W v Veolia Environmental Services (UK) Plc

Where credit-hire charges have been paid under a genuine contract of indemnity insurance, the claimant has suffered the relevant loss and there is no double recovery because the insurer is subrogated to the claimant’s rights. The defendant cannot reduce liability by treating the insurer’s payment as irrelevant or gratuitous.

The duty to mitigate is not breached merely because the claimant pays for goods or services enjoyed, although the charge might have been unenforceable. The claimant’s reasonableness is assessed in the round; the insurer’s position does not replace that of the claimant.

Doorstep-selling regulations render a credit-hire agreement unenforceable where the statutory notice was not given, but apply only where the statutory conditions are met.

The claimant’s Bentley was damaged by the defendant’s refuse vehicle. A replacement Bentley was supplied on credit-hire terms while repairs were undertaken, generating charges exceeding £138,000. The charges were later paid by an insurer connected with the hire arrangements.

The defendant argued that the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc. Regulations 2008 made the first hire agreement unenforceable and that the claimant therefore suffered no recoverable loss. It also argued that payment was unreasonable and amounted to a failure to mitigate.

The court had to determine the effect of the payment, the application of the Regulations to two hire agreements, the appropriate hire rate, and whether the claimant was impecunious for the purposes of recovering the full credit-hire rate.

1. Already-paid charges. The claimant mitigated his loss of use by hiring a replacement vehicle and incurred hire charges. Payment through insurers counted as payment by the claimant. Under a genuine indemnity policy, subrogation prevented double recovery. The insurer pursued the same claim that the claimant would have had if he had paid personally. The reasoning in Arab Bank v John D Wood Commercial Ltd was applied. The court declined to follow the contrary obiter observations in Burdis v Livsey because the issue had not been directly addressed there.
2. Mitigation. A claimant who pays for goods or services enjoyed does not fail to mitigate merely because he might have resisted payment in legal proceedings. The duty to mitigate is not satisfied by showing that a less burdensome course was reasonable; the defendant must show that it was unreasonable not to take that course. Copley v Lawn did not require the claimant’s position to be replaced by that of his insurers. The claimant’s position, including relevant advice, could be considered in the round.
3. Regulations. The first agreement was made during a visit by the trader to the claimant’s home, and no cancellation notice was given. Under regulations 5 and 7 of the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc. Regulations 2008, it was unenforceable against the claimant. The approach in Chen Wei v Cambridge Power and Light Ltd was accepted, including the conclusion that affirmation by conduct could not cure the statutory failure.
4. The second agreement was made by post without a further visit. The defendant abandoned reliance on regulation 5(c), so the Regulations did not make that agreement unenforceable.
5. Rate and impecuniosity. The ordinary recoverable measure was the true spot-rate hire element. Under Lagden v O’Connor, the full credit-hire rate was recoverable where the claimant could not reasonably afford to pay the spot rate. On the evidence, the claimant’s capital was reasonably needed for future family and retirement commitments, his credit facilities were inadequate, and readily realisable assets were lacking. He was therefore impecunious and had no reasonable choice but to use credit hire.
6. The insurance policy was valid, but the insurer’s payment above its £100,000 limit was not treated as a good-faith payment under the policy. That qualification did not affect the result because the £100,000 could be allocated to the first agreement.
7. The claimant recovered the credit-hire charges in full. He succeeded on the already-paid issue and on impecuniosity, although the first agreement would otherwise have failed against the defendant under the Regulations.

First-instance judgment in the High Court. No prior appellate decision is stated in the judgment.