This Judgement was handed down by the Court of Appeal on the 17th June 2009. These two joined Appeals concerned a common issue that is also a hotly disputed matter in the County Court of Northern Ireland;
“If, after a road traffic accident caused by a Defendant’s negligence the insurers of the negligent Defendant offer to provide a “free” or courtesy vehicle to the Claimant for such a period as the Claimant needs a replacement car while his own car is being repaired and that offer is rejected by the Claimant can the negligent Defendant say that the claimant has failed to take reasonable steps to mitigate his loss?”
The Court of Appeal held the answer was no.
These cases arose out of road traffic accidents which occurred on the 23rd November 2006 and the 26th July 2006 respectively. In both cases the Plaintiff had rejected an offer by the Defendant’s insurers for a free courtesy vehicle and instead had hired a car through a credit hire company. The credit hire company, acting through the respective Plaintiffs had sought to recover these credit hire costs.
In the case of Mrs Copeland, the first Plaintiff, she was involved an accident on the 23rd November 2006. On the 26th November 2006 she made an Agreement with Help Hire ( UK) Limited whereby she agreed to hire a car, while her own car was being repaired for £39.90 per day. On the same day (and after she had signed the Help Hire Agreement) she received a telephone call from the Defendant’s insurers offering a replacement car. She described this as a cold telephone call. She did not commit to accepting the free courtesy car and subsequently the Defendant’s insurers wrote to her repeating this offer. The Plaintiff forwarded this letter to her Solicitors who did not provide her with specific advice on this issue. The car was hired through Help Hire (UK) Limited for a period of 71 days.
When this case was heard in the Lower Courts a sum equivalent to 7 days hire only was awarded as the Court considered that the Plaintiff, by the expiry of that time, should have availed herself of the right to cancel the credit hire agreement (with Help Hire) and avail of the free courtesy vehicle that was made available to her by the Defendant’s representatives.
In the second case Captain Maden was involved in a road traffic accident on the 26th July 2006. The next day the Defendant’s insurers offered him a replacement car. Captain Maden appeared to have ignored the offer and once again made an agreement with Help Hire for a replacement car. This offer was made on the 18th August 2006; he received a car hire vehicle at a cost of £156.80 per day for a period of 3 days while his vehicle was being left in for repairs. In the Lower Courts Captain Maden’s case was dismissed with the Courts holding that Captain Maden had acted unreasonably by ignoring the Defendant’s reasonable offer.
Various submissions were made on behalf of both parties arguing the various points in respect of the reasonableness of or otherwise of the Plaintiff’s decision to refuse to accept the courtesy vehicle that was offered to them.
In considering all of the arguments presented the Court of Appeal decided that neither Plaintiff had acted unreasonably in failing to accept the Defendant’s insurers offer to provide a courtesy vehicle or in failing to explore these offers further. Consequently the Appeals were allowed.
The rational behind this decision was that in the present cases the Court of Appeal decided that the Plaintiff did not have an informed choice available to them of the comparative costs of the Defendant insurers hiring a vehicle against the cost of their hiring a vehicle though a credit hire company. The Court considered that the respective Plaintiffs and their advisers need to know the true cost of the Defendants and his insurers since it might be the case that the cost of the Defendant’s insurers hiring the replacement vehicle was actually the same as or indeed more than the cost of hiring a vehicle through a credit hire company. If indeed the latter were the case it was considered that it could “scarcely be said that it was unreasonable for the Plaintiffs to pay the credit hire costs”. Although it was submitted on behalf of the Defendant that the costs to the Defendants insurers was entirely irrelevant as they were prepared to bear the costs in its entirety the submission was not accepted.
Reverting back to the principles of an ordinary commercial dispute the Courts considered that a Plaintiff, who has been deprived of the use of his car by the negligence of a tort/feaser only had to take reasonable steps to mitigate his claim for that loss. The Court of Appeal considered that he cannot be said to have acted unreasonably if he makes or continues his own arrangements with his own hire company, unless he is made aware that his commercial enterprise can be undertaking more cheaply by the Defendant than by his own arrangements.
Therefore the Court of Appeal considered that if the Defendant or his insurers did make an offer of a replacement car to an innocent Claimant and he makes clear that the cost of this hire is less than the Claimant is intending to pay from a credit hire company then it may well be the case that a Claimant should accept that lower cost replacement. In these present cases as such comparative figures were not provided to the Plaintiffs by way of a letter from the Defendant’s insurers they were not said to have acted unreasonably.
The concluding paragraph of the Court of Appeals Judgement states “that, in looking at that the matter objectively, it is not unreasonable for a Claimant to reject or ignore an offer from a Defendant which does not make clear the cost of hire to the Defendant for the purpose of enabling the Claimant to make a realistic comparison with the costs which he is incurring or about to incur (through the credit hire company)”.
The Court of Appeal stated in a case where the Defendant insured does make such a reasonable comparison of the car hire costs and (following the rule in Strutt –v- Whitnell) if a “Plaintiff does unreasonably reject or ignore a Defendant’s offer of a replacement car” the Plaintiff is entitled to recover at least the cost which the Defendant can show he would reasonably have incurred by providing this courtesy vehicle. Of course a Plaintiff will only have acted unreasonably if the cost of the Defendant’s insurers “courtesy” vehicle is less than the credit hire company. It is important to note that in such cases the Court considers that the Plaintiff does not forfeit his right to claim damages altogether even where he does unreasonably reject a provision of a courtesy vehicle.
The Court of Appeal considered that there was a “general rule” that the Claimant can recover the spot or market rate of hire for his loss of use claim, unless and to the extent that a Defendant can show that, on the facts of a particular case a car could have been provided even more cheaply than that spot rate. (Diamond –v- Lovell).
It is also useful to note that the Court of Appeal criticised the “unpleasant threatening tone” of the letter proposing to offer a courtesy vehicle that was sent by the Defendant’s Insurers in these cases to the Plaintiffs. Therefore whilst it should be made clear that the Plaintiff is under a duty to mitigate their loss and the cost of the courtesy hire car should be clearly set out this should not be done in a threatening manner.