated by their failure to use the language which would have been apt to achieve it. Reliance would, no doubt, have been placed on the fourth of Lord Hoffmann’s principles in Investors Compensation Scheme Ltd v West Bromwich Building Society, [1998] 1 WLR 896, 913:

"The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749."

38)	We do not find it necessary to decide whether an argument advanced on that basis would succeed. The foundation for that argument has not been established. It is, in our view, impossible to attribute to someone in the position of the hirer at the time that the agreements were made the background knowledge which we have described. 

39)	We were referred to the decision cited by Lord Hoffmann in support of the fourth of his principles of interpretation -  Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. The question in that appeal was whether a tenant’s notice to determine a lease which was expressed to take effect on 12 January 1995 was validly served under a provision which entitled the tenant to determine the lease by not less than six months’ notice “to expire on the third anniversary of the term commencement date” in circumstances in which the term had commenced on 13 January 1992. The landlord claimed, correctly, that the date specified in the notice (12 January 1995) was one day before the third anniversary of the term commencement date (13 January 1995). As Lord Goff of Chievely observed, at page 753D, the tenant had made an obvious mistake – in reading the clause in the lease as if it had provided for the notice to be served to expire “at the end of the third year of the term” rather than “on the third anniversary of the term commencement date” – so that it was tempting to assist the tenant “when it must have been obvious to the landlord that the tenant was attempting to give an effective notice under the clause”. Lord Goff and Lord Jauncey took the view that the temptation to assist the tenant had to be resisted. Although, looked at in the context of the provision in the lease, it was plain that the tenant had made a mistake, the mistake was not obvious from notice itself. The notice could not be construed so as to contradict the words actually used. The majority (Lord Steyn, Lord Hoffmann and Lord Clyde) took a different view. Lord Steyn identified  the issue, at page 767G-H, as how a reasonable recipient would have understood the notice, construing the notice in the relevant objective context. He concluded, at pages 768H-769A:

"Crediting a reasonable recipient with knowledge of the terms of the lease and third anniversary date (13 January), I venture to suggest that it is obvious that a reasonable recipient would have appreciated that the tenant wished to determine the leases on the third anniversary date of the leases but wrongly described it as the 12th instead of the 13th. The reasonable recipient would not have been perplexed in any way by the minor error in the notices. The notices would have achieved their intended purpose."

40)	The intended purpose, in that context, was to inform the landlord that the tenant had decided to determine the lease in accordance with the right reserved – see Lord Steyn’s observation at page 768E. Lord Hoffmann, in a passage at page 779G-H which foreshadows what he was to say in the Investors Compensation Scheme case, pointed out that commercial contracts were to be construed in the light of all the background which could reasonably have been expected to be available to the parties; so that:

"The fact that the words are capable of a literal application is no obstacle to evidence which demonstrates what a reasonable person with knowledge of the background would have understood the parties to mean, even if this compels one to say that they have used the wrong words. In this area we no longer confuse the meaning of words with the question of what meaning the use of the words was intended to convey."

41)	He could find no answer to the question why the rule for the construction of notices should be different from those for the construction of commercial contracts. Lord Clyde took a similar view to that of Lord Steyn – see at page 783A:

"No reasonable landlord would in my view be misled by the statement of the date which in the context of a clear intention to invoke clause 7(13) [of the lease] was inaccurate. The landlord would in my view recognise that in each case the reference to 12 January was to be read as a reference to 13 January and I would so construe the notice[s]."

42)	In our view the decision of the majority in the House of Lords in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 provides no support for the respondent’s contentions in the present appeal. It must be kept in mind, first, that in the Mannai case there was no doubt that the landlord knew – or that any reasonable landlord must be taken to have known – what were the terms of the relevant clause in the lease; so that it was obvious not only that a mistake had been made by the tenant, but also what that mistake was. Secondly, the notice took effect unilaterally. The landlord’s intention was irrelevant. The only relevant question was what a reasonable person in the position of the landlord would have understood from the notice to be the intention of the tenant. There was no need to find an expressed consensus between landlord and tenant. By contrast, in the present case, (i) it has not been established that the hirer knew – or should be taken to know – the significance or the terms of paragraph 3(1)(a)(i) of the 1989 Order or what the hire company was seeking to achieve by the time restriction in condition 10.1 of the agreements; and (ii) it has not been established that, if the hirer did know or suspect what the hire company was seeking to achieve by that time restriction, the hirer shared the hire company’s intention. The intention of both parties is relevant to the interpretation of a contractual term. There is a need – which is not present when construing a notice which takes effect unilaterally - to find an expressed consensus between the parties to the contract. 

43)	We have sought to explain why we have not been persuaded that it could be appropriate to attribute to the hirer – or to a reasonable person in the position of the hirer - knowledge that the purpose of the hire company in relation to the time restriction in condition 10.1 was to obtain exemption under the 1989 Order. It is unnecessary to decide whether, if that knowledge were to be treated as “reasonably available” to a reasonable person in the position of the hirer, the hirer ought also to be treated as having agreed that condition 10.1 should have the effect which the hire company intended. But it is, we think, important to keep in mind that, as a general rule, a document will not be given the meaning for which one party, say “A”, contends merely because the other party knew or suspected, at the time, that that was what A was hoping to achieve. There must be some other reason to construe the document in that way. In the present case, it is by no means clear that, even if the hirer knew what the hire company was hoping to achieve by the time restriction in condition 10.1, he must be treated as having contracted on the basis that condition 10.1 did not have the meaning which the words used would naturally convey. In particular, there is no reason to attribute to the hirer an intention that the agreement should be exempt from the protection which the consumer credit legislation was enacted to provide for his benefit. 

44)	It follows that we would allow this appeal in relation to the hire charges incurred under the first three agreements.

Order:  Appeal allowed with costs.  Application for permission to appeal to the House of Lords refused.  Order does not form part of approved judgment.