Ms Lorna Armstead v Royal Sun Alliance Insurance Company Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Singh,Lord Justice Dingemans,Lord Justice Bean |
| Judgment Date | 28 April 2022 |
| Neutral Citation | [2022] EWCA Civ 497 |
| Docket Number | Case No: CA-2021-000577 (formerly B2/2021/0797) |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 497
Lord Justice Bean
Lord Justice Singh
and
Lord Justice Dingemans
Case No: CA-2021-000577 (formerly B2/2021/0797)
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
THE COUNTY COURT AT WALSALL
Recorder John Benson QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Benjamin Williams QC and Ben Smiley (instructed by Principia Law) for the Appellant
Quentin Tannock (instructed by DAC Beachcroft Claims Ltd) for the Respondent
Hearing date: 31 March 2022
Approved Judgment
This judgment was handed down remotely by circulation to the parties' representatives by email and released to The National Archives. The date and time for hand-down is deemed to be 9.45 hrs on 28 April 2022.
Introduction
This appeal raises the issue of whether the hirer of a motor car (Ms Lorna Armstead) can rely on terms which she agreed with the hire company (Helphire Limited) who rented the motor car to her, to establish the quantum of her claim for damages against the insurers (Royal Sun Alliance Insurance Company Limited) of a negligent driver of another motor car, who had driven into Ms Armstead's hire car.
The first road traffic accident and the replacement Mini Cooper hire car
As a matter of background the appellant, Ms Armstead, had a road traffic accident for which she was not at fault in which her own motor car was damaged. Liability for the accident was admitted by that other person who had collided with Ms Armstead's car. That first road traffic accident explains why Ms Armstead was driving a hire car at the time of the second and material road traffic accident.
Ms Armstead was provided with a Mini Cooper motor by Helphire Limited (“Helphire”) pursuant to a vehicle credit hire agreement dated 9 November 2015 (“the Helphire agreement”), while her original car was being repaired. The daily rental charges under the Helphire Agreement for a 1–6 day period was £168.30; for a 7–27 day period was £145.30; and for a period over 28 days was £130.
The following were material terms of the Helphire agreement. There was a CDW (collision damage waiver) charge of £60. There was a declaration that the hirer “acknowledges its obligations to return the hire vehicle in its pre-hire condition and its obligations to pay in default in accordance with the provisions of clauses 11, 12, 13, 14, 15, 16, 17, 19 and 20”. The period of hire could be terminated on 24 hours notice pursuant to clause 3. In addition:
(1) Clause 14 provided that “You must return the hire vehicle in the same condition as it was … at the start of the hire and (even if there is a policy of insurance covering such loss) shall … indemnify and pay the lessor immediately on demand for any loss of, and/or damage to, the hire vehicle.”
(2) Clause 16 provided that: “You will on demand pay to the lessor an amount equal to the daily rental rate specified overleaf up to a maximum of 30 days in respect of damages for loss of use for each calendar day … whether the hire vehicle is unavailable to the lessor for hire because … the hire vehicle has been damaged.”
The evidence showed that terms such as clause 16 of the Helphire agreement were common in other motor car rental agreements, and Avis, Thrifty and Europcar had broadly similar terms.
The second road traffic accident and the damage to the Mini Cooper hire car
On 23 November 2015 Ms Armstead had another road traffic accident involving a collision between the Mini Cooper car and a Ford Transit Connect motor vehicle driven by Pawel Galewski. Mr Galewski drove the Ford Transit motor vehicle from a parking space into the road and collided with the nearside of the Mini Cooper motor car.
Mr Galewski was insured by the respondent Royal & Sun Alliance Insurance Company plc (“RSA”). Ms Armstead was not at fault, and it was common ground that the accident was caused by the negligent driving of Mr Galewski.
It became common ground on appeal, although there had been no findings of fact to this effect in the courts below, that the damage to the nearside of the Mini Cooper motor car did not prevent Ms Armstead from continuing to use the Mini Cooper motor car during her period of hire. She returned the Mini Cooper motor car to Helphire after her original car was returned to her and her period of hire concluded.
When it was returned to Helphire, arrangements were made for the Mini Cooper motor car to be taken for repairs. The Mini Cooper car was repaired from 8 January 2016 to 21 January 2016, being 12 days. The repairs cost £1990.65.
On 14 May 2018 (over two years after the repairs had been carried out) Ms Armstead received a formal demand, sent on behalf of Helphire, for payment for the hire costs for the 12 days that the Mini Cooper was being repaired. The demand was for £1743.60, being 12 days at £145.30. It is not apparent why the rate was claimed at £145.30 per day, which was the daily rate for hires of between 7–27 days, and not the daily rate of £130, which was the daily rate for hires over 28 days. As the car had been hired to Ms Armstead from 9 November 2015 until 8 January 2016, which was over 28 days by the time at which it was returned, and it had then been immediately repaired, it might be thought that the daily rate should have been at the rate of £130 per day. When this point was put to Mr Williams QC at the hearing of the appeal, he said he was content to claim £130 per day and not £145.30 per day. This would give a claim of £1560.
RSA did not pay for either the cost of the repairs or the hire costs and disputed any liability to do so.
The proceedings
Ms Armstead brought proceedings against RSA pursuant to the provisions of the European Communities (Rights Against Insurers) Regulations 2002 (“the 2002 Regulations”) for losses caused by Mr Galewski's negligent driving. Under “vehicle damage” it was pleaded that “following the index accident, her vehicle of which she was bailee, suffered damage and a consequent immediate diminution in value”. The cost of repairs to the Mini Cooper were pleaded at £1990.65. Under the heading “losses consequent on negligent vehicle damage” it was pleaded that pursuant to clause 16 Ms Armstead was obliged to pay the lessor, Helphire, a sum equal to the daily rental rate set out in the agreement. It was pleaded that the repair “took 12 days to carry out, during which time the hire vehicle was unavailable to the lessor”, and hire costs for the 12 days that the Mini Cooper was being repaired were £1743.60.
In the defence RSA denied that Ms Armstead could bring the claim against RSA pursuant to the 2002 Regulations, and it was pleaded that RSA was refusing an indemnity to Mr Galewski. RSA noted that the invoice for the cost of repairs was made to Total Accident Management and therefore denied that Ms Armstead had suffered any loss and denied that Ms Armstead could bring a claim for subrogated losses.
RSA noted the claim for the hire charges when the Mini Cooper motor car was being repaired and pleaded that clause 16 was an unfair term under sections 62 and 63 of the Consumer Rights Act 2015, was unenforceable as a penalty and that Ms Armstead should mitigate her loss by refusing to pay the sums.
RSA accepted that it would be under a duty to pay Ms Armstead a sum that Helphire reasonably demanded as compensation under clause 14 of the Helphire agreement, which provided that Ms Armstead should return the car in its pre-hire condition.
The judgment of the District Judge
Ms Armstead's claim was heard on 1 July 2019 before Deputy District Judge Fawcett (“the District Judge”) in the County Court at Walsall. Counsel appeared on behalf of both Ms Armstead and RSA. Ms Armstead gave evidence and was cross examined.
The District Judge gave an extempore judgment. The judgment was recorded, although it appears that there was some immaterial corruption of the recording. A transcript of the judgment has been produced.
The District Judge introduced the claim and summarised the evidence given by Ms Armstead which was to the effect that she knew she would be liable for the hire costs, but also knew that they would be paid by the other side. She had been the driver and went along with what her insurers had decided to do. The District Judge recorded that the principal objection to the amount claimed was that it was an economic loss for which RSA ought not to be held liable because it was “an unforeseeable or too remote loss”.
The District Judge referred to the “no recovery rule” set out in Clerk & Lindsell on Torts and authorities to the effect that there was a requirement for property of the claimant to be damaged. The District Judge considered that the current case was similar to claims for pure economic loss “as the claimant did not have any proprietary interest in the property. She does not hold title to the goods and simply held the vehicle as the hirer …”. The no recovery rule was justified by both proximity and fairness. The District Judge specifically noted that Helphire had not brought the claim in their own name. The District Judge therefore dismissed the claims made by Ms Armstead.
The appeal to the Recorder
Ms Armstead appealed against the dismissal of her claim and a respondent's notice was lodged. By the time of the appeal it was common ground that the District Judge was wrong to disallow the claim for the cost of the repairs in the sum of £1990.65. The issue remained whether the claim for loss of use arising under the Helphire agreement could be pursued.
The appeal was heard on 21 and 22 January 2021 before Mr Recorder John Benson QC (“the Recorder”) and counsel appeared on behalf of both Ms Armstead and RSA. Judgment was reserved. On 13 April 2021 the Recorder delivered a...
To continue reading
Request your trial