Traditionally, loss in vehicle damage cases is quantified by the amount it costs to repair the damage to the vehicle. However, more recently claimants have been seeking to recover additional damages for the diminution in value which the vehicle has sustained as a result of the repairs it required.
However, the increase in the number of claims for diminution has been coupled with a lack of case law providing guidance as to how they should proceed. The first case on this matter where a claim for diminution was raised was Payton v Brooks [1974] RTR 169 where although it was held that claims for diminution in a vehicle’s value were possible, the claimant was not successful in proving the same as he was unable to sufficiently prove that he had suffered a loss.
Although no definitive guidelines have been furnished by case law, it is still possible to discern a number of broad factors which the court will consider in reaching a decision. The most important of these is whether or not the vehicle has actually been examined by an engineer following the repairs done to it. In Schnitzer v Lyons (2001, CL 01/1541) and Good v De Klee, the Court considered this to be a crucial factor- mainly because examination by an engineer provided a justifiable basis for the figure that had been claimed. Another factor is whether the repairs were completed satisfactorily, as if this cannot be established then the defendant may claim that any loss in value is a result of the negligence of the repairer. In Smith v Loughlin (2000, CL 00/1484) this was the deciding factor in dismissing a claim on the basis that there was no evidence about the standard of repairs that had been carried out.
Case law has also identified that certain types of vehicle are more susceptible to a diminution in value following repairs. This is particularly relevant in the case of rare or specialised vehicles, for example those with collectable value. In Wadsworth v Surrey CC (2005, CL 06/1030), it was accepted that a Ferrari F550 had reduced in value due to repair. The key factor for the judge was that the Ferrari was a ‘prestige’ vehicle, and therefore differed from an ordinary ‘family’ car. It was more likely to be of importance to a prospective Ferrari owner than the owner of a family car that the vehicle be in its original condition.
There are also a number of other, more subtle factors which may effect the court’s decision, such as model specifications, condition, age and mileage, the vehicle’s service history and whether repairs were carried out by a provider authorised by the manufacturer. In relation to the age of the vehicle, it is self-evident that the value of a nearly new vehicle will be affected much more than that of an older model by any repairs carried out. Diminution reports based on pure theory are unlikely to succeed with the courts as they can be easily discredited by the defendant’s insurers as being based on assumptions. In practice, judges seem to be more persuaded by evidence comparing the vehicle’s worth prior to the accident with its worth after the repairs as opposed to simply a general affirmation that its value has been reduced.
A common argument put forward by Defendants is that diminution should not recoverable by a claimant until the vehicle has been sold as the loss has not been realised until this has occurred. However, in Hunter v Thomson and another (2004 Scot (D) 9/1), the Inner House of the Court of Session rejected this argument. Although if the vehicle has already been sold at a loss, this should be brought to the court’s attention as it provides conclusive evidence of the worth of the vehicle after the repairs, the lack of such evidence is unlikely to be fatal to the claimant’s case.
It seems that whether or not diminution can be successfully proved depends on consideration of a large number of factors which vary from case to case. While it appears easier in some cases to prove a reduction in value, such as in the case of a vintage or unique car, no conclusive guidelines beyond these generalisations have been provided to date by the courts.