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Insurance – Coles v Hetherton [2013] EWCA Civ 1704

The Court of Appeal has upheld the decision of Cooke J ([2012] EWHC 1599 (Comm) – see August 2012 Round-Up) and with it the repair arrangements of Royal & Sun Alliance (“RSA”). The key elements of the CA’s conclusions can be summarised as follows.

Where a chattel – here, a vehicle – is negligently damaged, that loss (“the direct loss”) is suffered immediately. The proper measure of that loss is the diminution in value of the vehicle. The courts should continue to follow the general practice of assessing this as the reasonable cost of repair. Only if the sum claimed appears clearly excessive will the court investigate whether that sum exceeds the cost that the claimant would have incurred in having the vehicle repaired by a reputable repairer. The claim for direct loss is for general damages – not special damages – and should be pleaded as such. Documents such as a repair invoice are merely evidence of the diminution in value. Mitigation of loss is irrelevant to a claim for direct loss. Any suggestion to the contrary in Darbishire v Warran [1963] 1 WLR 1067 was incorrect.

If a claimant’s insurer has arranged the repair, the reasonableness of the repair charges is judged by reference to what the claimant – not his insurer – could obtain on the open market. The insurer’s position is irrelevant. RSA did not act as the claimants’ agent in arranging repairs.

If the insurer has arranged and paid for the repairs, the court only needs to consider whether the total sum claimed is equal to or less than the notional sum the claimant would have to pay in the open market for reasonable repair costs. The court will examine the components of the notional overall figure which the claimant would have to pay and compare it to the amount claimed. It will not have to examine details of individual “administrative” or “sundry service” charges referred to in the invoice to the insurer.

Given RSA’s success, it may be only a matter of time before other insurers set up similar schemes.

Winston Jacob / 1st Feb 2014


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