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England and Wales Court of Appeal (Civil Division) Decisions

You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Dimond v Lovell [1999] EWCA Civ 1311 (29 April 1999)
Cite as: [1999] RTR 297, [1999] CCLR 46, [1999] 3 WLR 561, [1999] 3 All ER 1, [1999] EWCA Civ 1311, [2000] QB 216

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Royal Courts of Justice
London WC2

Friday, 29 April 1999

B e f o r e:

THE VICE-CHANCELLOR: The Rt Hon Sir Richard Scott
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(Handed Down Transcript of
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HD
Tel: 0171 421 4040
Official Shorthand Writers to the Court)
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MR IAN MCLAREN QC & MR STEVEN TURNER (Instructed by Nelson & Co., Leeds, LS3 1LF) appeared on behalf of the Appellant
MR DANIEL BRENNAN QC & MR MARC WILLEMS (Instructed by Cotrill Stone Lawless, Manchester, M2 5WA) appeared on behalf of the Respondent

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(As approved by the Court )
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©Crown Copyright

1. The facts of this case are very simple and the sum involved is trivial. But the case raises issues of considerable importance and some difficulty. Other cases, we are told, are queuing up in county courts around the country awaiting the result of this appeal. There are cases in this Court, too, awaiting the result.

2. The case arose out of a road traffic accident in Sheffield on 30 December 1996. Mrs Dimond, respondent in this Court and the plaintiff below, was driving her motor vehicle, a Suzuki Vitari, when the appellant, Mr Lovell, drove his car into the back of hers. She did not suffer any physical injury but her vehicle was damaged. It was still capable of being driven and, for about three weeks or so, she continued to drive it. It then went into the garage for repairs. Mrs Dimond was a bank manager. She needed a car to drive to and from work. I expect she needed a car also for social activities. So arrangements had to be made for her to obtain a replacement vehicle. Her husband after the accident had consulted insurance brokers about the recovery of damages. The insurance brokers advised him of the replacement vehicle services on offer from 1st Automotive Ltd.

3. 1st Automotive Ltd specialise in hiring replacement vehicles to individuals whose cars, without any fault on their part, have been damaged by the negligence of other drivers and are off the road while being repaired. A particular feature of the services provided by 1st Automotive is that a customer can postpone paying for the hiring until his or her damages claim against the driver of the other vehicle has concluded. Since 1st Automotive takes on only those who appear to have cast iron negligence cases with no element of contributory negligence, 1st Automotive has a very high recovery rate of, according to the evidence, 97 per cent. The form of agreement into which 1st Automotive requires its customers to enter entitles 1st Automotive to have the conduct of any litigation that may be necessary in order to recover the damages. One of the main advantages that an agreement with 1st Automotive offers is that the customer obtains not only a suitable replacement vehicle while his or her damaged vehicle is being repaired, but obtains also relief from the nuisance of having to make and pursue the damages claim. The replacement vehicle can be delivered to the customer. When the customer’s car is roadworthy again, the replacement vehicle can be left at the customer’s garage for collection by 1st Automotive. The customer has to pay nothing until the conclusion of the damages claim when, if all has gone well, 1st Automotive’s charges will be covered by the damages recovered from the negligent driver.

4. In reality, of course, the recovery will not be from the negligent driver. It will be from the negligent driver’s insurers. This present litigation appears to be litigation between Mrs Dimond and Mr Lovell. In reality it is litigation between 1st Automotive and Co-operative Insurance Society Ltd, Mr Lovell’s insurers. I will refer to them as ´CIS’.

5. Mrs Dimond was happy to sign 1st Automotive’s form of agreement. She knew she needed a replacement vehicle while hers was being repaired. She made no enquiries as to whether other companies might be able to supply her with a suitable replacement vehicle at a lower rate of charge than 1st Automotive was offering. She, or more likely her husband, simply accepted their broker’s recommendation that she should deal with 1st Automotive.

6. She signed the 1st Automotive agreement on 25 January 1997. A Ford Mondeo was the replacement vehicle. The date on which the vehicle was to be returned was left open. It was not known exactly when her Suzuki would be ready. The details of the charges to be made were not specified in the agreement. Miss Christine Smith, a director of 1st Automotive, gave evidence that the rate of charge could not be specified until it was known for how long the hiring had continued. The reason she gave for this was that 1st Automotive’s daily rate of charge reduced after the first seven days. In addition a charge of £5 per day was made by 1st Automotive for a “Collision Damage Waiver”. This rate of charge could have been but was not specified in the agreement before it was signed. 1st Automotive makes a delivery charge of £15. This, too, could have been but was not specified in the agreement before it was signed. No details whatever of the charges were inserted into the appropriate places in the agreement before it was signed by Mrs Dimond.

7. Mrs Dimond’s Suzuki was repaired and ready for collection from her garage by 1 February 1997. So her hiring of the Ford Mondeo lasted 8 days. She duly returned the vehicle to her garage from where it was collected by 1st Automotive. 1st Automotive then entered the details of the applicable charges into the appropriate places in the agreement that Mrs Dimond had signed. The hiring charge was £30 per day for 8 days, £240. The delivery charge of £15 and the CDW charge of £5 a day for 8 days were added. So the charges entered in the agreement totalled £295.00. With VAT the total amount shown due to 1st Automotive was £346.63.

8. The £346.63 was the sum that 1st Automotive set about endeavouring to recover, in Mrs Dimond’s name, from CIS. CIS paid Mrs Dimond the cost of the repairs to the Suzuki within three days of the bill for the repairs being presented to them. But they drew the line at the £346.63. So proceedings were commenced and the claim for £346.63 came before Mr Recorder Anton Lodge Q.C., sitting in the Sheffield County Court.

9. There were two lines of defence. The first was that under the agreement between Mrs Dimond and 1st Automotive, 1st Automotive provided Mrs Dimond with credit in that she was able to defer payment for the car hire until her damages claim had concluded. Accordingly, it was argued, the agreement was a regulated consumer credit agreement for the purposes of the Consumer Credit Act 1974 and, since the prescribed requirements of the Act had not been complied with, the agreement was unenforceable against Mrs Dimond. So, it was argued, she had had the use of a replacement vehicle without having any obligation to pay for it. Since she did not owe 1st Automotive the £346.63, or any other sum, for her hire of the Ford Mondeo, she could not recover that sum as damages from Mr Lovell. Mrs Dimond’s (or rather 1st Automotive’s) response to this was that the agreement was not a consumer credit agreement as defined by the 1974 Act, but if it was and if, in consequence, it was unenforceable, nonetheless Mrs Dimond’s right to claim damages for the loss of use of her Suzuki for 8 days remained.

10. The second line of defence was that Mrs Dimond had failed to mitigate her damage. 1st Automotive’s charge for the 8 days represented a daily charge of £43.33, inclusive of everything. The “spot rate” for car hire in the Sheffield area for 8 days varied between £27.42 and £23.89, depending on the age of the car. In simply accepting 1st Automotive’s rates without any inquiry as to comparative rates on offer by other companies, Mrs Dimond had failed to act reasonably vis-à-vis the defendant from whom she expected to recover the charges. Moreover the services provided by 1st Automotive to Mrs Dimond for the £43.33 per day went beyond simply the supply of a car for hire and included advantages which could not in law form part of her damages claim. Mrs Dimond’s response was that she had acted reasonably in all the circumstances in contracting with 1st Automotive and that their charges were reasonable.

11. The Recorder agreed with Mrs Dimond on each of the issues I have mentioned. He held that the agreement was not caught by the 1974 Act but that, even if it was and was unenforceable, Mrs Dimond could still recover as damages the cost of hiring a replacement vehicle. He held, also, that Mrs Dimond had acted reasonably in entering into the agreement with 1st Automotive and that 1st Automotive’s rates were reasonable. He gave judgment in Mrs Dimond’s favour for the £346.63 and a further £30 as to which no issue now arises.

12. Mr Lovell, by CIS, has appealed. The argument before us has been much the same as it was before the Recorder. There are three issues of principle.

13. First, are agreements such as those 1st Automotive offers its customers consumer credit agreements for the purposes of the Consumer Credit Act 1974? If the answer is ´Yes’, a further issue arises as to the enforceability of the agreements.

14. Second, can a plaintiff such as Mrs Dimond recover damages for the loss of use of her vehicle notwithstanding that she has had the use of a replacement vehicle provided by a car hire company under an unenforceable agreement? If a plaintiff has had the use of a replacement vehicle without having to pay for it, can the plaintiff nonetheless recover damages?

15. Third, can a car owner whose car has been involved in an accident caused by negligence of another driver and without any fault on his own part accept the deal being offered by a company like 1st Automotive and recover their charges as damages notwithstanding that a cheaper hiring of a similar vehicle could have been obtained from a normal car hire company if the car owner had shopped around?

16. Each of these points of principle is of considerable commercial importance both to 1st Automotive and the other companies which offer credit car hire agreements to no-fault owners of cars damaged in road accidents and also to CIS and other insurance companies which have to find the damages payable to the no-fault car owners. The figure of £30 million a year has been mentioned as the sum that, nation-wide, turns on the result of this case. Not only are similar cases queuing up in the county courts but there are cases listed for hearing in this court which raise the same issues. One of these is Fantoni -v- Dunscombe, Case No. CCRTI 98/1623/2. Since the outcome of this appeal seems likely to be determinative of the Fantoni -v- Dunscombe appeal I gave leave on 17 February 1999 for written submissions on behalf of the parties to that appeal to be placed before us. The defendant in Fantoni -v- Dunscombe has availed himself of that leave.

17. I must turn now to the three issues of principle:-

Is 1st Automotive’s agreement a consumer credit agreement?

18. I have already given some details of the form and content of the agreement. I have not yet, however, referred to the printed Conditions of Hire that are incorporated into the agreement. The important conditions for present purposes are conditions 5, 6, 7, 8, 18 and 19. I should set out these conditions in full.

“5. Where the hire is consequent upon the Hirer’s own vehicle being unroadworthy as a result of a road traffic accident:

(i) The Lessor will allow the Hirer credit on the hire charges until such time as a claim for damages has been concluded against the party (hereinafter called the third party) that the Hirer alleges is liable for damages, arising out of the said accident, subject only to condition (6) hereunder.

(ii) The Lessor shall have the right to pursue an action in the Hirer’s name against the third party.

(iii) The Lessor shall have the right to pursue such action through the County Court and/or High Court and the Hirer must co-operate in the conduct of the action and, if required by the Lessor, attend any hearing that the Court appoints.

(iv) PROVIDED THAT notwithstanding the credit facility referred to above the hirer will discharge any indebtedness as soon as reasonably practicable, and shall take such action as is necessary to obtain interlocutory judgment or an interim payment of damages for the purpose of discharging the said indebtedness.

6. If, and only if, the Hirer, is in default of condition (5iii) then the credit allowed by the Lessor to the Hirer shall be terminated and the hire charges will be due from the Hirer to the Lessor 28 days from the Lessor giving notice thereof to the Hirer by reference to this condition (6).

7. The rate charged for the hire of the vehicle shall be the daily, weekly or monthly rate charged for that vehicle as published in the Lessor’s rental tariff valid at the commencement of the hire.

8. Except where condition (5) applies, the Hirer will pay to the Lessor on demand all charges due under this agreement, plus Value Added Tax at the rate appropriate at the time of the hire.

18. This agreement may be terminated by either party giving 24 hours notice of termination and the vehicle being returned to the Lessor.

19. Maximum rental period of THIS RENTAL AGREEMENT must not exceed 28 days”.

19. I would draw particular attention to the following features of these Conditions:-

(i) In condition 5(i) the Lessor is expressed to allow the Hirer “credit on the hire charges ...”. Condition 5(iv) refers to “the credit facility”. And condition 6 refers to the termination of “the credit allowed to the Hirer”.

(ii) Condition 5(iv) requires the Hirer to “discharge any indebtedness as soon as reasonably practicable ...” Condition 6 says that, in the contingency specified, “... the hire charges will be due ... 28 days from the Lessor giving notice thereof ...”. And condition 8 requires the Hirer, except where condition 5 applies, to “... pay ... on demand all charges due ...”.

20. These features of the Conditions of Hire make it clear, in my judgment, that the agreement creates an underlying indebtedness on account of hire charges notwithstanding that the hirer’s damages claim has not yet been concluded and that the time for payment of the indebtedness has not yet arrived.

21. With these terms of the agreement in mind I now turn to the relevant provisions of the 1974 Act.

22. Sections 8 to 15 contain interlocking definitions of agreements to which the Act applies. It is of importance to decide which if any, of these definitions catches 1st Automotive’s agreement.

23. Section 8 provides:-

“(1) A personal credit agreement is an agreement between an individual (“the debtor”) and any other person (“the creditor”) by which the creditor provides the debtor with credit of any amount.

(2) A consumer credit agreement is a personal credit agreement by which the creditor provides the debtor with credit not exceeding £15,000”.

24. Section 9 defines “credit” as follows:-

“(1) In this Act “credit” includes a cash loan, and any other form of financial accommodation”.

25. The first question for decision is whether 1st Automotive’s agreement is a personal credit agreement, as defined. If it is, it is certainly a consumer credit agreement (since the credit provided was of only £346.63). I will, however, defer consideration of this question until I have referred to the other relevant definitions of the Act. The reason for this is that Mr Brennan QC has submitted strongly that the Act must be read as a whole and that, so read, it is apparent that the expression “personal credit agreement” was never intended to catch credit hire agreements.

26. Section 10 provides as follows:-

“(1) for the purposes of this Act -

(a) running - account credit is a facility under a personal credit agreement whereby the debtor is enabled to receive from time to time (whether in his own person, or by another person) from the creditor or a third party cash, goods and services (or any of them) to an amount or value such that, taking into account payments made by or to the credit of the debtor, the credit limit (if any) is not at any time exceeded; and

(b) fixed sum credit is any other facility under a personal credit agreement whereby the debtor is enabled to receive credit (whether in one amount or by instalments)”.

27. It seems to me clear that 1st Automotive’s agreement does not allow its customers “running account credit” as described in section 10(1)(a). It follows that, if the agreement is a personal credit agreement, it allows fixed sum credit as described in section 10(1)(b).

28. Section 11 is of importance. It provides as follows:-

“(1) A restricted-use credit agreement is a regulated consumer credit agreement -

(a) to finance a transaction between the debtor and the creditor, whether forming part of that agreement or not, or
(b) to finance a transaction between the debtor and a person (the ´supplier’) other than the creditor, or
(c) to refinance any existing transaction of the debtor’s, whether to the creditor or another person,

and “restricted-use credit” shall be construed accordingly”.

I need not read the rest of section 11.

29. The Recorder took the view that if the agreement was a consumer credit agreement as defined, it would have been a restricted-use credit agreement under section 11(1)(c). I think, with respect that this must be wrong. The arrangement between Mrs Dimond and 1st Automotive did not involve the re-financing of any existing indebtedness. It involved the postponement of the time for payment of an indebtedness, namely, the car hiring charges. The charges were payable and the indebtedness was created under the same transaction as provided for the postponement of the time for payment. There was no re-financing. The agreement postponing the time for payment was, in my opinion, for section 11 purposes, an agreement for financing the transaction between Mrs Dimond and 1st Automotive. If it was a consumer credit agreement it was caught by section 11(1)(a), not section 11(1)(c).

30. Section 12 defines the expression “debtor - creditor - supplier agreement”. It provides as follows:-

“A debtor - creditor - supplier agreement is a regulated consumer credit agreement being -

(a) a restricted-use credit agreement which falls within section 11(1)(a), or
(b) ......, or
(c) ....... .”

31. So, if the 1st Automotive agreement is a consumer credit agreement, it is a debtor - creditor - supplier agreement under section 12.

32. Nothing for present purposes turns, in my opinion, on sections 13 or 14. It is worth noting, however, that if the Recorder had been right in regarding the agreement as caught by section 11(1)(c), the agreement would have been a “debtor - creditor agreement” as defined in section 13.

33. Section 15 defines the expression “consumer hire agreement”. It provides as follows:-

“(1) A consumer hire agreement is an agreement made by a person with an individual (the “hirer”) for the bailment. .... of goods to the hirer, being an agreement which -

(a) is not a hire-purchase agreement and
(b) is capable of subsisting for more than three months, and
(c) does not require the hirer to make payments exceeding £15,000.

(2) A consumer hire agreement is a regulated agreement if it is not an exempt agreement”.

34. Section 16 deals with exempt agreements. It is accepted that 1st Automotive’s agreement is not an exempt agreement under section 16. It is beyond question an agreement for the bailment of goods to the hirer. But it is not capable of subsisting for more than three months. Condition 19 limits its duration to 28 days. So the agreement is not a consumer hire agreement under section 15. A critical question, however, is whether a hire agreement that escapes section 15 because it cannot subsist for more than three months can nonetheless be a consumer credit agreement, provided, of course, that it allows some “form of financial accommodation” (section 9). Mr Brennan submits that it cannot, for the purposes of the Act, be both a hire agreement and a credit agreement. He supports his submission by referring to some of the Regulations made under the Act. I will come to those in a moment.

35. Section 60(1) of the Act requires the Secretary of State to “make regulations as to the form and content of documents embodying regulated agreements ...”.

36. Sub-section (2) says that:-

“Regulations under subsection (1) may in particular:-

(a) require specified information to be included in the prescribed manner in documents, and other specified material to be excluded;

(b) contain requirements to ensure that specified information is clearly brought to the attention of the debtor or hirer, and that one part of a document is not given insufficient or excessive prominence compared with another”.

37. But sub-section (3) provides:-

“(3) If, on an application made to the Director by a person carrying on a consumer credit business or a consumer hire business, it appears to the Director impracticable for the applicant to comply with any requirement of regulations under sub-section (1) in a particular case, he may, by notice to the applicant, direct that the requirement be waived or varied in relation to such agreements ... and the regulations shall have effect accordingly”.

38. It is apparent, therefore, that the Act contemplates that compliance with regulations made thereunder may be impracticable for the purposes of particular businesses. In that event the Act provides its own remedy. The owner of the business can apply for the regulations to be varied or waived.

39. Section 61 introduces the concept of a regulated agreement being “properly executed”. It provides, under sub-section (1), that an agreement is not “properly executed” unless:-

“(a) a document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or an behalf of the creditor or owner, and

(b) the document embodies all the terms of the agreement, other than implied terms, and

(c) ... .”

40. It is common ground in the present case that the document signed by Mrs Dimond did not embody all the terms of the agreement between her and 1st Automotive. In particular, it omitted to include any details of the hire charges. It follows that the agreement was not “properly executed”.

41. Section 65 provides that:-

“(1) An improperly - executed regulated agreement is enforceable against the debtor or hirer on an order of the court only.

(2) .....”.

42. And section 127(3) requires the court to dismiss an application for an enforcement order under section 65(1) “unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner)”.

43. In the present case, no application for an enforcement order has been made by 1st Automotive. In any event, the court could not make an enforcement order since no such document as is required by section 127(3) was ever signed by Mrs Dimond.

44. The 1974 Act was not brought into effect for a number of years. When it was eventually brought into effect in 1983 it was accompanied by the Consumer Credit (Agreements) Regulations 1983 made under various sections of the Act, including sections 60, 61 and 127.

45. Paragraph 2 dealt with the form and content of regulated consumer credit agreements and, by sub-paragraph (1), required them to contain the information set out in column 2 of Schedule 1 to the Regulations. Sub-paragraph (2) catered for the situation where information about financial particulars could not be exactly ascertained and permitted “estimated information based on such assumptions as the creditor may reasonably make in all the circumstances of the case ....” to be included. It is common ground that the agreement between Mrs Dimond and 1st Automotive did not contain the requisite information.

46. Paragraph 6(1) required that:-

“The terms specified in column 2 of Schedule 6 ... in relation to the type of regulated agreement referred to in column 1 ... are hereby prescribed for the purposes of section 61(1)(a) ... and of section 127(3) ...”.

47. Schedule 6 has the following entry under column 1.

“Restricted-use debtor - creditor - supplier agreements for fixed-sum credit ...”.

Against this entry under column 2 is the following prescribed term:-

“A term stating the amount of the credit, which may be expressed as the total cash price of the goods, services, land or other things, the acquisition of which is to be financed by credit under the agreement”.

Under column 1 there is an entry “consumer hire agreements”. Against this entry, under column 2, the prescribed term is:-

“A term stating how the hirer is to discharge his obligations under the agreement to pay the hire payments ...”.

48. Mr Brennan drew attention to these contrasting requirements for the purpose of submitting that hire agreements were intended to be regulated as consumer hire agreements and not as consumer credit agreements. I am very doubtful, however, whether it is proper to attempt to construe the 1974 Act in the context of the 1983 Regulations. It is certainly right to try and construe the 1974 Act as a whole. But the 1983 Regulations post-dated the Act by some 9 years and I do not think the content of the Regulations can be taken to be a guide to what Parliament intended by the language used in the Act.

49. Before returning to the Act, however, I should refer to the Consumer Credit (Exempt Agreements) Order 1989 made by the Secretary of State under, amongst other empowering sections, section 16 of the Act.

50. Paragraph 3(1) of the 1989 Order provides that:-

“(1) The Act shall not regulate a consumer credit agreement which is an agreement of one of the following descriptions, that is to say -

(a) a debtor - creditor - supplier agreement being either -

(i) an agreement for fixed-sum credit under which the total number of payments to be made by the debtor does not exceed four, and those payments are required to be made within a period not exceeding 12 months beginning with the date of the agreement”.

51. I need not refer to the other limbs of paragraph 3(1). Paragraph 3(1)(a)(i) shows that if, contrary to Mr Brennan’s submissions, agreements like 1st Automotive’s are consumer credit agreements, the hire companies can prevent them from being regulated agreements by limiting the period of credit to a maximum of 12 months.

52. But that is of no relevance to 1st Automotive’s agreement with Mrs Dimond which contained no limit on the duration of the “credit” save that it would terminate on the conclusion of the claim for damages.

53. So I return to the critical question, namely, whether a hire agreement under which payment for the hire is deferred for a period after the hire has come to an end is a personal credit agreement as defined in section 8 of the Act.

54. The Recorder held that it was not. He noted that under condition 5 of the agreement payment was not due “until such time as a claim for damages has been concluded” and held that because the hirer had no contractual obligation to pay until that time, credit was not being given. This reasoning cannot, in my judgment, be accepted. If payment for goods or services or land is deferred after the time when, if nothing about time of payment had been agreed, the payment would be due, the payer is being given credit. Such authority as there is supports this view.

55. In R -v- Miller [1977] 1 WLR 1129 (C.A.) a case in which an undischarged bankrupt was charged with obtaining credit while a bankrupt, Roskill L.J. giving the judgment of the court, said:-

“The obtaining of credit, in our view, means obtaining some benefit from another, without immediately giving the consideration in return for which that benefit is conferred”. (p. 1134).

On this view Mrs Dimond obtained credit from 1st Automotive.

56. In Consumer Credit Legislation Vol. 1, paragraph 437 contains a discussion of “The ingredients of credit”. Credit involves, in the view of the editor, Professor Goode:-

“(a) the supply of a benefit;
(b) attracting a contractual duty of payment;
(c) in money;
(d) the duty to pay being contractually deferred;
(e) for a significant period of time after payment has been earned;
(f) such deferment being granted by way of financial accommodation”.

Each of these elements is present under the agreement between Mrs Dimond and 1st Automotive. In paragraph 443 the following general principle is expressed:-

“Debt is deferred, and credit extended, whenever the contract provides for the debtor to pay, or gives him the option to pay, later than the time at which payment would otherwise have been earned under the express or implied terms of the contract”.

57. This principle, in my judgment, correctly expresses the test for identifying “credit” for the purposes of the 1974 Act.

58. After we had reserved judgment in this appeal a decision of Mr Justice Pumfrey in a tax case, Grant -v- Watton , [1999] Simons Tax Cases 330, came to my attention. The question in the case was whether a close company had made a loan to a director. A loan, for this purpose, would include “any form of credit”. At p. 345 the judge considered the scope of these words and said this:-

“In my judgment, on the face of it, credit is granted where payment is not demanded until a time later than the supply of services or goods to which the payment relates. Credit is the deferral of payment of a sum which, absent agreement, would be immediately payable”.

I entirely agree.

59. These statements of principle, applied to the facts of the present case, seem to me to require the conclusion, a conclusion which common sense also demands, that in allowing payment for the replacement vehicle to be deferred until her damages claim was concluded, Mrs Dimond was being allowed credit. The agreement itself referred to the deferral as “credit” (condition 5(i) and (iv) and condition 6).

60. So what are the arguments against that conclusion? Mr Brennan has drawn our attention to a letter dated 27 July 1998 sent to 1st Automotive by the Office of Fair Trading. The author of the letter expressed the opinion, also expressed by the Recorder, that “the agreement does not entail credit, as payment of the hire is only required on settlement of an insurance claim and therefore there would not appear to be any contractual deferment of debt”. I do not accept this opinion. It fails to notice the existence of an indebtedness from, at latest, the end of the hiring. The agreement refers to the indebtedness in condition 5(iv). More important, the question whether there is a contractual deferment of debt cannot be answered simply by looking at the contractual date of payment. It is necessary also to ask when, but for that stipulation, payment would have had to be made. It is the difference between the two dates that constitutes the credit.

61. Mr Brennan reminded us also that the validity of the very agreement that we are considering in this appeal was considered by the House of Lords in Devlin -v- Baslington , which was conjoined with Giles -v- Thompson [1994] 1 AC 142. There was no suggestion by any of their Lordships that the agreement might be caught by the 1974 Act.

62. The point of validity that was argued before the House of Lords related to the allegedly champertous nature of the agreement. This attack on the agreement’s validity was rejected by the House of Lords. No point on the 1974 Act was raised. It is impossible to treat the upholding of the agreement by their Lordships as indicating any view, one way or the other, on a point not raised before them at all.

63. More cogent, in my view, was Mr Brennan’s reliance on paragraph 456.6 in Consumer Credit Legislation, Vol. 1 that deals expressly with “credit hire agreements” and the question whether the deferment of the obligation to pay the hire charges constitutes the provision of credit. According to paragraph 456.6 it does not. The issue is dealt with in the following passage:-

“There are several answers to this contention. The first is that for the purposes of the Act there is no extension of credit at all. Under the Act there are only two forms of credit, namely credit which finances a transaction and credit which refinances an existing indebtedness. To fall within the first of these two categories the credit must finance the acquisition of land, goods, services or other things. But in the case of a rental agreement nothing is being acquired; there is merely the renting of a vehicle. Nor does the case fall within the second category .... it is not thereby financing an existing indebtedness, it is merely fixing the time when a future indebtedness is to arise ...”.

64. This passage was written by Professor Goode, an acknowledged master of the intricacies of consumer credit control. Nonetheless I am unable to accept this analysis. First, the proposition that a car hire agreement does not involve the acquisition of a service is not, in my judgment, correct. A car hire company offers a service to its customers just as does a company that hires out video tapes, a liveryman who hires out horses or Moss Bros in hiring out evening dress. There is, in my opinion, no distinction in principle between a service that consists of making available some article for use by a customer and the service offered by a barber or by a taxidriver or by a caterer. If any of these services is made available on terms that involve deferring payment for a period after the service has come to an end, the supplier of the service is, in my opinion, providing a credit facility to the customer. In the present case, the agreement that Mrs Dimond’s obligation to pay for the car hire would be deferred until her damages claim had been concluded was, in my judgment, an agreement allowing her “credit” for the purposes of the 1974 Act.

65. Finally, Mr Brennan submitted that the structure of the Act made it impossible for an agreement to be at the same time a consumer hire agreement and a consumer credit agreement. That possibility does not arise in the present case. The 1st Automotive agreement was not capable of lasting for more than three months, so it could not have been a consumer hire agreement as defined. But the point is a fair one because if condition 19 had been omitted, the 1st Automotive agreement would have been a consumer hire agreement under section 15. Could it at the same time have been a consumer credit agreement?

66. Professor Goode supports Mr Brennan in his submission that it could not. Paragraph 456.6 continues, after the passage I have already cited, as follows:-

“.... it is hard to believe that the draftsman of the Act could have contemplated a legal regime under which a single facility, the rental of goods, at a single rental could simultaneously be a regulated consumer hire agreement ... and a regulated consumer credit agreement. The complexities of such a regime and the confusion that would be engendered in the minds of hirers presented with two different and incompatible sets of disclosure will be obvious. Plainly consumer credit and consumer hire are envisaged as mutually exclusive categories ...”.

67. I see the force of this but am not persuaded that the two regimes would necessarily be incompatible. If certain prescribed requirements have to be included in regulated agreements for the hire of goods and other requirements have to be included in regulated agreements that provide credit, then agreements that both provide for the hire of goods and allow credit for payment of the hire charges may have to include both sets of requirements. If any genuine case of incompatibility were to arise, the Act provides the remedy via an application under section 60(3) for a waiver or variation of the requirements.

68. I prefer an answer to this first question that confronts the potential two regimes difficulty to one that ignores the obvious credit facility being provided to customers under agreements like 1st Automotive’s and that distorts the otherwise clear language of the statutory definitions in sections 8, 9, 10, 11 and 12 of the Act.

69. In my judgment the 1st Automotive agreement was a personal credit agreement (section 8(1)), a consumer credit agreement (section 8(2)), an agreement for a fixed sum credit facility (section 10(1)(b), a restricted-use credit agreement under section 11(1)(a) and a debtor - creditor - supplier agreement under section 12(a). It would also have been a consumer hire agreement if it had been capable of lasting more than 3 months.

Is the 1st Automotive agreement enforceable?

70. It is common ground that the agreement was not, for the purposes of section 61, “properly executed”.

71. First, the document signed by Mrs Dimond did not contain all the “prescribed terms” (s.61(1)(a)). Secondly the document did not contain all the terms of the agreement between Mrs Dimond and 1st Automotive. As to the first deficiency, Mr Brennan submitted that 1st Automotive could not have included in the document all the prescribed terms as set out in Schedule 6 to the 1983 Regulations. I do not agree that this was so. The prescribed term particularly pointed to by Mr Brennan was “A term stating the amount of the credit, which may be expressed as the total cash price of the goods, services, land or other things, the acquisition of which is to be financed by credit under the agreement”. Mr Brennan submitted, in paragraph 6.4 of his Skeleton, that the amount of the credit would be unknown since the length of the hire period would be unknown. But the daily rate of hire would be known and an estimate of the period of hire could be obtained from the garage that was repairing the damaged vehicle. In these circumstances paragraph 2(2) of the 1983 Regulations would, as I read it, apply and would have allowed 1st Automotive to insert an estimate of the amount of credit with an indication of the assumptions on which the estimate was made. I do not accept that 1st Automotive could not have complied with the Regulations.

72. Mr Brennan submitted also that the prescribed requirements that were omitted from the document signed by Mrs Dimond could be waived or varied by the Director on an application under section 60(3). The proposition that a section 60(3) application can be made in order to validate an agreement already entered into where the credit has already been provided seems to me doubtful. Another way of putting the same point is to doubt whether a section 60(3) waiver or variation of requirements could retrospectively validate an agreement unenforceable for want of compliance with the statutory requirements. Section 60(4) seems to me to stand in the way. A sub-section (3) notice would, in the case of an existing agreement, be bound to prejudice the interests of the debtor or hirer. We did not receive any detailed submissions from counsel as to whether or not an application could now be made under section 60(3) by 1st Automotive. My view, however, on a reading of sub-sections (3) and (4) is that the section 60(3) application must be made and the notice of waiver or variation must be given by the Director before the agreement has been entered into and that the notice can have prospective but not retrospective effect.

73. Accordingly, in my judgment, the agreement between Mrs Dimond and 1st Automotive cannot be enforced against her. This is not a case, for reasons already explained, in which an enforcement order under section 127 could be obtained.

Can Mrs Dimond nonetheless claim damages for the loss of use of her car?

74. This, in my opinion, is the most difficult issue in the case. There is no doubt but that, by the negligence of Mr Lovell, Mrs Dimond was deprived of the use of her car for 8 days. There is also no doubt but that she had a genuine need of a replacement vehicle and that the reasonable cost to her of obtaining one would have been recoverable as damages. But, in the event, she has had the use of a replacement vehicle but has no legal liability to pay for it. This has come about not through the benevolence of a friend or relation but because 1st Automotive’s car hiring agreement has fallen foul of the Consumer Credit legislation. If she can, nonetheless, recover damages she has said that she will pay the damages over to 1st Automotive even though she has no legal liability to do so.

75. Mr McLaren Q.C., counsel for the appellant/defendant, has submitted that if Mrs Dimond has no legal liability to pay 1st Automotive, she has suffered no recoverable loss. Her loss of use of her Suzuki has been compensated for by a benefit derived from 1st Automotive that comes with no charge. So no special damages for loss of use of her car can be claimed. Mr Brennan, on the other hand, has submitted that the item of loss for which she is entitled to damages is the loss of use of her car. It is beside the point that, in the events that happened, she was able to remedy that loss of use without having to pay anyone anything.

76. There are two distinct strands of authority that bear upon this conundrum.

77. One line of authority holds that benefits received by a plaintiff from a third party that have offset some loss caused to the plaintiff by the negligence are immaterial to the plaintiff’s damages claim. The other line of authority stresses that damages are compensatory and a plaintiff who, in the event, has suffered no loss cannot recover damages.

78. Parry -v- Cleaver [1970] AC1 was a case of the former sort. The House of Lords held that a policeman disabled in a car accident caused by the defendant’s negligence did not have to bring his police pension (which he had in substance himself provided by his pre-accident service) into account against his recoverable damages.

79. But in Hussain -v- New Taplow Paper Mills Ltd [1988] 1AC 514, payments by the defendants to the plaintiff equal to half his pre-accident earnings under their “permanent health insurance scheme” for their employees (to which employees did not contribute) were held to be deductible in assessing the plaintiff’s damages for loss of earnings. Lord Bridge of Harwich, after referring to Parry -v- Cleaver, emphasised “the rule that prima facie the only recoverable loss is the net loss” (p. 527) and, at p.530, said that:-

“... it has always been assumed as axiomatic that an employee who receives under the terms of his contract of employment either the whole or part of his salary or wages during a period when he is incapacitated for work cannot claim damages for a loss which he has not sustained”.

80. And in Hodgson -v- Trapp [1989] 1AC 807 the House of Lords held that attendance and mobility allowances payable to the plaintiff under the Social Security Act 1975 ought to be deducted from the damages assessed as being necessary to provide for the cost of care of the plaintiff. Otherwise there would have been an element of double recovery.

81. Donnelly -v- Joyce [1974] 1 Q.B. 454 was a case in which the plaintiff’s mother had given up her part-time employment and devoted herself to caring for him. She naturally did not charge for these services. The plaintiff was awarded damages an element of which represented his mother’s loss of wages. The Court of Appeal dismissed an appeal against this award. Counsel for the defendant submitted that a plaintiff could not recover damages that represented someone else’s loss unless he was under a legal liability to reimburse that loss. And this plaintiff was under no liability to reimburse his mother. The Court of Appeal did not agree, Megaw L.J., giving the judgment of the court, said this at p. 462:-

“... The plaintiff’s loss ... is not the expenditure of money ... to pay for the nursing attention. His loss is the existence of the need .... for those nursing services, the value of which for the purposes of damages ... is the proper and reasonable cost of supplying those needs. That, in our judgment, is the key to the problem. So far as the defendant is concerned, the loss is not someone else’s loss. It is the plaintiff’s loss”.

82. Donnelly -v- Joyce was followed in another Court of Appeal case McAll -v- Brooks (1984) RTR 99. This case, like the present, involved a replacement car. The plaintiff’s car was off the road being repaired. Under the plaintiff’s insurance policy a replacement car was made available to him at a charge of £328. He claimed the £328 from the defendant who was admittedly liable for the damage to the plaintiff’s car. It turned out, however, that the insurers were not licensed to carry on an insurance business. So the £328 was not in law recoverable by them from the plaintiff. Could the plaintiff claim that sum as damages from the defendant? The Court of Appeal held, following Donnelly -v- Joyce , that he could. It was a two judge Court of Appeal. Lawton L.J. cited a passage from the judgment of Megaw L.J. in Donnelly -v- Joyce . It included the passage I have already cited. He held that, since the plaintiff had an admitted need for a replacement car “on the authority of Donnelly’s case that need had to be paid for by the wrongdoer”. Dillon L.J. agreed. He said:-

“The court is not concerned in awarding damages to consider whether the plaintiff does or does not owe a legal or moral obligation to a third party or to consider what the plaintiff is going to do with the money awarded to him”.

83. McAll -v- Brooks is, as a decision of the Court of Appeal, prima facie binding on us. If it were the last word on the subject, that would be an end of this point. Mrs Dimond would be entitled to damages for loss of use of her Suzuki even though she has no obligation to pay anything to 1st Automotive. But McAll -v- Brooks is not the last word on the subject. The last word is the decision of the House of Lords in Hunt -v- Severs [1994] 2 AC 350.

84. Hunt -v- Severs was a case in which the plaintiff had been very severely injured in a motorcycle accident caused by the defendant’s negligence. They later married. The plaintiff’s damages claim included claims for the value of his services, past and future, in looking after her. The trial judge and the Court of Appeal held that she was entitled to recover the value of those services although it was the defendant tortfeasor who was providing them. The House of Lords allowed the appeal. Lord Bridge of Harwich emphasised, as he had done in Hussain, that “... damages in the tort of negligence are purely compensatory. [The plaintiff] should recover from the tortfeasor no more and no less than he has lost”. He went on, at p. 357:-

“Difficult questions may arise when the plaintiff’s injuries attract benefits from third parties. According to their nature these may or may not be taken into account as reducing the tortfeasor’s liability. The two well established categories of receipt which are to be ignored in assessing damages are the fruits of insurance which the plaintiff himself has provided against the contingency causing his injuries (which may or may not lead to a claim by the insurer as subrogated to the rights of the plaintiff) and the fruits of the benevolence of third parties motivated by sympathy for the plaintiff’s misfortune. The policy considerations which underlie these two apparent exceptions to the rule against double recovery are, I think, well understood”.

85. Lord Bridge then referred to the cases where the plaintiff had been allowed to recover as damages the value of care services voluntarily provided by friends or relations. He referred, in particular, to the passage from Megaw L.J.’s judgment in Donnelly -v- Joyce on which Lawton L.J. had relied in McAll -v- Brooks . As to that passage Lord Bridge said this (at p.361):-

“... I do not find this reasoning convincing. I accept that the basis of a plaintiff’s claim for damages may consist in his need for services but I cannot accept that the question from what source that need has been met is irrelevant. If an injured plaintiff is treated in hospital as a private patient he is entitled to recover the cost of that treatment. But if he receives free treatment under the National Health Service his need has been met without cost to him and he cannot claim the cost of the treatment from the tortfeasor. So it cannot, I think, be right to say that in all cases the plaintiff’s loss is ´for the purpose of damages ... the proper and reasonable cost of supplying [his] needs’.”

86. Lord Bridge accepted that it was established in English law that “an injured plaintiff may recover the reasonable value of gratuitous services rendered to him by way of voluntary care by a member of his family” (p. 363). He held, however, that the rationale behind this principle was “to enable the voluntary carer to receive proper recompense for his or her services”. So he adopted the view expressed by Lord Denning M.R. in Cunningham -v- Harrison [1973] Q.B. 942 that “in England the injured plaintiff who recovers damages under this head should hold them on trust for the voluntary carer”. But this could not be done where the voluntary carer was the defendant who had to pay the damages.

87. Each of the other members of the House agreed with Lord Bridge’s reasons for allowing the appeal.

88. Lord Bridge’s reasoning, in disapproving the reasoning of Megaw L.J. in Donnelly -v- Joyce , fatally undermines, in my judgment, McAll -v- Brooks . If a plaintiff has received a benefit from a third party that has, in the event, met his need with no cost to himself, be it a need for care services or a need for a replacement vehicle, the court may allow an award of damages in order to enable the plaintiff to recompense the third party. The plaintiff will then hold the amount of the award in trust for the third party. But if the circumstances of the case do not permit a trust for the third party to be imposed on the damages, the plaintiff cannot recover the damages. He does not need to recover damages in order to meet his own loss for, in the event, he has suffered none. To allow him to recover in circumstances where the trust solution could not be applied would lead to a recovery by the plaintiff of more than he had lost. These, in my judgment, are the principles to be applied in the present case.

89. Mrs Dimond’s need for a replacement vehicle was met by 1st Automotive. They supplied her with a vehicle under the terms of the hiring agreement that she signed. But that agreement is unenforceable for 1st Automotive’s failure to comply with the requirements of the 1974 Act. 1st Automotive certainly did not provide the vehicle out of benevolence. It supplied the vehicle in the course of its business. Would the law in these circumstances impose a trust on the damages in favour of 1st Automotive? In my judgment, certainly not. The statutory requirements of which 1st Automotive were in breach were imposed by Parliament and, under subordinate legislation, by the Secretary of State. I can see no reason at all how it can be right for equity, via the medium of a trust, to remedy 1st Automotive’s failure to comply with the statutory requirements. Orakpo -v- Manson Investments Ltd [1978] AC 95 provides an instructive example. The defendants in the case were licensed moneylenders. They made loans to the plaintiff but, in doing so, failed to comply with the requirements of the Moneylenders Act 1927. The consequence was that the loan agreements were unenforceable. The plaintiff had used the money to purchase some properties. He had granted the defendants a first mortgage but that, too, was unenforceable because of the breaches of the 1927 Act. The defendants claimed that to the extent that their money had been used to discharge vendors’ liens over the properties they were entitled by subrogation to the benefit of the liens. The House of Lords rejected this claim. Somewhat different reasons were given by different members of the House. Lord Salmon, at p.111, commented that he could not think “that it would be proper to apply an equitable doctrine for the purpose of enabling a moneylender to escape from the consequences of his breach of the statute ...”. Lord Edmond Davies quoted from the written submission of the respondent in person:-

“Should a court of equity grant relief to an offending moneylender in breach of section 6 of the Act of 1927, contrary to the statutory prohibition of remedy? Can a moneylender claiming relief in equity in these circumstances avoid setting up his very own breach of the law to support such a claim?”.

He answered these questions as follows:-

“Considerable though my reluctance is, in the particular circumstances, to answer these questions in the negative, I find myself compelled to do so, for to answer affirmatively would be to enable the court to express a policy of its own in regard to moneylending transactions which would be in direct conflict with the policy of the Act of 1927 itself”. (p. 115).

90. In the present case, the 1974 Act has enacted that an agreement not “properly executed” is unenforceable. It is not, in my judgment, the function of the courts to remedy that unenforceability by creating a trust in favour of 1st Automotive over damages payable to Mrs Dimond. If McAll -v- Brooks had been decided after Hunt -v- Severs the same reasoning would, in my view, have prevented recovery in that case. A trust in favour of the insurance company that had been carrying on an illegal insurance business created in order to remedy the consequences of the illegality would, in my view, have been wrong in principle. If a trust of the damages in favour of the supplier of the replacement vehicle cannot be created, Hunt -v- Severs stands, in my judgment, as an authority that bars recovery of the damages from the defendant.

91. In my judgment, in disagreement with the Recorder, McAll -v- Brooks is no longer good law and Mrs Dimond who has fortuitously obtained a replacement vehicle without having to pay for it, cannot recover as damages the amount she would have had to pay if her agreement with 1st Automotive had been enforceable.

Was there a failure by Mrs Dimond to take reasonable steps to mitigate her damage?

92. This question does not strictly arise. But we have had full argument on it. 1st Automotive, and others carrying on a like business, can adjust their business practices so as to avoid in the future falling foul of the requirements of the 1974 Act. So this question may still need answering.

93. The standard of conduct required of a plaintiff in order to avoid charges of a failure to mitigate his damage is not a particularly onerous one. As it is put in McGregor on Damages, 16th Ed., in para. 322:-

“Although the plaintiff must act with the defendant’s as well as with his own interests in mind, he is only required to act reasonably and the standard of reasonableness is not high in view of the fact that the defendant is an admitted wrongdoer”.

94. In the present case it is clear from the evidence that Mrs Dimond, or perhaps her husband, simply accepted their insurance broker’s recommendation to use the services on offer from 1st Automotive. It was, in my opinion, eminently reasonable for them to have done so. A broker is more likely to have a knowledge of the services on offer that an individual could acquire even after a tedious hour or so with Yellow Pages and a telephone. It cannot be the law that a plaintiff who asks for the advice of a broker and does not herself telephone around to test the market is failing to take reasonable steps to mitigate her damage. The broker was, of course, her agent. Should he have tested the car hire market in order to advise her whom she should approach for a replacement vehicle? There was no evidence from the broker, so what, if any, thought he gave to ordinary car hire firms one cannot tell. But it seems to me that he was entitled to take the view that a firm like 1st Automotive, which would provide Mrs Dimond with a suitable vehicle and relieve her from the worry of having to argue with Mr Lovell’s insurers about recovery and from the worry of any necessary litigation, would provide a service that she could reasonably decide to take. Mr McLaren pointed out, correctly, that damages for worry and for the nuisance caused by having to deal with the consequences of an accident are not recoverable. It does not follow, however, that an injured party’s decision to hire a replacement vehicle from a company which, as well as supplying the vehicle, will relieve her of the worry and nuisance which would normally result from the accident is a decision which fails to take sufficient account of the defendant’s interest. Nor, in my view, does the fact that the company’s hire charges are higher than those of the ordinary car hire companies necessarily lead to a different conclusion. The evidence in the case was that 1st Automotive’s charges were in line with those of other companies offering a similar service.

95. It is, after all, a question of fact whether a plaintiff has acted reasonably in incurring the item of expense that is sought to be recovered as damages. The Recorder held that Mrs Dimond had acted reasonably in hiring her replacement vehicle from 1st Automotive. In so holding he was implicitly also holding that in doing so Mrs Dimond had not failed to take reasonable account of the interests of Mr Lovell. The evidence before him entitled him, in my judgment, to come to that conclusion. I do not think it was obligatory for Mrs Dimond to shop around or to go to an ordinary car hire company. It was reasonable to choose the special niche service on offer from 1st Automotive. If the agreement Mrs Dimond entered into with 1st Automotive had been enforceable against her, I would, in agreement with the Recorder, have held her to be entitled to recover as damages the charges payable under it.

96. In the event, however, I would allow the appeal.


97. I agree.


98. With the exception of the last question, described in argument as “mitigation” of the plaintiff’s damage, I agree with the reasoning of the Vice Chancellor about each matter covered in his judgment.

99. Like the Vice Chancellor I shall assume that this final issue is properly described as mitigation rather than the assessment of damage. The plaintiff’s claim is confined to damage suffered because she could not use her own car while it was being repaired. Such claims are commonplace. Assuming that there is indeed any loss (as to which, see Lord Mustill’s warning in Giles v Thompson [1994] 1 AC 142, at 167, that “The need for a replacement car is not self-proving”), it is conventionally assessed by reference to the cost of hiring a substitute car while necessary repairs are carried out. The conventional approach is neither fixed nor immutable (in the context of the hire of a car of equal quality to the damaged car, see H.L. Motorworks v Alwahbi [1977] RTR 276 where the cost was allowed, and Watson Norie v Shaw (1967) 111 S.J. 117 where it was not). Indeed if the approach were fixed or immutable Lord Mustill would not have expressed himself as he did in Giles v Thompson:

"What matters is that the judges should look carefully at claims for hiring, both as to their duration and as to their rate. This will do much to avoid the inflated claims of which defendants’ insurers are understandably apprehensive and will also discourage promotion of over optimistic claims by motorists..... "

100. Precisely the same principles apply to the analogous situation when the court is required to quantify the diminution in value of a vehicle following accidental damage. The cost of repair is normally taken to represent the damage (see The London Corporation [1935] P 70, at 77: Darbishire v Warran [1963] 1 WLR 1067 at 1071). This represents a practical method of quantifying the loss, but in some cases the cost of repairs may not adequately represent the whole of the diminution in value ( Payton v Brooks [1974) RTR 169) and in yet other cases it may be regarded as excessive ( Darbishire v Warran ).

101. It is therefore not possible to pronounce authoritatively and finally on the substantial practical question which concerns the present defendant’s insurers, that is, whether it is reasonable for every plaintiff whose car has been damaged in circumstances in which the defendant’s liability is obvious, or virtually so, to take advantage of the useful facilities offered by organisations such as 1st Automotive Limited. Without attempting to define the factual issues which may arise in any individual case the assessment will reflect ordinary questions such as the reasonableness of the use of an alternative vehicle, and appropriate steps to be taken in mitigation by the plaintiff. The circumstances are bound to vary. The individual plaintiff may have an urgent need immediately to find a replacement car, which may make it entirely reasonable for him to take advantage of the facilities offered by 1st Automotive Limited, or similar organisations, notwithstanding that the cost of the replacement vehicle would also include the additional expense necessary for these organisations to operate their businesses at a reasonable profit. Where the defendant’s insurers are unwilling, or hesitate to accept liability in an obvious case, it may similarly be reasonable for the plaintiff to elect to use such services. On the other hand if the defendant’s insurers make a rapid offer to provide an alternative vehicle, or the limited extent of the damage actually sustained by the vehicle enables the plaintiff to use it while making reasonable enquiries to check on the alternatives, rather than simply involve the defendant (or his insurers) in an increased liability, it may be inappropriate to use the cost charged by organisations like 1st Automotive as the correct basis for quantifying the claim for loss of use.

102. Reduced to a single word, the test is reasonableness, and where the claim is inflated it should be reduced to reasonable levels. Without attempting a disquisition on the relevant legal principles, in practical terms in most cases it may be useful for the actual rate of hiring an alternative vehicle to be taken as the normal starting point. If this figure represents local hire rates there is unlikely to be much dispute. If the alternative vehicle was hired from an organisation like 1st Automotive Limited, then if the defendant’s insurers contend that this rate is unreasonable, they should be prepared to advance evidence, and argument. If the amount in dispute between the parties justifies the expense of litigation, the trial judge will have to assess the claim for loss of use in the light of his findings of fact.

103. Applying these principles to the present case, my preliminary view on reading the papers, and indeed during the course of argument, was that the judge’s assessment in this present case was somewhat over generous. The plaintiff, who had no urgent need of the replacement car, made no enquiries of the local rates available from hire companies, nor of the defendant’s insurers, to check whether they would have been prepared to agree to such rates. However, given that this was a question of fact for the trial judge, I am not prepared to dissent from the conclusion reached by the Vice Chancellor.

THE VICE-CHANCELLOR: The judgments in this case have been handed down and the judgment of the court is in terms of the judgments handed down as amended pursuant to the very helpful corrections which were submitted to us. There is just one thing I wanted to add. I have had a letter from Mr Brennan, who on the hearing was leading counsel for the respondents, explaining why he could not be here today. He also has expressed somewhat of a complaint that the judgments did not deal with the arguments that he put forward relating to a restitutionary recovery. I just wanted to say about that, so there is no doubt as to what the position is, that the arguments about restitutionary recovery did not find any mention in the pleadings in the case; they found no mention in the judgment of the judge below; they found no mention in any respondent's notice; they found no mention in the respondent's skeleton argument. They were mentioned in argument by Mr Brennan, but it seems to me, having heard the argument, the argument was not sufficiently cogent to warrant any reference in the judgment. The letter says that Mr Brennan assumes the court rejected the argument. The assumption is correct.

Order: Appeal allowed with costs here and below; the respondent do repay to the appellant the sum of £346.63 together with interest of £18.06; application for leave to appeal to the House of Lords refused. ( This order does not form part of the approved judgment )

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