Coles & Ors v Hetherton & Ors

Damages for negligent physical damage to a repairable chattel are measured by its diminution in value at the time of the tort. The reasonable cost of repair is normally practical evidence of that loss, rather than the loss itself. Later events, including repair at a discounted price or without payment, do not mitigate that direct loss.

Where an insurer exercises subrogation rights, the reasonable repair cost is assessed by reference to the insured claimant’s open-market position. Insurance benefits do not reduce the tortfeasor’s liability. The recoverable repair sum depends on whether the insurer’s overall outlay exceeds that reasonable notional cost, not on each component of its invoice. A contractual courtesy car is a recoverable insurance benefit where its reasonable cost represents loss of use.

Thirteen managed claims arose from minor road traffic accidents. Each claimant’s vehicle was damaged by an admitted negligent driver insured by Provident Insurance plc or Allianz Insurance plc. The claimants were insured by RSAI, elected to use its repair scheme and, in some cases, received a courtesy car.

Cooke J held that the direct loss was the diminution in value of the vehicle, normally measured by reasonable repair cost assessed from the individual claimant’s open-market position. He later struck out parts of the defendants’ pleadings challenging the uplifted repair charges, sundry charges and courtesy-car claims: [2012] EWHC 1599 (Comm) and [2012] EWHC 2848 (Comm).

The defendants appealed. The central questions were the proper measure of repair loss, whether the insurer’s purchasing position was relevant, and whether the sums claimed, including courtesy-car costs, were recoverable.

Disposition

Appeal dismissed. The court upheld Cooke J’s answers to all three preliminary issues and his strike-out and summary judgment orders.

1. The direct loss caused by negligent physical damage to a repairable vehicle is its diminution in value at the time of the collision. Reasonable repair cost is the usual and convenient measure of that loss, but is evidential rather than constitutive of it. It is not a mitigation issue. A claimant who incurs an unreasonable repair cost fails because it does not represent diminution in value. The court disapproved the mitigation reasoning in Darbishire v Warran, while accepting that its actual result was correct.

2. Subrogation did not alter the identity or measure of the claim. The cause of action remained that of the insured claimant, and the benefits of the claimant’s insurance could not reduce the tortfeasor’s liability. The reasonable repair charge was therefore the sum which a person in the claimant’s position could obtain in the open market, not the cheaper price which RSAI could negotiate. The insurer was not the claimant’s agent when it contracted for repairs.

3. For the repair claim, the court was concerned with the overall comparison between RSAI’s actual outlay and the reasonable notional repair cost to the claimant. It was unnecessary to decide whether every administrative or sundry-services item on the invoice was separately reasonable. If the total paid by RSAI exceeded the claimant’s reasonable repair cost, recovery would be reduced to that notional sum.

4. A courtesy car was not part of repair cost, but its reasonable cost was recoverable as general damages for deprivation of the damaged vehicle. The policyholder’s contractual right to the car was a fruit of the insurance for which a premium had been paid. Exercising that pre-existing right was not mitigation. The recoverable sum was to be held for RSAI’s benefit.

• Court of Appeal (Civil Division) — dismissed the defendants’ appeal and upheld the preliminary rulings and consequential strike-out orders: [2013] EWCA Civ 1704.
• High Court (Queen’s Bench Division, Commercial Court) — Cooke J answered the first two preliminary issues in favour of the claimants, and subsequently struck out material parts of the defendants’ pleadings: [2012] EWHC 1599 (Comm); [2012] EWHC 2848 (Comm).