Mark Smith V. Sabre Insurance
| Jurisdiction | Scotland |
| Judge | Lady Paton,Lord Brodie,Lord Philip |
| Neutral Citation | [2013] CSIH 28 |
| Docket Number | A773/10 |
| Date | 09 April 2013 |
| Court | Court of Session |
| Published date | 09 April 2013 |
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lady Paton Lord Brodie Lord Philip | [2013] CSIH 28 A773/10 OPINION OF THE COURT delivered by LORD BRODIE in the Reclaiming Motion by MARK SMITH Pursuer and Reclaimer; against SABRE INSURANCE Defenders and Respondents: _______________ |
Alt: Moore QC (sol adv), McNaughtan; HBM Sayers
9 April 2013
Introduction
[1] This is a reclaiming motion against an interlocutor of the Lord Ordinary dated 24 January 2012 sustaining the first plea-in-law for the defenders and respondents which was to the effect that the subject matter of the action is res judicata, and consequently assoilzing the respondents from the conclusions of the summons.
Facts as averred
[2] The pursuer and reclaimer is Mark Smith. On 24 March 2009 the reclaimer was driving his BMW 530D motor vehicle, registration number PL02 YXJ on the A811 road near Drymen when a Fiat Punto motor vehicle drive by Robert Holmes turned into the reclaimer's path and collided with the reclaimer's vehicle. It is accepted that the collision was caused by the sole fault of Mr Holmes. At the material time Mr Holmes was insured in respect of motor risks by the respondents. Accordingly in terms of regulation 3 of the European Communities (Rights against Insurers) Regulations 2002, the reclaimer was entitled to sue the respondents, and the respondents were liable to make reparation to the reclaimer, to the same extent as they were liable to indemnify Mr Holmes in respect of the reclaimer's right to reparation against him.
[3] As a result of the collision the reclaimer's BMW motor vehicle sustained extensive damage with the result that the reclaimer was denied its use. In this action the reclaimer sues for certain losses consequential on the damage to his vehicle. These are set out in statement 4 of condescendence as follows:
"As a result of the collision the Pursuer suffered loss and damage. His vehicle sustained extensive damage. His vehicle was written off and he was accordingly denied the use and amenity of the vehicle until he was in funds in respect of the pre accident value of his vehicle. The Pursuer entered into a Credit Hire Agreement with Accident Exchange Limited, Alpha 1, Canton Lane, Hams Hall, Coleshill, West Midlands, B46 1GA. During the period of repair they provided the Pursuer with a replacement vehicle. The Pursuer was able to achieve an excess of nil in his agreement with Accident Exchange by adding waivers and additional charges to the basic hire rate offered by Accident Exchange. He is further contractually obliged to meet Accident Exchange's hire costs for the replacement vehicle, including credit hire rates, waivers charges and interest on all sums until payment. But for the accident and the negligence of the defender, the Pursuer would not have incurred any of these costs or losses. In all of the circumstances the sum sued for is a reasonable estimate of the Pursuer's loss and damage.
For the avoidance of doubt the Pursuer seeks compensation for the following specific losses, charges and expenses:
1. Hire Charges - £26,550.98
2. CDW - £1,337.50
3. Satellite Navigation Charge - £802.50
4. Delivery and collection - £100
5. VAT - £4,318.65
6. Inconvenience - £100"
It is convenient to refer to these items of damage as a "loss of use claim".
[4] The present action was signetted on 10 December 2010. The basis of the respondents' plea of res judicata appears from their averments at answer 1. These are as follows:
"Explained and averred that the pursuer has already raised proceedings in Stirling Sheriff Court (Case number PD57/09) against the defenders for loss, injury and damage arising out of the road traffic accident on 24 March 2009 on A811 Drymen, with which the present action is concerned. The pursuer obtained decree against the defenders on 4 May 2010 for the sum of £4,550, together with expenses on the summary cause scale."
In responding to these averments the reclaimer explains that what he refers to as the "Stirling action":
"...related to payment of compensation claimed by Mark Smith for solatium, loss of earnings and in terms of section 8 of the Administration of Justice (Scotland) Act 1982 arising from personal injury suffered by him in a road traffic accident on 24 March 2008 on A811 at Drymen."
[5] The reclaimer incorporates into his pleadings certain correspondence to which either Accident Exchange Limited ("AEL") or solicitors acting on his behalf (Messrs Thompsons) were party. By letter dated 10 April 2009 Messrs Thompsons requested the respondents to note their position as solicitors instructed on behalf of the reclaimer who had suffered damage as a result of a road traffic accident on 24 March 2009. The respondents replied by letter dated 14 April 2009 advising that they had already received notification of an interest on behalf of the reclaimer from Gorman Hamilton, solicitors, and then by letter dated 28 April 2009 that Messrs Bonnar & Co, solicitors, had intimated their interest on his behalf. Thompsons responded by email of 29 April 2009 advising that:
"Bonnar & Co are representing Mark Smith in relation to his personal injury claim only. We are instructed in relation to the loss and damage which Mr Smith has sustained. As previously advised, we are carrying out quantum investigations and shall provide you with a full breakdown in due course."
AEL intimated the claim which is the subject of the present action directly to the respondents by letter dated 15 July 2009. Thompsons wrote again to the respondents on 14 September 2009 restating the heads of claim which had appeared in AEL's letter of 15 July 2009 and adding the further head of "inconvenience" in the sum of £100. Thompsons invited settlement proposals. The respondents replied by letter dated 18 September 2009 requesting to be advised if the reclaimer was impecunious and enquiring why he needed to utilise a credit hire vehicle at a daily rate of £248.14. It would appear that the correspondence came to an end there, at least as far as the pleadings reveal.
Commercial background
[6] The reclaimer avers that he seeks payment of the cost of hiring a replacement car and compensation for inconvenience caused to him as a result of the loss of use of his own vehicle because of the damage done to it in the accident. He distinguishes this loss of use claim from the claim for the losses suffered by him directly as a result of personal injuries, which had been pursued in the Stirling action.
[7] Although not critical to the legal issues raised in this reclaiming motion, it is convenient to say something about the commercial realities which provide a background to the present case. They were touched on by Mr Hofford QC in the course of his submissions on behalf of the reclaimer.
[8] What appears to be the factual position in the present case is commonplace. In Dimond v Lovell [2002] 1 AC 384 at 403 Lord Hobhouse described it thus:
"The factual situation is typically a collision between two privately owned motor vehicles. Only one driver is at fault. The other's car is damaged and needs to be repaired. It will have to be off the road for a matter of days or weeks while it is repaired."
Lord Hobhouse continued:
"The driver not at fault would like to hire a substitute car so that he is not without one. But he does not want to have to bear the cost. His own insurance does not cover this expenditure. He appreciates that he should be able to recover from the driver at fault the cost of hiring the substitute but is reluctant to get involved in the hassle and expense of going to court to recover the money. He therefore engages the services of an accident hire company. There are quite a number of such companies. They are in a profitable line of business...they provide a substitute car to a party not at fault and see to the recovery of the cost from the other party. The result is designed to be that the customer does not have to go without a car, does not have to find any money and is saved the hassle of himself pursuing the guilty party. It is a good arrangement and understandably popular."
[9] While popular, accident hire agreements entered into between innocent drivers and accident hire companies can give rise to difficulties. They are likely to be construed as regulated agreements in terms of the Consumer Credit Act 1974 and therefore will require to conform to the regime established by that Act: see Dimond v Lovell supra. The arrangements constituted by accident hire agreements are, as Lord Hobhouse also observed, expensive. In part this is because, as here, the accident hire company will provide (and charge for accordingly) a new or nearly new vehicle with a specification equivalent to what might be a quite elderly damaged vehicle. In part it is because, not considering himself to have the responsibility to pay the charges, the innocent driver has no incentive to exercise economy as to the "hire" rate or the period of use of the replacement vehicle: cf Lagden v O'Connor [2004] 1 AC 1067 at para 38. It is also because the accident hire company is providing a variety of services (including credit) additional to the simple provision of a substitute vehicle. Whether the innocent driver (at least where he is "impecunious") can recover the cost of these services as part of a loss of use claim or whether he is limited to the spot car-hire rate was what divided the House of Lords in Lagden v O'Connor supra. Then there are the difficulties which may arise when the accident hire company finds it necessary to litigate a loss of use claim. We say the accident hire company finds it necessary because, while any such litigation must proceed in the name of the innocent driver it is usual, if not inevitable, for there to be a provision in the accident hire agreement which gives the accident hire company the right to pursue the claim, employing solicitors of its choice and at its expense (see eg Giles v ...
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