Far from too remote: Armstead v Royal & Sun Alliance [2024] UKSC 6 - Amy Lanham Coles, Temple Garden Chambers
18/03/24. The Claimant was involved in an accident, whilst she was driving a vehicle she had hired on credit from Helphire. The driver of the other vehicle, who was insured by the Defendant insurer, admitted liability for the accident.
The credit hire car needed to be repaired and the credit hire agreement stipulated at Clause 16 that the Claimant was liable to pay the daily (credit hire) rental rate for loss of use of the car for each day the vehicle was unavailable during the repairs. The issue was whether the Claimant could recover that full credit hire sum from the Defendant insurer, or whether, by virtue of its being a contractual obligation between the Claimant and credit hire company, it was simply pure economic loss and/or too remote.
Arguments in the Courts Below
The Defendant had pleaded that Clause 16 was unenforceable and further that the Claimant ought to have mitigated her losses by refusing to pay the Clause 16 sum to Helphire. These arguments were not pursued in the higher courts. Further, the Defendant quickly conceded that the Claimant was entitled to recover compensation for diminution in value as the bailee in possession of the credit hire vehicle. The Claimant conceded that she could only recover the Clause 16 sum as damages if the sums claimed represented a genuine and reasonable attempt to assess the likely losses to be incurred by Helphire.
The Defendant succeeded in the Court of Appeal. The court considered Clause 16 formed part of an internal arrangement between the bailor and bailee and could not be recovered from a third party – being a form of irrecoverable pure economic loss. Further, Clause 16 did not represent a genuine and reasonable attempt to assess the likely losses and was therefore not reasonably foreseeable and accordingly too remote.
Judgment
The Supreme Court disagreed with the Court of Appeal and all of the courts below.
Returning to first principles Lord Leggatt and Lord Burrows reminded themselves that...
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