Sayce v TNT (UK) Ltd

A judge should not decide an appeal on a materially different legal basis from that argued without giving the parties notice and an opportunity to make submissions. That is a serious procedural irregularity. A lower court must apply the ratio of a higher court’s decision even if it considers the decision inconsistent with earlier authority. Where a higher court has stated an obiter principle to clarify a vexed area of law, a lower court should ordinarily follow it and leave reconsideration to the higher court. The relevant ratio of Copley v Lawn [2009] EWCA Civ 580 was that rejecting a defendant’s replacement-vehicle offer is not unreasonable unless the claimant knows that rejection will increase the defendant’s ultimate burden.

The appellant’s car was damaged in a road accident caused by the respondent’s employee. The personal injury and repair claims were settled, leaving a claim for credit-hire charges. The respondent had offered a replacement vehicle free of charge.

The District Judge held that rejecting the offer was unreasonable and extinguished the claim for loss of use. His Honour Judge Charles Harris Q.C. dismissed the appeal, declining to follow Copley v Lawn [2009] EWCA Civ 580. The Court of Appeal considered whether that approach involved procedural unfairness, whether the judge was bound by Copley, and what part of Copley formed its ratio.

1. Appeal allowed. Judge Harris had decided the appeal on a basis different from that on which both parties had argued it, without giving them a fair opportunity to address the proposed approach. That failure was a serious procedural irregularity: paras [15]-[16].
2. Copley v Lawn. Moore-Bick LJ held that the first part of Copley, concerning whether rejection of a replacement vehicle was unreasonable, formed its ratio. Mitigation involves evaluation and judgment of the primary facts, so an appellate court may have greater latitude to interfere with such an evaluative finding. The operative principle was that a claimant could not be regarded as acting unreasonably in rejecting the defendant’s offer unless the claimant was aware that rejection would impose a greater ultimate burden on the defendant: paras [17]-[21].
3. Precedent. Judge Harris was bound to apply that ratio, notwithstanding his view that it conflicted with earlier authorities. A lower court must give effect to a decision of the immediately higher court and cannot sit in judgment on it: Miliangos v George Frank (Textiles) Ltd [1976] A.C. 443, page 478; paras [22]-[23].
4. Moore-Bick LJ further stated that a lower court should follow an obiter decision of a higher court which determines a question of principle to clarify the law, even where it is not technically binding. The second part of Copley, concerning the consequences of unreasonable rejection, was not part of its ratio because the relevant circumstances had not arisen. Nevertheless, the lower court ought to have followed it as guidance: para [24].
5. Moore-Bick LJ expressed obiter reservations about that second part. A replacement vehicle may be a means of avoiding loss, unlike an offer of money. Earlier authorities, including British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673, Payzu Ltd v Saunders [1919] 2 KB 581 and The ‘Solholt’ [1983] 1 Ll. Rep. 605, did not readily support looking to the defendant’s cost. The court doubted the wider use of Strutt v Whitnell [1975] 1 W.L.R. 870 and questioned the defendant-cost measure in Copley: paras [26]-[30]. Pill LJ agreed with the result and the binding effect of Copley, but added that mitigation depends on the particular victim’s circumstances, including the vehicle, insurance cover and reasonable opportunity for advice: paras [43]-[49].
6. Permission to appeal to the Supreme Court was refused. The lower costs order was set aside. The case was reallocated to the multi-track for the costs of the proceedings in the Court of Appeal, but not retrospectively for the lower-court stages: paras [30]-[34].

• Court of Appeal (Civil Division): In [2011] EWCA Civ 1583, the appeal was allowed on procedural-irregularity and precedent grounds. Permission to appeal to the Supreme Court was refused.
• Northampton County Court: District Judge Flood rejected the claim for loss-of-use damages after finding that the claimant had unreasonably rejected the respondent’s free replacement vehicle. His Honour Judge Charles Harris Q.C. dismissed the subsequent appeal.