England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NORTHAMPTON COUNTY COURT
(His Honour Judge Charles Harris Q.C.)
(District Judge Flood)
8SK01997

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/12/2011

Lord Justice Moore-Bick :

Background

1. This appeal arises out of a road traffic accident on 30^th May 2007 in which the appellant's car was damaged by one of the respondent's vehicles. The appellant, Miss Sayce, was injured in the accident, but that part of her claim and her claim to recover the cost of repairs to her car were settled before the proceedings were started. The only head of loss which therefore remained outstanding was the cost of hiring a replacement vehicle for the period during which her own car was off the road undergoing repairs. That amounted to £3,446.28.
2. The driver of the other vehicle involved in the accident was an employee of the respondent, TNT (UK) Ltd. At the time of the accident he gave Miss Sayce a card asking her to contact TNT as soon as possible. Miss Sayce telephoned TNT later that day and was told that if her own car had been rendered unroadworthy they would see about providing a courtesy car. Her attention was drawn to a paragraph on the back of the card headed "Mitigation of losses" which included the following:

" . . . if you require a hire car whilst your vehicle is undergoing repairs, call us and we will provide with a hire vehicle, the same or equal to yours, free of charge."

It also contained the following warning:

"Please note that if you choose not to contact TNT or take advantage of our offer (see below) this may affect your entitlement to recover hire or storage charges that you have incurred by using the services of a third party. In any case it is imperative that you show this card to your insurer, any third party hire company that you may use or your legal representative as it is very important that they are made aware of our offer, so that they can advise you accordingly."

3. In the event Miss Sayce did not accept TNT's offer but, having consulted her own insurers, obtained a replacement car under a credit hire agreement. In due course she started proceedings to recover the amount charged for the replacement vehicle.
4. The claim was originally allocated to the fast track, but was transferred to the small claims track at the instigation of TNT and eventually came on for hearing before District Judge Flood. She found that by failing to accept a replacement car from TNT Miss Sayce had failed to act reasonably in mitigation of her loss and that because the replacement would have obviated any need to hire a car in the open market she could not recover anything from TNT.
5. Miss Sayce appealed against that decision and the matter came before His Honour Judge Charles Harris Q.C. In the meantime this court had given judgment in the case of Copley v Lawn [2009] EWCA Civ 580, [2010] 1 All E.R. (Comm) 890. In view of the central importance of that decision to the present case, it is convenient to refer to it in some detail at this point.

Copley v Lawn

6. In Copley v Lawn the court heard two appeals concerning claims for loss of use of cars damaged in road traffic accidents for which the claimants were not to blame. In each case the defendant's insurers had offered the claimant a replacement vehicle at no cost, but the claimant had failed to take up the offer and had obtained a vehicle from another source under a credit hire agreement. Two questions arose for determination: whether the claimants had failed to act reasonably in mitigation of their loss; and, if so, whether that failure prevented them from recovering damages from the defendants. The court below had found that the claimants had failed to act reasonably in rejecting the defendants' offers and that as a result they could not recover substantial damages for the loss of use of their vehicles. However, this court disagreed. Longmore L.J., with whom Waller and Jacob L.JJ. agreed, pointed out that in neither case had the claimant been told how much it would cost the defendant to provide a replacement vehicle, so that the claimant could not work out whether it would be cheaper for the defendant to provide a replacement itself than to reimburse him in respect of the hire charges he would otherwise incur. He held that in those circumstances it was not unreasonable for the claimants to have refused the defendants' offers and that, since the question whether a claimant has failed to act reasonably in mitigation is a matter of evaluation and judgment rather than a finding of primary fact, the court was entitled to interfere if it considered that the judge's conclusion was wrong.
7. That was sufficient to dispose of the appeal, but Longmore L.J. went on to consider what the position would have been if the claimants had in fact failed to act reasonably in mitigation. He held that a claimant's loss is not wiped out by an offer of a replacement vehicle at no cost to himself and that even if he has acted unreasonably in rejecting such an offer, he can still recover an amount equal to "the actual reasonable cost of hiring a replacement" as reflected by the cost that the defendant would have incurred in providing a substitute vehicle.

The proceedings before Judge Harris

8. When the matter came before Judge Harris TNT accepted in the light of the decision in Copley v Lawn that, even if Miss Sayce had acted unreasonably in failing to accept its offer of a replacement vehicle, she was nonetheless entitled to recover by way of damages an amount equal to the cost that it would have incurred in providing her with another car. It was agreed that that would have amounted to £14 a day, or £868 in total. However, Judge Harris not only held that that the District Judge was entitled to find that Miss Sayce had acted unreasonably in failing to accept TNT's offer, but also that her failure to do so precluded her from recovering any damages for loss of use from TNT. He declined to follow the decision in Copley v Lawn because he considered that it was inconsistent with several previous decisions both of the House of Lords and of this court. He therefore dismissed her appeal. Miss Sayce now appeals against his decision.

The present appeal

9. Before us Mr. Christopher Butcher Q.C. for Miss Sayce submitted that Judge Harris erred in two important respects: first, he decided the case on a basis that was inconsistent with the way in which the parties had argued it and did so without giving them an opportunity to address him on the approach he was minded to take or the relevant legal principles; second, he failed to follow and apply the decision in Copley v Lawn, which was binding on him. Mr. Berragan for TNT felt unable to challenge either of those submissions and indeed for the purposes of the appeal the parties had prepared a joint statement in support of an order that the appeal be allowed. TNT made it clear, however, that it intended to seek permission to appeal to the Supreme Court on the grounds that the decision in Copley v Lawn was inconsistent with established authority and wrong as a matter of principle.
10. In view of the serious criticisms made of Judge Harris's conduct of the proceedings, and in anticipation of TNT's application for permission to appeal to the Supreme Court, we invited counsel to address us fully on both aspects of the case, rather than simply allow the appeal by consent. We are grateful to them both for their assistance, because it has enabled us to understand more clearly the criticisms made of the judgment below and the grounds on which TNT submits that this court should itself grant permission to appeal to the Supreme Court.

Procedural irregularity

11. It is convenient to begin by considering the way in which the judge dealt with the proceedings. In the light of the second limb of the judgment in Copley v Lawn TNT accepted that Miss Sayce was entitled to recover at least part of her loss and that therefore the appeal would have to be allowed. It said that it had told her that it would incur a cost of £14 a day in providing her with a replacement vehicle and although it continued to maintain that her failure to take up its offer was unreasonable, it accepted that on that basis she was entitled nonetheless to recover damages for loss of use in that amount, a total of £868. Indeed, in an attempt to bring the dispute to a close it offered to pay her £900, as well as a sum on account of costs.
12. The question whether Miss Sayce had acted unreasonably thus remained a live issue on the appeal, but it is clear that both parties accepted that it was to be determined in accordance with the decision in Copley v Lawn. That meant that it was necessary to decide whether TNT had informed Miss Sayce how much it would cost it to provide her with a replacement car. The District Judge had made no finding about that because when the case was before her no one had thought it was a relevant consideration. However, the documents in the case, all of which were before Judge Harris, included a letter from TNT to Miss Sayce dated 6^th June 2007, in which she was told that she would be offered a car of an equivalent type to her own at a fully inclusive rate of £14 a day, the cost being borne by TNT. By that time, however, Miss Sayce had already entered into a credit hire agreement pursuant to arrangements made by her own insurers.
13. In those circumstances both parties no doubt expected that, applying the first limb of the judgment in Copley v Lawn, Judge Harris would find as a fact whether TNT had informed Miss Sayce of the cost it would incur in providing her with a replacement car, and if so when, and in the light of his findings would decide whether her failure to take up its offer was unreasonable. However, he did not do so. Instead, he said this:

"9. Several questions arise. The factual questions (a) whether the claimant was unreasonable not to accept the defendant's offer; (b) whether the District Judge's decision is wrong and is appealable; and (c) if the claimant's rejection was unreasonable, what is the legal position and is this court, bound by Copley v Lawn?

10. As to (a) and (b) it is well established that the question of mitigation is one of fact: Payzu v Saunders [1919] 2KB 581 CA, quoted and approved in The 'Solholt' [1983] 1 Ll. Rep. 605 CA per Sir John Donaldson MR. Because mitigation is a question of fact, "It is, therefore, rarely appropriate to interfere with the conclusions of the trial judge": per Potter LJ in Standard Chartered v Pakistan National Shipping Corporation [2001] 1 All ER (Comm) 822 CA, paragraph 47.

I note that Longmore LJ in Copley v Lawn felt that "Questions of mitigation are ... questions of evaluation and judgement and there is no reason why this court should not interfere if the judge's conclusions are in its considered opinion wrong."

However, that observation does not alter the rule. Sir Mark Potter in Beechwood v Birmingham [2010] 3 WLR 1677 at 1687 remarked that it "requires to be read in context" and he cited with approval Aldous LJ in Burdis v Livsey [2003] QB 36 at paragraph 148: "What is reasonable and whether a loss is avoidable are questions of fact, not law, which District and County Court Judges regularly decide."

In the instant case the District Judge considered the evidence and reached her conclusions in the terms I have read. She was quite entitled to reach this conclusion on the basis of the evidence she considered."

14. However, the matter did not end there. Having upheld the District Judge's finding that Miss Sayce had failed to act reasonably, Judge Harris had to decide what were the consequences. Again, the parties had argued the appeal on the basis that Copley v Lawn applied and that Miss Sayce was therefore entitled to recover at least £868. It appears that the appellant had submitted to the judge that he was bound by the decision, but he took a different view. Having considered a number of leading authorities on the principles of mitigation as they apply to avoidable loss he said:

"19. The above citations from judgments of the House of Lords show clearly that if a claimant unreasonably adopts a course of conduct which means that more money is spent by her on providing herself with a replacement car than is necessary then that money is not recoverable from the defendant.

20. I propose to follow this body of authority. In the circumstances of the present case I can see no reason why this approach should not have been adopted. The claimant contended quite properly that she wanted a replacement car. She did not need to hire one. She was offered one free of charge. If she had accepted it she would have had no claim for the cost of hiring. On the finding of the District Judge it would have been reasonable to have accepted TNT's offer. To put it more firmly, it was unreasonable not to have accepted it. Why then should the defendant have to pay anything at all? The fact that it would have cost it something to provide the car free to the claimant is, of questionable relevance, since the question is what sum did the claimant (not the defendant) need to incur. To order TNT to pay that sum, which is the Copley principle distilled, seems more like an attempt to punish a defendant than to provide an answer which fulfils the elementary rule that the purpose of an award of damages is to place the injured party in the same position as he was before the accident as nearly as possible, viz, in this case with a car for which no rental is payable by her."

He therefore dismissed the appeal.

15. It is common ground that although during the course of the hearing the judge had not sought to disguise his doubts about the correctness of the decision in Copley v Lawn, he had not given the parties any indication that he was minded not to follow it, nor had he invited submissions from them about whether he should do so, or indeed whether it was correct. They took it for granted, therefore, that the basis on which they had both argued the appeal was accepted. In my view, whether or not the judge was bound by the decision, it was quite wrong of him to decide the appeal on a basis contrary to that on which it had been argued without indicating to the parties the course he was minded to take and without giving them an opportunity to address him on the question. The fact that one party had submitted in terms that he was bound by Copley v Lawn demonstrates that, if he had he suggested otherwise, the question would have been fully argued and dealt with in the judgment. As it was, the parties proceeded on the assumption that he would follow that decision and were entitled to expect that he would do so. In those circumstances, the judge's failure to follow Copley v Lawn, whether or not he was bound by it, was a serious procedural irregularity.
16. For that reason alone I think that the appeal must be allowed, as Mr. Berragan for TNT accepted. However, in view of the way in which the judge dealt with the authorities and of the fact that TNT seeks permission to appeal to the Supreme Court, it is appropriate to consider the principles enunciated in Copley v Lawn and to consider whether the judge was indeed bound by them.

The ratio of Copley v Lawn

17. Leaving aside the introductory paragraphs, the judgment of Longmore L.J. falls into two distinct parts: the first (paragraphs 10-24) deals with the question whether the claimants in those cases had acted unreasonably in failing to accept the offer of a replacement vehicle at no cost to themselves; the second (paragraphs 25-30) deals with the consequences of a failure to act reasonably in order to avoid a loss. Since the court held that the claimants had not acted unreasonably, the first part of the judgment was sufficient to dispose of the appeal; indeed the circumstances to which the second part applies did not arise. Mr. Butcher submitted that the second part of the judgment is so inextricably linked to the first that it too should be regarded as containing part of the ratio of the decision, but I do not think that can be right, since it proceeds on an assumption of fact contrary to that which the court found to exist. It follows that the ratio of the decision is to be found in the first part of the judgment alone and that the doctrine of precedent applies in its full rigour only to the legal principles on which that part rests.
18. Part one of the judgment rests on two propositions. The first is that "questions of mitigation are questions of evaluation and judgment" (paragraph 23). As appears from paragraph 10 of his judgment, Judge Harris brushed that aside as being inconsistent with the established rule that the question whether the claimant acted reasonably in mitigation of his loss is one of fact. I think there may be an element of confusion here. Whether the claimant acted reasonably in response to a wrongful act may be a question of fact, but the answer involves an evaluation of the primary facts and, inevitably, an element of judgment. I do not understand Longmore L.J. to be saying any more than that. An appellate court will always be slow to overturn a finding of primary fact made by a judge at first instance, but, depending on the nature of the evidence, may have rather greater latitude in relation to a finding of fact which involves an evaluation of the primary facts. There is nothing controversial about that. In my view Longmore L.J. was merely pointing out that since the question whether the claimant failed to act reasonably in mitigation involves an evaluation of the primary facts, it is a decision with which the court can more readily interfere.
19. The only real question, therefore, is whether Judge Harris was right in holding that in the circumstances of this case District Judge Flood was entitled to find that Miss Sayce had acted unreasonably. At one level it might be said that the ratio of this part of the judgment in Copley v Lawn is simply that an appellate court is entitled to set aside any finding of fact, whether primary or secondary, which is not supported by the evidence. However, that is trite law and I do not think that the reasoning of Longmore L.J., in particular the emphasis in paragraph 20 on the need for the claimant to know the true cost to the defendant of providing a replacement vehicle, enables it to be understood in such a confined way. It is not entirely easy to identify the principle of law that represents the ratio of this first part of the judgment, but it must, in my view, be found in paragraph 20 and the final sentence of paragraph 21, in which Longmore L.J. said:

"20. In that case [Darbishire v Warran [1963] 1 WLR 1067] the comparative cost was clear from the beginning and the claimant could make an informed choice. In the present cases no such informed choice was available to either the claimants or their advisers and I do not see how they can be said to have acted unreasonably in not accepting the offer in the form it was presented to the claimants. The claimants and their advisers need to know the true cost to the defendant and his insurers since it might . . . be the case that the cost of the defendants' insurers hiring the replacement car was actually the same as (or more than) the cost of hiring a replacement from Helphire. If that were the true position, it could scarcely be said that it was unreasonable for the claimants to pay the Helphire cost.

21. . . . A claimant who has been deprived of the use of his car by the negligence of a tortfeasor only has to take reasonable steps to mitigate his claim for that loss of use and he cannot, in my judgement, be said to act unreasonably if he makes (or continues) his own arrangements with his own hire company, unless he is made aware that this commercial enterprise can be undertaken more cheaply by the defendant than by his own arrangements."

20. Taken on its own, the last sentence of paragraph 21 could be understood to mean that a claimant can be found to have acted unreasonably in pursuing his existing arrangements if the defendant has alerted him to the possibility of obtaining a replacement vehicle on his own behalf more cheaply. However, read in the context of paragraph 20 and the earlier part of the judgment, I think it must have been intended to mean that the claimant cannot be found to have acted unreasonably in refusing the defendant's offer unless he has been made aware that by doing so he would impose a greater burden on the defendant. At first sight that may appear surprising since, as Judge Harris pointed out, it involves looking at the matter from the point of view of the defendant, rather than that of the claimant, an approach which is not reflected in the leading authorities, such as British Westinghouse Electric and Manufacturing Co Ltd. v Underground Electric Railways Co of London Ltd [1912] AC 673, Payzu Ltd v Saunders [1919] 2 KB 581 and Sotiros Shipping Inc and Aeco Maritime S.A. v Sameiet Solholt (The 'Solholt') [1983] 1 Ll. Rep. 605. (Indeed, it is interesting to note that in The 'Solholt', a case in which the buyer's failure to mitigate resulted in a substantial windfall gain to the seller, Sir John Donaldson M.R. giving the judgment of the court said that the court was concerned with the buyer's loss and not with the seller's profit, the latter being wholly irrelevant.) Payzu v Saunders and The 'Solholt' both involved claims in contract, but it is well established that the same principles apply to claims in tort and indeed Darbishire v Warran, on which Mr. Butcher placed some reliance, was one such.
21. I think it is clear, therefore, that the court did adopt and apply the principle that a claimant does not act unreasonably for the purposes of mitigation in rejecting an offer from the defendant unless he is aware that by doing so he will increase the ultimate burden on the defendant, regardless of the effect on his own position. That also seems to me to be consistent with what Longmore L.J. said in the second part of his judgment.
22. If, as I think, that is the ratio of Copley v Lawn, the judge was bound to apply it, as indeed is this court. The common law system, under which judges enunciate and develop the law, depends for its coherence on the doctrine of precedent, without which the law itself would quickly lose all clarity and certainty. The rules of precedent require lower courts to accept and apply the decisions of higher courts, even though they may consider them to be wrong. As Lord Simon observed in Miliangos v George Frank (Textiles) Ltd [1976] A.C. 443 at page 478,

"It is the duty of a subordinate court to give credence and effect to the decision of the immediately higher court, notwithstanding that it may appear to conflict with the decision of a still higher court. The decision of the still higher court must be assumed to have been correctly distinguished (or otherwise interpreted) in the decision of the immediately higher court. . . . Any other course is not only a path to legal chaos but in effect involves a subordinate court sitting in judgment on a decision of its superior court."

23. It follows that Judge Harris was not entitled to disregard the decision of this court in Copley v Lawn, however much he may have disagreed with it and however much he considered that it could not be reconciled with previous decisions of the House of Lords. He was entitled, of course, while observing the courtesy due to the decision of a higher court, to voice his reasoned criticisms of the decision, but having done so, his duty was to accept and apply the law as laid down in the most recent decision of this court.
24. In my view, however, the matter does not end there. There are circumstances in which, although not technically bound by a decision of a higher court, a lower court should follow and apply that decision, even though it may disagree with it. There may be room for legitimate disagreement between judges of co-ordinate jurisdiction and in those circumstances reasoned differences of opinion may provide a useful springboard for an appeal. That is not the case, however, where a higher court has decided a question of principle, albeit obiter, for the purpose of clarifying the law for the profession at large. It would not be right, for example, for this court to disregard those parts of their Lordships' speeches in Dimond v Lovell [2002] 1 AC 384 that deal with the recovery of that part of the credit hire costs that relate to additional benefits on the grounds that they are obiter. I think it is clear that the first part of the judgment in Copley v Lawn, whether binding on lower courts or not, was clearly intended to clarify the law in relation to what had become a vexed question in cases of this kind. In my view, therefore, the judge ought to have followed it for that reason alone and should have left it to this court to decide whether it could and should depart from it. For the reasons I have given I do not think that the second part of the judgment in Copley v Lawn forms part of the ratio decidendi and therefore it was not binding on the judge, but it will be apparent from what I have just said that in my view he ought to have followed and applied it nonetheless.
25. One consequence of Judge Harris's refusal to follow Copley v Lawn was that he made no findings about whether it was unreasonable for Miss Sayce to refuse the offer of a free car once she had been told that it would cost TNT only £14 a day to provide it. We can, of course, remit the matter to the county court for a finding to be made and damages to be assessed accordingly, but that would involve the parties in yet more expense and it is to be hoped that in order to avoid that unwelcome result the parties can agree on the amount that should be recovered.
26. I have already said that I would allow this appeal on the grounds that the judge was not entitled to decide the case on a basis fundamentally different from that on which it had been argued and that he ought to have applied the principles set out in Copley v Lawn. It follows that it is unnecessary to discuss the second part of the judgment in any detail, but in the light of the arguments put forward in support of the application for permission to appeal, I propose to touch on one or two aspects of it.
27. It may be helpful to begin by identifying the point of departure for this limb of the argument, namely, that the claimant has unreasonably refused an offer by the defendant to provide him with a replacement vehicle free of charge, that is, at no cost to the claimant, albeit at some expense to himself. If the claimant had accepted the defendant's offer he would not have needed to hire a replacement vehicle and would have suffered no loss arising out of the inability to use his own car. In those circumstances I can understand why some find it difficult to see why the claimant should be entitled to recover anything from the defendant in respect of the loss of use of his own car, since it was a loss that he could, and ex hypothesi should, have avoided. The proposition in paragraph 26 of the judgment that " . . . it cannot be correct that a claimant who rejects a defendant's reasonable offer is entitled to nothing" does not on the face of it take account of the established rule that avoidable loss (that is, loss that the claimant could and should reasonably have avoided) is not recoverable. The fact that the opportunity of avoiding loss is provided by the wrongdoer may complicate the matter, but it has not previously been regarded as sufficient to displace the principle; nor, indeed, has the fact that the defendant may profit as a result: see Payzu v Saunders and The 'Solholt'.
28. I respectfully question whether the analogy with an offer of money is sound. The provision of a replacement vehicle is a means of avoiding damage caused by the claimant's loss of use of his own car. It is not comparable to an offer of a sum of money lower than that to which the claimant is entitled by way of damages, which does not provide a means of avoiding the loss but is merely an offer to pay part of the total damages recoverable in respect of the loss. Moreover, I would respectfully doubt whether the decision in Strutt v Whitnell [1975] 1 W.L.R. 870 supports the conclusion for which it was cited. In Uzinterimpex J.S.C. v Standard Bank Plc [2008] EWCA Civ 819, [2008] Bus LR 1762 I expressed the view that the defendant's offer to re-purchase the house at the original price was not regarded by the court in that case as providing an opportunity to avoid the loss (only the removal of the tenant could achieve that), but as offering an alternative financial remedy which the claimant was not bound to accept: see per Cairns L.J. at page 873B-D. I remain of that view and in any event, in view of the criticism of the decision by this court in The 'Solholt' I doubt whether Strutt v Whitnell can properly be regarded as authority for any wider proposition.
29. I confess that I also have difficulty with the conclusion that a claimant who has unreasonably refused an offer from the defendant of a free car can recover "at least the cost which the defendant can show he [i.e. the defendant] would reasonably have incurred" (paragraph 32). That, it seems to me, reflects the approach taken in the first part of the judgment, namely that one must look at the matter from the defendant's point of view, but it is not an approach that is reflected in the earlier authorities. Nor, with respect, do I think that it is one that is easy to reconcile with the principle relating to avoidable loss to be derived from the leading cases and summarised in McGregor on Damages 18^th ed., paragraphs 7-004 and 7-014. It is right to note, however, that the decision in Copley v Lawn has received support in paragraph 7-068 of the same work.

Permission to appeal

30. As can be seen, in my view this appeal has brought to the surface some important questions about the current state of the law on mitigation which have implications beyond the confines of road traffic accident cases. In the ordinary way, therefore, it might have been a case in which this court would have felt justified in giving permission to appeal. However, in my view two powerful factors militate against doing so. The first is that because of the serious procedural irregularities that have taken place TNT accepts, quite properly, that the appeal must succeed, at least in part. For that reason a further appeal would serve no useful purpose as far as the parties are concerned. Second, it has been drawn to our attention that permission to appeal was sought in Copley v Lawn itself, but was refused by the Supreme Court. The leading authorities on the principles of mitigation, to which Judge Harris referred in his judgment and which provide the primary basis of the challenge to the correctness of the decision in Copley v Lawn, were referred to in the applicant's petition, so it cannot be said that the full weight of the arguments was not deployed on that occasion. In those circumstances, although I think that it would be beneficial for these questions to be considered at the highest level as soon as a suitable opportunity arises, I do not think that it would be right to give permission to appeal in this case.
31. For these reasons I would allow the appeal and refuse permission to appeal to the Supreme Court.

Costs

32. The judge's order awarding costs against the claimant in what was a small claim has been challenged on the grounds that it was wrong in principle, given that she had not acted unreasonably in the conduct of the proceedings within the meaning of CPR rule 27.14(2)(g). I think that is right, but it is unnecessary to consider the question in any detail because the order for costs below will be set aside in any event as a result of the outcome of the appeal.
33. An application was made on behalf of Miss Sayce for the case to be re-allocated to the multi-track pursuant to CPR rule 26.10 with the consequence that the ordinary rules relating to costs would apply to all stages of the proceedings: see CPR rule 44.11(2)(b). Before this court it was accepted that the application is appropriate only in respect of the costs in this court.
34. I agree with Mr. Butcher that by the time it reached this court the case was effectively proceeding as a multi-track case and that it should therefore be re-allocated to the multi-track, but I do not think that it would be fair to the parties for the costs rules applicable to claims on the multi-track to apply to the proceedings before the lower courts. Both parties argued the original claim and the first appeal on the basis that it was a small claim and neither should be penalised retrospectively for judge's unexpected refusal to follow Copley v Lawn which generated the appeal to this court.

Lord Justice Aikens:

35. I agree that the appeal should be allowed for the reasons given by Moore-Bick L.J. I also agree that permission to appeal to the Supreme Court should be refused for the reasons given by Moore-Bick L.J.

Lord Justice Pill:

36. The facts which led to the present litigation are set out by His Honour Judge Charles Harris QC in his judgment:

"1. This is another credit hire case in which the claimant motorist obtained a car to replace one damaged in a collision caused by the fault of the defendant and seeks to recover the hire charges. In this case, the defendant, TNT Limited, offered the claimant a replacement car at no cost to her; an offer she did not accept. Unsurprisingly, it contends that she should not, therefore, be entitled to the cost of hiring a vehicle which it was prepared to supply to her at no charge.

. . .

3. TNT, a large and reputable transport company, operates a scheme whereby it provides a hire car to a claimant at no cost where one of its drivers has been responsible for a collision. It obtains the car from a concern called Enterprise. TNT also offers to pay the repair charges.

4. The facts of the instant case are that the claimant, a young woman, owned and was driving a Vauxhall Corsa in Northampton on 30th May 2007 when one of the defendant's employees drove into the back of it. The driver admitted liability and handed her a card with TNT's details on it and a passage which read:

'If you require a hire car whilst your vehicle is undergoing repairs call us and we will provide you with a hire vehicle the same or equal to yours free of charge.'

She rang TNT on the date of the accident and said that she was told that it would, "see about providing a courtesy car". She said at trial she was told not to contact her own insurers though this was a curious and surprising assertion because the TNT card had stated, "It is imperative that you show this card to your insurers". She did speak to her insurers and she told the court that for some reason she was, "unsure as to the motives behind TNT's offer to assist". She did not take up the TNT offer but on 2nd June 2007 entered into a credit hire agreement with Albany under which charges of £3,446.28 were in due course incurred for two months' car hire.

5. On 6th June 2007 she received a letter from TNT, after two telephone conversations with that company. The letter stated that if she needed:

'...alternative transport to be used while your car is in for repair...then this facility can be arranged from this office direct. You will be offered a car of an equivalent type...to your own at a fully inclusive rate of £14 a day, the arrangements and costs being met by this office...please note that if you choose not...to take advantage of this offer this may affect your entitlement to recover hire charges that you have incurred... in any case it is imperative that you show this letter to your insurer, any third party hire company you may use or your legal representative...so that they may advise you.'

The offer was not taken up . . ."

37. Judge Harris upheld the finding of the District Judge that the whole of the claim for loss of use was extinguished by Miss Sayce's failure to accept the TNT offer. The judge's reference to "another credit hire case" indicates that situations such as the present frequently occur and the court has been told by counsel that they are frequently the subject of litigation in the County Court.
38. Another such case was Copley v Lawn [2010] 1 All E.R. (Comm) 890, considered in detail by Moore-Bick LJ in his judgment. (Copley was heard with another case to the facts of which I need not refer to illustrate the issue.) In that case, Mrs Copley's car was damaged in an accident caused by the negligence of Mr Lawn. She needed a replacement car immediately and made an agreement with Helpline (UK) Ltd whereby she agreed to hire a car while her car was being repaired. On the same day, but after she had signed the Helphire agreement, she received a cold telephone call from Mr Lawn's insurers offering her a replacement car. As Longmore LJ put at page 2 of his judgment in Copley:-

". . . Unsurprisingly perhaps Mrs Copley could not recall this telephone call when she came to give evidence but her response was, no doubt, non-committal, if not frigid."

39. The offer was repeated by the insurers who also sent a letter. She sought legal advice, which was slow in arriving. In that case, the Deputy District Judge awarded only 7 days hire on the ground that Mrs Copley should by then have availed herself of the right to cancel contained in the Helphire agreement and accepted Mr Lawn's insurer's offer. An appeal to Judge Langan was dismissed on the ground that "refusal of an offer of a 'free' car amounted to a failure by the claimants to take reasonable steps to mitigate their loss." The appeal was allowed.
40. Having considered the letter sent by the insurers, Longmore LJ, with whom Waller LJ and Jacob LJ agreed, considered Mrs Copley's position:

"It is very difficult to know what an average driver would make of all of this. It comes (within a day or two of the accident) from the insurers of a defendant who has negligently caused damage to the claimant's car and perhaps his person too. It has an unpleasant threatening tone to it and does not even suggest that the recipient should pass it to his insurer or solicitor for advice as to its contents. It is tempting to say that any recipient should be entitled to ignore it completely. But that is not a course which any of the judges below adopted. What is completely clear to me is that the cold telephone call to Mrs Copley was inappropriate. If that is KGM's practice it should be discontinued forthwith."

41. Longmore LJ added:

". . . She (as anyone else would) passed it [the letter] immediately to her solicitors and left them to deal with it. On no view could she personally be said to have acted unreasonably in doing as she did and awaiting their advice. The fact that that advice never came was not the fault of Mrs Copley. Deputy District Judge Reed held that Mrs Copley should, on receipt on KGM's letter, have accepted KGM's offer and cancelled the agreement she already had with Helphire. If one is looking at the matter solely from Mrs Copley's view, I can only disagree. It is positively unreasonable to expect Mrs Copley to take the initiative, without advice, of cancelling an agreement she has already made just so that she can get a different "free" car from the "free" car she already has. It may well be that the deputy district judge and Judge Langan were effectively conflating the position of Mrs Copley and her solicitors and deciding that Mrs Copley's solicitors should have advised her to take the defendant's offer of a free replacement car and the question whether it is right to look at it in that way will have to be addressed."

42. Longmore LJ stated at paragraph 21:

". . . The present dispute is an ordinary commercial dispute and the court cannot close its eyes to the obvious fact that hiring cars is a profitable business from the point of view of the supplier and a cost–incurring exercise from the point of view of the hirer. A claimant who has been deprived of the use of his car by the negligence of a tortfeasor only has to take reasonable steps to mitigate his claim for that loss of use and he cannot, in my judgment, be said to act unreasonably if he makes (or continues) his own arrangements with his own hire company, unless he is made aware that this commercial enterprise can be undertaken more cheaply by the defendant than by his own arrangements."

43. The court, rightly in my view, was considering the issue of mitigation from the viewpoint of the particular victim. I agree with the decision of this court in Copley on the facts of that case. Further, as a matter of evidence, a victim will be in a better position to decide upon the reasonableness of his own arrangements in mitigation if he knows the costs to be incurred by the tortfeasor, when setting up rival mitigation.
44. What, in my judgment, is not acceptable is a tortfeasor being permitted to dictate to his victim what the victim must do to mitigate his loss. He is under a duty to mitigate his loss and must act reasonably in doing so. That is fundamental. Moreover, there is a public interest in keeping down the damages and costs which may follow from road accidents. The higher they are, the higher the insurance premiums paid by members of the public to obtain insurance. In the present case, Miss Sayce was properly warned to take independent advice (Moore-Bick LJ, paragraph 2).
45. The offer may not, however, be the best reasonable offer available from the victim's viewpoint. In circumstances such as the present, there is also the risk of the cold telephone calling which occurred in Copley. The victim of a road traffic accident, such as the young woman in this case, can be expected to be in a vulnerable state of mind following an accident. Accepting the offer of a "free" vehicle from the tortfeasor will not always be the only, or best, way in which to mitigate loss. The victim may reasonably prefer to deal with a company in which she has confidence, based possibly on previous dealings. What is reasonably required by way of mitigation depends on the facts of the particular case.
46. The victim is entitled to a reasonable opportunity to consider what vehicle is an appropriate temporary replacement, bearing in mind his needs. A further very important consideration is the insurance cover to be provided, particularly as to third party liability, and whether it accords with the cover enjoyed by the victim under his existing arrangements. These may provide, for example, for the cover of any authorised driver, or for named drivers, possibly drivers under the age of 25. Arrangements would need to be set up, and any additional premium provided for. The victim may have his own particular needs, and obtain what from his viewpoint is a better deal, from his own sources. Tortfeasors may need to descend to particulars.
47. These aspects have not been considered in the present case where the offer of a 'free' car was thought to be a complete answer. In Copley, it had been held below that the victim was obliged to cancel her arrangement already made.
48. I do not consider that the analogy, relied on in submissions, of the cycle owner who lends his cycle to the owner of a cycle he has damaged, is an entirely helpful one. Vehicle hire arrangements are more complex and may have wide implications for the hirer and other road users.
49. Having expressed these concerns, I express agreement with the conclusion of Moore-Bick LJ that the appeal should be allowed and express no further views on Copley v Lawn. The appeal should be allowed on the ground of procedural irregularity, as stated by Moore-Bick LJ at paragraph 15, and because the judge was not entitled to disregard the decision of this court in Copley, as stated by Moore-Bick LJ at paragraphs 23-26. I also agree, for the reasons given by Moore-Bick LJ, that permission to appeal should be refused.