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If your driving someone else’s car and someone hits you,can your recover credit hire cost?

By 2nd March 2017No Comments

​ Oxford Mungall v WODC 031114

1. 1 IN THE COUNTY COURT AT OXFORD A60YJ181. Oxford Combined Court Centre, St Aldates, Oxford, OX1 1TL. Monday, 3rd November 2014. Before: HIS HONOUR JUDGE HARRIS, QC CHRISTOPHER MUNGALL Appellant – v – WEST OXFORDSHIRE DISTRICT COUNCIL Respondents ____________________ MR NICOL (instructed by solicitors) appeared on behalf of the Appellant. MISS PAXMAN (instructed by solicitors) appeared on behalf of the Respondents. ____________________ Digital Tape Transcription by: John Larking Verbatim Reporters (Verbatim Reporters and Tape Transcribers) Suite 91, Temple Chambers, 3-7 Temple Avenue London, EC4Y 0HP. Tel: 020 7404 7464 Fax: 020 7404 7443 DX: 13 Chancery Lane LDE ____________________ Words: 3,036 JUDGMENT Folios: 43 (Approved)
2. 2 Monday, 3rd November 2014. JUDGMENT: JUDGE HARRIS: 01 This is an appeal from the decision of District Judge Jenkins made in the Oxford County Court on 25th July 2014.
It is a case in which recovery of Credit Hire Charges was sought and refused. 02 The background facts. BMW or some offshoot of it leased a car to Care Design & Furniture Ltd. Christopher Mungall was a director and the de facto controller of the company. The car was given to his son Jack Mungall to use but the son did not work for the company or pay anything for the vehicle to anyone.
On 12th September 2013 the car was damaged in an accident for which the Defendant is said to have been responsible and it needed repairs during which time Mungall Jnr could not use it.
03 Christopher Mungall then entered into a Credit Hire Agreement to obtain a substitute car. The Agreement was signed by his son but it is accepted that he was only acting as his father’s agent. The hired car was used by the son, again without payment. Both father and son as Claimants then sought to recover the Credit Hire Charges from the Defendant. Care Design Ltd was not a party.
04 It will be apparent that the father had not lost the use of the damaged car, which he neither owned nor leased, and never drove. Accordingly he had no need for a replacement. To recover Credit Hire Charges it has to be shown that a Claimant has a need for a replacement car. For a recent summary of the law in this area see Patney v First Leicester [2011] EWCA Civ 1384 para. 29 per Aikens LJ. The son did lose the use of the car which he did not own and was not hiring. But he did not hire the substitute and is not responsible for the Credit Hire payments, and he has spent nothing and suffered no financial loss at all. Furthermore he has not been without a car either, since his father hired one for his use. So his position both before and after the accident has been the same, the happy recipient of a free car.

05 The District Judge concluded at para. 8 of his judgment: ‘Mr Jack Mungall suffered no use of his own vehicle. He suffered the notional loss of use of a vehicle which was leased by a company for his exclusive use …’ and he continued: ‘It seems to me that it would be absurd to make an award in Mr Jack Mungall’s favour …[for]… any damages in circumstances where he has suffered no financial or indeed other loss.’ He also concluded that no award could be made in Mr Christopher Mungall’s favour because he had never had use of the vehicle and nor did the company with which he was associated.

At the Appeal it was conceded that the District Judge’s conclusion concerning the father was correct but urged that it was wrong so far as the son was concerned. There were also various pleading points which were not developed or relied on for the Appeal. 06 It is perhaps surprising that the company to which the original BMW was leased did not itself hire the replacement car. Had it done so it might have succeeded in claiming the cost. It needed a car to replace that which it had chosen in its corporate wisdom to utilise by providing for Jack Mungall, although it might have been argued that it did not

3. 3 in fact need to do so. But at least it would have had a clear obligation in respect of the replacement car hire charges. Likewise if the son had hired the replacement car, he could have said that he needed a car and that he had reasonably incurred costs in obtaining a replacement. 07 But can the son, who did not own or hire the original car, and who did not rent the replacement car, validly claim for the cost of the replacement when he has suffered no financial loss or liability and no loss of amenity either?

08 The Appellant relies upon Bee v Jensen [2007] EWCA Civ 923, a case in which the owner of a car damaged in a collision was provided with a substitute car by his own motor insurer under an arrangement it entered into with another insurance company. Mr Bee claimed the cost of this provision from the tortfeasor. It was argued that since he was not himself liable for the hire charges he could not recover them notwithstanding the normal insurance principle of subrogation (which was explained in para. 9 of the report). Lord Justice Longmore said: ‘It does not follow from the fact that Mr B was not liable for the hire charges for the replacement car that he cannot recover damages for the deprivation of his use of his car. It may be a question of what the appropriate amount of such damage will be but if he has in fact reasonably made arrangements for a hire car there is no reason why he should not recover the cost of hire whether or not he has rendered himself liable for the hire charges and whether or not the actual cost has been paid by him or somebody else such as an insurer or indeed any other third party.
In so doing he may in legal jargon be recovering General Damages rather than Special Damages but there is no significance in that.’

09 Concerning General Damages the Lord Justice cited a passage from The Mediana [1900] AC 113 at 117 … ‘What a … jury … [does] … is to … come to a rough sort of conclusion as to what damages ought to be payable for the unjust and unlawful withdrawal of it [a ship from the owner].’

10 Lord Justice Longmore also cited Dimond v Lovell [2002] 1 AC 384 where Lord Hobhouse said this: ‘Mrs Dimond was at the time of the accident the owner and the person in possession of her car. It was damaged. Its value was reduced. This can be expressed as a capital account loss. This loss can be measured as being the cost of making good the damage plus the value of the loss of its use … Each case depends on its own facts but loss of use of the chattel in question is in principle a loss for which compensation should be paid.’

11 If a Claimant has the use of a hire car but does not have to pay for it, it may be difficult to say that he can recover Special Damages at all. That does not however mean that General Damages should not be assessed by reference to the reasonable costs of hire. Bee v Jensen supra at para. 22. Thus it was held that Mr Bee was entitled to recover the reasonable costs of hire though he would hold the sum for the benefit of the insurer or car provider. District Judge Jenkins said that there were ‘very sound grounds’ for distinguishing Bee v Jensen.
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12 It follows from the foregoing that the fact that the cost of the replacement car was not borne by the Second Claimant does not in itself rule out recovery. Jack Mungall could be said to have ‘made arrangements’ for a substitute car by asking his father to get one for him, and no doubt he would hold any damages paid to him in respect of hire charges on trust for his father.

13 But does it make any difference that he was not the owner or indeed the renter of the damaged car? It is said on the Defendant’s behalf the authorities all appear to relate to situations in which the Claimant was the owner of the damaged car, and neither Mr Nicol nor Miss Paxman was able to refer the court to any case in which a non-owner had recovered General Damages let alone damages referable to specific temporary replacement costs in respect of damage to a chattel which he did not own.
The sort of obser
vation commonly made is this, in Burdis v Livsey [2003] QB 36 at para. 147 where Lord Justice Aldous said: ‘The fundamental principle is that a person whose car has been damaged is entitled to compensation for the loss caused. In a case where such loss includes loss of use and he establishes a need for a replacement he is entitled to the costs of hiring a replacement car.’

14 It is quite understandable of course that only the owner can claim if what the victim whose chattel is damaged is being compensated for is a reduction in the value of an item which he owns. If he does not own it he suffers no loss in its value.
15 The Claimant in the instant case was not affected by the diminution in the value of the car brought about by the damage it sustained and he would not therefore be entitled to claim either damages for diminution in value or as a ready and common means of estimating this, the cost of repairing it. He has lost nothing as an owner and was under no liability to repair. He was not indeed seeking the costs of repair.

16 He did however lose something by reason of the tortfeasor’s negligence, namely, the use of the car, and I see no reason in principle why he should not have General Damages in respect of that. It is perfectly foreseeable to a tortfeasor that if he damages a car it might be a car being used by someone other than the owner and that if such a car is damaged the person who uses it may as well as possible personal injury suffer serious inconvenience for loss of use. An obvious example of this is a wife driving her husband’s car, or a child its parent’s vehicle, or indeed a person who habitually drives a car which a friend has lent to him. There is of course a potential complication here for such a person may not even have been driving at the time. The question then would ne could a non-owning driver who was not driving at the time but who relied upon the provision of the car sue the tortfeasor for loss of use?

This is a question of duty of care or perhaps foreseeability of loss. These questions were not argued before me and are potentially complex, but there is clearly a duty of care to a motorist when driving his own car or somebody else’s not to cause physical injury by negligent collision. Is there a duty to that motorist not to injure the driver’s interest in the use of someone else’s car? This is a question to be considered in the light of the well-known principles in Caparo v Dickman [1990] 2 WLR 358. Certainly in the case of an actual rather than a potential driver I would regard it as proper to conclude that there was a duty not to cause the driver foreseeable financial loss by damaging the car he is in. If ‘the Defendants begin with an act wrongful in itself if such an act is the source and origin of loss to the
5. 5 Plaintiff, then provided the loss is sufficiently closely connected with the wrongful act it is a loss for which the Plaintiff is entitled to redress’ per Lush J in Campbell v Paddington [1911] 1 KB 869. The wrongful act here of course is causing the collision. The real question, said Lord Hoffman ‘is the kind of loss in respect of which the duty is owed.’ See Samco [1997] AC 191 at 202C. I would answer that question by saying that it is when the Claimant in question is the driver of the car collided with.

17 In the absence of argument I do not propose to deal with this topic comprehensively. It might not be well received by the Court of Appeal if I did. See Sayce v TNT [2012] 1 WLR 1261. At present the fact that a Claimant has not himself sustained a financial loss does not prevent recovery from a Defendant who provided a free car. See Copley v Lawn [2009] EWCA Civ 580. So the lack of actual outlay is no bar.

18 If, as I think it proper to conclude, the driver does have a claim in respect of loss of use rather than the cost of repair, it is not necessary for the driver to be the owner. The claim does not relate to the diminution in value of a possession but to inability to use a car which the Claimant had at his disposal, a car which it is foreseeable he would not be able to use if it is damaged when he is driving it.

19 How is that loss of use to be assessed? Where no substitute car is acquired in a conventional case the courts make a more or less arbitrary or conventional award of £x per day or per week by way of General Damage to compensate for the inconvenience. No doubt if the affected motorist took cabs or made train journeys then he would be able to claim the cost of these net of what he might have spent on running costs for the car and that would be Special Damage. But he cannot claim as Special Damage sums spent on a replacement car for which he has not either paid or contracted to pay.

20 So, looked at in this way, the question is can he claim as General Damages a sum calculated by reference to the cost of hiring a substitute, a cost which he is under no obligation to meet, and do so when his loss of amenity is in fact negligible because he has enjoyed the free car which his father got for him?

21 It might be said in this case that it would be very unjust if someone cannot recover for why should the tortfeasor avoid having to pay the reasonable costs of a replacement car? One answer to that is that the hire and consequent proceedings had been unwisely arranged. As I have already said, Care Design Ltd as lessee of the damaged car would if it had entered into the Credit Hire Contract have had at least a reasonable prima facie claim. It reasonably wanted/needed to replace a car which it was utilising as transport for the Second Claimant. Though see Beechwood v Hoyer [2011] QB 357, [2010] EWCA Civ 647 for the principles involving corporate Claimants, especially paras. 28 and 29. More clear would have been the position of the Second Claimant if he had hired the replacement car himself.
He had lost the use of the car he had had and therefore needed the replacement. But since it was decided that the father would hire a replacement and he has not lost anything, why should the son be able to recover in respect of the father’s liability to the Credit Hire Company?

22 I have concluded that his Loss of Use claim can be valued at the estimated reasonable costs of hiring a replacement car as in Bee, supra. The reasoning in that case on this point did not rely upon the premise of ownership; it relied rather upon that of use.
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23 It is perfectly true that the Claimants in most cases are both owners and users of damaged cars, but where a party is only a user he too needs to be compensated for that loss of use and there is no reason why the law should not provide him with a remedy.
24 Although I was initially attracted by the logic of the District Judge it does seem to me that the case is in fact covered by the principle discussed in para. 15 of Longmore LJ’s judgment in Bee: ‘If he has in fact reasonably made arrangements for a hire car there is no reason why he should not recover the cost of hire whether or not he has rendered himself liable for hire charges and whether or not the actual cost has been paid to him or somebody else such as an insurer or indeed any other third party. In so doing he may … be recovering General Damages rather than Special Damages but there is no significance in that.’ The fact that the son did not own the car means that he has no claim for repair costs but does not in my judgment invalidate a claim in respect of the value to him of the car he was using.
25 There was also an Appeal in respect of a small point worth I think £46 in respect of an Excess Damage Waiver charge. The District Judge indicated that he would not think that the Claimant’s claim was a good one; the father said he would not have taken it out. Counsel at the trial seemed to agree: ‘It is hard to sustain the claim for that!’ said the District Judge: ‘Yes, sir’ replied counsel.’ However for the reasons and on the authority set out in para. 12 of the Appellant’s skeleton I conclude that he was wrong about that. It is not a very valuable finding.
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ordingly the Appeal will be allowed and there will be judgment for the Claimant for a sum equivalent to the Hire Charge, which perhaps counsel will remind me of as I do not seem to have it to hand. ______________

Tim Kelly

Tim is a highly qualified Independent Engineer with over 20 years experience as an Engineering Assessor of damaged vehicles.

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