Bee v Jenson

Loss of use of a negligently damaged vehicle is compensable. Where the claimant reasonably needs and obtains a replacement vehicle, damages may ordinarily be assessed by reference to the reasonable cost of hiring a comparable vehicle.

The claimant need not personally have paid, or become liable to pay, the hire charge. Payment by the claimant’s insurer does not reduce the tortfeasor’s liability. The claimant may recover general damages measured by the reasonable spot hire charge, subject to proof of need and reasonableness.

The claimant’s stationary car was damaged through the defendant’s admitted negligence and remained unavailable while being repaired. Under the claimant’s motor insurance arrangements, DAS arranged and paid for a replacement vehicle supplied by Helphire. The daily hire rate was found to be reasonable.

Helphire had separately made a commercially sensitive payment to an affiliate of DAS under a wider business arrangement. The defendant contended that this payment should be credited against the recoverable hire charges. Morison J rejected that contention in [2006] EWHC 3359 (Comm).

The central issue on appeal was whether the claimant could recover the reasonable hire charge despite not personally paying it, or whether recovery was limited by reference to the insurer’s alleged net cost.

1. Appeal dismissed. Longmore LJ, with whom Sir Paul Kennedy and Tuckey LJ agreed, held that the claimant could recover the reasonable cost of hiring the replacement vehicle. The separate payment made by the hire company to an affiliate of the insurer was not deductible.

2. A claimant deprived of a vehicle by a tortfeasor’s negligence suffers a compensable loss of use. Where the claimant reasonably needs and obtains a replacement vehicle, the reasonable cost of hire is an appropriate measure of that loss. The loss may be characterised as general damages assessed by reference to a reasonable spot hire charge or, where applicable, as special damages based on expenditure.

3. Personal liability for the hire charges was not a prerequisite to recovery. It was therefore unnecessary to decide whether the claimant was contractually liable to Helphire. The authorities addressing an insured person’s liability to suppliers depended on their facts and were not readily reconcilable.

4. The approach in The Mediana [1900] AC 113 supported assessing general damages by reference to the cost of obtaining an equivalent replacement. The analysis in Lagden v O’Connor [2003] UKHL 64 likewise showed that loss of use could be valued by a comparable vehicle’s spot hire charge even where the claimant had not personally incurred that charge.

5. The claimant still had to prove actual loss, need and reasonableness. A person who did not obtain or require a replacement vehicle might have damages assessed on another basis. Here, however, the need for a replacement and the reasonableness of the vehicle and hire rate were accepted or established.

6. The claimant’s insurance arrangements could not reduce the tortfeasor’s liability. The claimant had paid a premium for cover against precisely this loss. Although the recovery was held for the insurer’s benefit following indemnification, the recoverable sum remained the reasonable hire cost rather than an alleged net cost derived from the insurer’s separate commercial arrangements.

1. Court of Appeal (Civil Division): The defendant’s appeal was dismissed unanimously. The court upheld the conclusion that the payment to the insurer’s affiliate did not reduce the reasonable replacement-vehicle hire charge recoverable by the claimant: [2007] EWCA Civ 923.

2. Queen’s Bench Division: Morison J held that the claimant and his insurer were not required to credit the payment made by Helphire to the insurer’s affiliate against the hire-charge claim: [2006] EWHC 3359 (Comm).