Copley v Lawn & Ors

A claimant does not act unreasonably by rejecting or ignoring an offer of a replacement vehicle which fails to disclose the defendant’s cost of providing it. That information is needed for a realistic comparison with the claimant’s proposed hire cost.

If the defendant shows that an equivalent vehicle could reasonably have been provided more cheaply than the market hire rate, unreasonable refusal may limit recovery to that lower cost. It does not extinguish the claim because the claimant has still suffered loss of use. Ordinarily, the recoverable measure remains the reasonable spot or market hire rate.

Two claimants required replacement vehicles after road accidents caused by the defendants’ negligence. Each obtained a vehicle through a credit-hire company. The defendants’ insurer had offered a replacement vehicle at no cost to the claimant, but had not disclosed what providing it would cost the insurer.

At first instance, one claimant recovered only seven days’ hire and the other claimant’s hire claim was dismissed. HHJ Langan QC dismissed both appeals, holding that refusal of the insurer’s offer constituted a failure to mitigate and made the hire costs irrecoverable.

The joined appeals concerned whether the offers had been unreasonably rejected and, if so, whether the claimants forfeited all damages for loss of use.

Appeals allowed unanimously. Longmore LJ gave the leading judgment. Jacob and Waller LJJ agreed.

1. The ordinary measure of a loss-of-use claim is the reasonable spot or market rate for hiring an equivalent vehicle, following Dimond v Lovell [2002] 1 AC 384. Courts should approach additional and complicated mitigation arguments with caution because that market-rate restriction already protects defendants against excessive credit-hire charges.

2. Reasonableness must be assessed objectively between claimant and defendant. In the usual case, it is appropriate to consider the combined position of the claimant and the claimant’s solicitors, broker or insurer. An insurer’s offer must therefore contain the information reasonably required by the claimant and those advisers to respond.

3. An offer described as providing a vehicle free to the claimant did not permit an informed comparison where it omitted the defendant insurer’s own hire cost. The claimants could not be criticised for failing to accept or investigate such offers. A claimant does not act unreasonably by continuing existing arrangements unless made aware that the defendant can provide an equivalent vehicle more cheaply. If the defendant clearly identifies a lower cost, acceptance may be required, other things being equal.

4. Failure to mitigate would not eliminate damages altogether. The claimant still suffers loss of use when the damaged vehicle requires repair. Following Strutt v Whitnell [1975] 1 WLR 870, unreasonable refusal of a reasonable offer in cash, kind or services does not extinguish that loss. Recovery is limited, at most, to the reasonable cost which the defendant proves would have been incurred in supplying the replacement.

5. The Solholt [1983] 1 Lloyds Rep. 605 concerned lost profit on a vessel whose value had risen and was materially different from a consequential loss-of-use claim. No relevant distinction existed between offers of money and offers of restitution, or between accrued and prospective loss. Loss of use accrued at the accident even though its amount was not then quantifiable.

6. Mitigation involves evaluation and judgment rather than primary fact alone. The Court of Appeal could therefore intervene where the lower courts’ evaluations were wrong. As the defendants had not proved that they could hire equivalent cars more cheaply, and the claimants’ rates were not shown to exceed market rates, judgment was entered for the sums claimed.

1. Court of Appeal (Civil Division): The joined appeals were allowed unanimously. The findings of unreasonable failure to mitigate were reversed, and judgment was entered for the sums claimed.
2. Leeds County Court, HHJ Langan QC: Appeals from the district judges were dismissed. The judge held that refusing the insurer’s offer of a replacement vehicle was a failure to mitigate and that the hire costs were irrecoverable.
3. First-instance decisions: Deputy District Judge Reed limited Mrs Copley’s recovery to seven days’ hire. District Judge Flanagan dismissed Captain Maden’s hire claim.