Mazahar Hussain v EUI Ltd
[2024] EWCC 16
Armstead v Royal & Sun Alliance Insurance Company Ltd
14 February 2024
[2024] UKSC 6
Supreme Court
Someone crashed into a rental car. The rental company charged the renter for the days the car was out of service. The renter sued the at-fault driver's insurance. The court said the insurance had to prove the rental company's charge was unreasonable, which it didn't. So, the insurance had to pay.
Key Facts
- •Lorna Armstead was involved in a road traffic accident, not her fault.
- •She hired a replacement car from Helphire Ltd under a credit hire agreement.
- •The agreement (clause 16) stated she would pay Helphire for loss of use while the car was being repaired.
- •The repair period was 12 days, resulting in a £1,560 claim from Helphire.
- •Armstead sued the other driver's insurers (RSA) for the repair costs and the £1,560.
- •RSA argued clause 16 was unfair, a penalty, and unenforceable; Armstead had a duty to mitigate.
Legal Principles
Duty of care not to cause physical damage to another's property; damages include diminution in value and consequential financial loss.
SCM (United Kingdom) Ltd v WJ Whittall & Son Ltd [1971] 1 QB 337; Spartan Steel & Alloys Ltd v Martin & Co (Contractors) Ltd [1973] QB 27
Negligently causing physical damage doesn't automatically extend liability to third parties suffering financial loss.
Cattle v Stockton Waterworks Co (1875) LR 10 QB 453; Candlewood Navigation Corpn Ltd v Mitsui OSK Lines Ltd [1986] AC 1; Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd (The “Aliakmon”) [1986] AC 785
Possession of property is sufficient to sue for negligence causing damage; bailee can sue.
The Winkfield [1902] P 42
Recoverable loss can include contractual liability to a third party if consequential on physical damage to claimant's property.
Ehmler v Hall [1993] 1 EGLR 137; Network Rail Infrastructure Ltd v Conarken Group Ltd [2011] EWCA Civ 644
Remoteness of damage: loss is too remote if the type of loss was not reasonably foreseeable.
Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co, The Wagon Mound [1961] AC 388; Hughes v Lord Advocate [1963] AC 837
Contractual liability must be a reasonable pre-estimate of the loss to be recoverable; linked to penalty clauses and unfair contract terms under the Consumer Rights Act 2015.
Cavendish Square Holding BV v Makdessi [2015] UKSC 67; Consumer Rights Act 2015, sections 62, 63; Schedule 2
Defendant bears the burden of proving that loss, though factually caused by the tort, is too remote.
Various cases cited in section 60-64.
Outcomes
Appeal allowed; judgment for Armstead for £1,560.
Lower courts wrongly rejected the claim. The only valid reason raised was remoteness, but RSA failed to prove clause 16 wasn't a reasonable estimate of Helphire's loss.