Beechwood Birmingham Ltd v Hoyer Group UK Ltd

JurisdictionEngland & Wales
JudgeSir Mark Potter,Lord Justice Dyson,Lord Justice Maurice Kay
Judgment Date10 June 2010
Neutral Citation[2010] EWCA Civ 647
Docket NumberCase No: B2/2009/1542/CCRTF
CourtCourt of Appeal (Civil Division)
Date10 June 2010

[2010] EWCA Civ 647

IN THE HIGH COURT OF JUSTICE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM Telford County Court

His Honour Judge Mitchell

Before: Sir Mark Potter, the President of the Family Division

Lord Justice Dyson

and

Lord Justice Maurice Kay

Case No: B2/2009/1542/CCRTF

7RAO3506

Between
Beechwood Birmingham Ltd
Appellant
and
Hoyer Group UK Ltd
Respondent

Mark Turner QC and Stuart Nicol (instructed by Berrymans Lace Mawer) for the Appellant

William Edis QC, Ken Delaney and Miss Summer (instructed by Anthony Hodari & Co) for the Respondent

Hearing date: 11 February 2010

Sir Mark Potter

Sir Mark Potter:

Introduction

1

The appellant in this case, who was the defendant below, appeals from a judgment of His Honour Judge Mitchell in the Telford County Court on 6 April 2009 awarding damages to the claimant/respondent arising out of a road accident between two vehicles driven by their respective employees. The issue in the appeal relates to the proper calculation of damages for the loss of use of the claimant's vehicle while under repair following the accident. More specifically, the issue is whether, in the particular circumstances of this case, the Trial Judge was correct to award to the claimant damages based upon the spot rate for a substitute vehicle hired from a credit hire company, or whether, having held that it was not reasonable for the claimant to hire in a substitute vehicle what (if any) award was appropriate by way of damages for loss of use.

Brief facts

2

The claimant is a substantial company of motor dealers trading from four locations as appointed dealers in new and second hand Audi motor cars. At any given time, it holds a large stock of cars for sale. One of its vehicles, an Audi A6 2.7 tdi Quattro, suffered an accident when being driven by one of the claimant's employees as he went to collect a customer's vehicle. The damaged vehicle was in fact one currently allocated out of the claimant's stock to its then service manager, he being employed under a contract of employment which entitled him to use one of the claimant's cars for his own personal use outside office hours. The damage was such that the vehicle could not be driven until after repair.

3

On the day following the accident the service manager, rather than simply reallocating to himself a similar car from the claimant's stock, hired an equivalent substitute vehicle under a form of credit hire agreement. As the Judge held, this was an unusual step in that hitherto, in similar circumstances, when one of the claimant's cars suffered an accident necessitating a period off the road for repair, it was the claimant's practice not to hire in, but to source a replacement for the temporary loss of use whilst repairs were carried out from it's own available pool of some 64 cars, which was large enough to avoid the necessity to hire in from outside in order to meet its business needs. The pool included a number of courtesy cars available without charge to customers whose vehicles were under repair, as well as used cars passing through the dealership and available for sale or use by the claimant. There were other similar A6 models able to be made available to the service manager for his use out of office hours without any loss of profit or additional expenditure on the part of the claimant. The replacement car in this case was hired, not to fulfil the needs of the claimant's business, but because the service manager wished personally to test the efficacy of a form of credit hire agreement between the claimant and Accident Exchange Limited under which the claimant undertook to refer to Accident Exchange Limited customers who might require a replacement vehicle in the event of an accident.

4

The damaged vehicle was duly placed in the hands of the claimant's body repairers and, owing to delays caused by the insurers of the defendant's vehicle and complications in the course of repair, the total period of hire paid to Accident Exchange Ltd, and in turn claimed from the defendant, was 120 days.

5

At paragraph 5 of the claimant's re-amended particulars of claim, the claim for damages was framed as follows:

“By reason of the aforesaid the Claimant has suffered loss, damage, expense and inconvenience.

PARTICULARS OF SPECIAL DAMAGE

Thus the claim was for special damage, based on the actual costs of hire under the credit hire agreement and no separate or alternative claim for general damages for loss of use was pleaded.

(1) Vehicle Repairs

£ 3,071.40

(2) Vehicle Hire Charges

£30,239.00

The Claimant hired an Audi A6 3.0 Quattro from Accident Exchange Ltd from 9 February 2006 until 8 June 2006 (120 days) at a rate of £250.95 per day Plus a credit repair fee of £50.00 plus a delivery and Collection fee of £75.00.

(3) Miscellaneous Expenses associated with the claim.

£ 35.00

TOTAL CLAIMED:

£33,345.40”

6

By paragraph 6 and 7 of the amended defence, the defendant denied the claimant's paragraph 5 and inter alia alleged failure by the claimant to mitigate its loss by hiring a vehicle on credit when it was unnecessary to do so and/or for failing to make use of alternative vehicles which it had available. By its reply, the claimant asserted that it was “entitled to claim for loss of use of the vehicle referable to the reasonable cost of alternative like for like transport.”

7

In the event, the Judge made an award on that basis. He found a period of only 48 days to be justified as the time taken for repairs and awarded general damages for loss of use of the claimant's vehicle of £12,000 at a rate of £250 per day. That was the rate payable under the credit-hire agreement. In the ordinary way the credit hire rate, which allows deferment of the hire charges until eventual recovery from the tortfeasor's insurer, is substantially higher than the spot hire rate and is not recoverable (see Dimond v Lovell [2002] 1 AC 384 at 402H-403B) unless the claimant is impecunious (see Lagden v O'Connor [2004] 1 AC 1067 per Lord Nicholls at paras 4 – 7); only the spot hire rate, based on the hirer's immediate liability to pay is awarded. However, it is clear from the judgment below, that it was conceded by the defendant that, if (and only if) the claimant could establish a claim based on a need for outside hire, then the rate paid under the credit hire agreement should also be taken as the spot hire rate for the purposes of quantifying the claim.

The judgment below

8

The form of the judgment on the issues still relevant to this appeal can be summarised as follows. The Judge first dealt with the state of the evidence in relation to the size of the available pool of the claimant's own cars and the reasons why, for the first and only time, the claimant decided to hire a replacement car under the customer credit hire agreement with Accident Exchange Limited. In relation to the issue of mitigation he referred to a passage in the speech of Lord Hope in Lagden v O'Connor [2003] UKHLC 64, [2004] 1 AC 1067 at para. 27 dealing with the duty of a claimant to mitigate, which paragraph reads in full as follows (the words in italics being those quoted by the Judge):

“Mr Lagden's claim was, in essence, a claim for the loss of use of his car while it was in the garage undergoing the repairs which needed to be done as a result of the accident. There was no evidence that he would have suffered financial loss as a result of being unable to use his car during this period. But inconvenience is another form of loss for which, in principle, damages are recoverable. So it was open to him, as it is to any other motorist, to avoid or mitigate that loss by hiring another vehicle while his own car was unavailable to him. The expense of doing so will then become the measure of the loss which he has sustained under this head of his claim. It will be substituted for his claim for loss of use by way of general damages. But the principle is that he must take all reasonable steps to mitigate his loss. The injured party cannot claim reimbursement for expenditure by way of mitigation which is unreasonable. So the motorist cannot claim for the cost of hiring another vehicle if he had no reason to use a car while his own car was being repaired – if, for example, he was in hospital during the relevant period or out of the country on a package holiday. If it is reasonable for him to hire a substitute, he must minimise his loss by spending no more on the hire than he needs to do in order to obtain a substitute vehicle. If the defendant can show that the cost incurred was more than was reasonable – if, for example, a larger or more powerful car was hired or although vehicles equivalent to the damaged car were reasonably available at less cost – the amount expended on the hire care must be reduced to the amount that would have been needed to hire the equivalent. ”

9

The Judge then quoted paragraph 34 of Lord Hope's judgment:

“It has to be shown that the claimant had a choice, and that he would have been able to mitigate his loss at less cost. The wrong doer is not entitled to demand of the injured party that he incur a loss, bear a burden or make unreasonable sacrifices in the mitigation of his damages. He is entitled to demand that, where there are choices to be made, the least expensive route which will achieve mitigation must be selected. So if the evidence shows that the claimant had a choice, and that the route to mitigation which he chose is more costly than an alternative that was open to him, then a case will have been made out for a deduction ….”

10

Moving to consider the position in the case before him,...

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    ...century and cannot be in doubt,at least in the case where the claimant has incurred the cost of hiring a substitute: see Beechwood Birmingham Ltd v Hoyer Group Ltd [2011] QB 364 at [35]-[47] per Sir Mark Potter P, with whom Dyson and Maurice Kay LJJ agreed. 20Ibid at 406G in the speech of L......
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    ...not be calculated on the basis of the cost of hiring a replacement,but on the basis of the capital and interest involved: Beechwood Birmingham Ltd v Hoyer Group UK Ltd [2011] QB 46 Compare Lord Halsbury's example in The Medianaat page 117. 47Bee v Jenson (No 2) [2008] Lloyd's IR 221at [22]–......
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1 books & journal articles
  • CONTRACT DAMAGES AND THE PROMISEE'S ROLE IN ITS OWN LOSS.
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    • Melbourne University Law Review Vol. 42 No. 2, January 2019
    • 1 January 2019
    ...Constructions Pty Ltd [2011] NSWCA 188, [93]-[94] (Handley AJA) ('CJD Equipment'). See also Beechwood Birmingham Ltd v Hoyer Group UK Ltd [2011] QB 357, 374 [51]-[52] (Potter P, Dyson LJ agreeing at 375 [57], Kay LJ agreeing at 375 [58]); Herrmann v Withers LLP [2012] PNLR28, 598 [90]-[91] ......

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