England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand London WC2A 2LL
		Thursday, 8 June 2006

1. MR JUSTICE CRESSWELL: There is before the court an application by the claimant for an order that summary judgment be granted to the claimant on the issues raised by the defendant in paragraphs 8 to 12 inclusive of the reamended Defence and/or that paragraphs 8 to 12 inclusive be struck out. The application is made under CPR 3.4 and/or under CPR 24.2.
2. CPR 3.4 provides:

"(2) The court may strike out a statement of case if it appears to the court -- (a) that the statement of case discloses no reasonable grounds for bringing or defending the claim; (b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings..."

3. The notes at 3.4(2) state:

"Paragraph 1.6 of the Practice Direction, paragraph 3PD.1, states that a Defence may fall within rule 4.4(2)(a) where it consists of a bare denial or otherwise sets out no coherent statement of facts, or the facts it sets out, while coherent, would not even if true amount in law to a defence to the claim.

"Statements of case which are suitable for striking out on ground (a) include those which raise an unwinnable case where continuance of the proceedings is without any possible benefit to the respondent and would waste resources on both sides ... A claim or defence may be struck out as not being a valid claim or defence as a matter of law..."

4. The notes at 3.4.6 address overlap with Part 24 summary judgment:

"The rules give the court two distinct powers which may be used to achieve the summary disposal of issues which do not need full investigation at trial. Rule 3.4 enables the court to strike out the whole or part of a statement of case which discloses no reasonable grounds for bringing or defending a claim (r.3.4(2)(a)), or which is an abuse of the process of the court or otherwise likely to obstruct the just disposal of the proceedings (r.3.4(2)(b)). Rule 24.2 enables the court to give summary judgment against a claimant or defendant where that party has no real prospect of succeeding on his claim or defence. Both those powers may be exercised on an application by a party or on the court's own initiative; see para. 1.2 of the Practice Direction (Striking Out a Statement of Case). Many cases fall within both r.3.4 and Pt 24 and it is often appropriate for a party to combine a striking out application with an application for summary judgment. Indeed, the court may treat an application under r.3.4(2)(a) as if it was an application under Pt 24; see Taylor v Midland Bank Trust Co Ltd (No 2) [2002] WTLR 95."

5. Part 24.2 provides that:

"The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if -- (a) it considers that ... (ii) the defendant has no real prospect of successfully defending the claim or issue."

6. As to "no real prospect of succeeding/successfully defending" the notes at 24.2(3) state:

"In order to defeat the application for summary judgment it is sufficient for the respondent to show some "prospect", i.e. some chance of success. That prospect must be "real", i.e. the court will disregard prospects which are false, fanciful or imaginary. The inclusion of the word "real" means that the respondent has to have a case which is better than merely arguable (International Finance Corp v Utexafrica Sprl [2001] CLC 1361 and ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472). The respondent is not required to show that his case will probably succeed at trial. A case may be held to have a "real prospect" of success even if it is improbable. However, in such a case the court is likely to make a conditional order (as to which, see the commentary to r.24.6)."

7. In ED & F Man Liquid Products Limited v Patel and Another [2003] EWCA Civ 472 Potter LJ said at paragraph 8 in relation to CPR 24:

"I regard the distinction between a realistic and fanciful prospect of success as appropriately reflecting the observation in the Saudi Eagle that the defence sought to be argued must carry some degree of conviction. Both approaches require the defendant to have a case which is better than merely arguable, as was formerly the case under RSC Order 14."

The background facts

8. Pursuant to an order of Aikens J of 31 August 2005 a statement of facts was prepared. I directed yesterday, in advance of today's hearing, that that statement of facts should be extended so far as material to the issues in the present application and further applications before the court. The parties have helpfully provided a revised statement of facts to which I refer. Paragraph 1 states:

"On 8 March 2004, the Claimant was involved in a road traffic accident caused solely by the negligence of the Defendant. The Claimant's vehicle (registration number FX52 RDV) was stationary on Frederick Way in Grimsby when the defendant's vehicle (registration number FV02 NMY) collided into the rear of his vehicle. The defendant has admitted sole liability for the accident."

9. At all material times the claimant had the benefit of a motor insurance policy with the Co-operative Insurance Society (the CIS) and DAS. The relevant policy was incepted on 18 July 2003. The defendant was insured at all material times by the Royal & Sun Alliance (the RSA). As part of the claimant's insurance package with the CIS the claimant had legal expenses and assistance insurance provided by DAS Legal Expenses Insurance Company Limited (DAS).
10. It is necessary to refer to the terms of the motor vehicle policy. The introduction stated:

"We (the Co-operative Insurance Society limited) agree with you (the Policyholder...) that, subject to the General Exclusions and Conditions of this Policy, we will provide the Insurance set out in the Policy Sections and in any Endorsements specified as operative in the Schedule in respect of events occurring during the Period of Insurance shown in the Schedule..."

11. The defined terms included:

"Vehicle hire costs: means the cost of hiring a replacement motor car or standard commercial vehicle in one continuous period."

12. "Section H: Uninsured Loss Recovery and Legal Helpline" provided as follows:

"For the purposes of this Section we, us and our means DAS Legal Expenses Insurance Company Limited who provide the cover and manage all claims under this Section. Please note that any costs incurred without the prior authorisation of DAS are not covered.

"What IS insured. We will ... (2) pay Vehicle Hire Costs following an accident involving a collision between the Insured Vehicle and another vehicle where (i) the Insured Vehicle cannot be driven and (ii) the accident was entirely the fault of an identified driver of another vehicle on which there is valid motor insurance ...

"(6) Where we agree to pay Vehicle Hire Costs the Insured Person must (a) accept our choice of vehicle hire company, the type of vehicle and the period of hire, (b) comply with any conditions of the vehicle hire company, (c) agree to our attempting to recover Vehicle Hire Costs in the name of the Insured Person and refund to us any Vehicle Hire Costs recovered.

"What is NOT insured ... (b) Legal Costs or Vehicle Hire Costs incurred before we agree to pay them ... (e) Vehicle Hire Costs where the Insured Person is claiming against a person who cannot be traced."

13. Thus the DAS benefits included the provision of a replacement vehicle at no cost to the insured in the event of an accident caused solely by another identified and insured driver and which meant that the insured's own vehicle could not be driven ("insured hire"). The hire transaction had to be approved by DAS in advance. Where DAS provided this service its insured agreed to DAS attempting to recover the hire charges in its name and to account to DAS for the receipts. The claimant says that DAS was entitled to choose the vehicle hire provider and the type of vehicle rented. The defendant says that the claimant was required to accept the choice of DAS as the hire provider if DAS made such a choice.
14. Paragraphs 2A, 3 and 3A of the statement of facts are as follows:

"The Claimant has been a CIS motor insurance policy holder since 1997 and DAS has provided legal expenses insurance as part of that policy since July 1999.

"The accident of 8 March 2004 rendered the Claimant's vehicle undriveable. Damage was sustained to the rear bumper, hatch tail-gate, rear undercarriage and rear lights. Temporary repairs were not an option.

"From 2001 to 2002, DAS had arranged provision of replacement vehicles through a brokerage, Fair Rent Ltd. It had a business agreement with Fair Rent which provided for that company to source all vehicles for DAS policy-holders. The written agreement provided for "spot hire rates" to be charged to DAS and for those rates to be reviewed by a system of quarterly reviews. DAS says that the terms of the agreement were altered in 2002 to provide that the rates charged would be set by reference to the scale of rates under the ABI GTA, a protocol for settlement of credit hire claims. The Defendant does not accept that, because no documentary evidence of the variation has been provided."

15. In early 2003, DAS changed its vehicle supply arrangements by ending its dealings with Fair Rent and entering into a business agreement with Helphire Group Plc. That agreement provided for Helphire to supply hire vehicles for DAS policyholders and for DAS to make payment of hire charges to Helphire. I refer to the Business Agreement (which is in part redacted) for its terms and effect. The recital provided:

"1 DAS is a Legal Expenses Insurance Company authorised to underwrite Legal Expenses Insurance. DAS deals with a number of companies ("Business Partners") through whom DAS provides insured and uninsured services to the customers of those Business Partners (the "Policy" holders) ...

"3 The Parties intend that, provided relevant Business Partners do not object, Helphire will supply the following services (the "Requirements").

"3.1 Replacement vehicles provided by way of hire or otherwise as an insured benefit to Policyholders under legal expenses insurance policies marketed and/or underwritten by DAS ("Subrogated Hirers")."

16. The Business Agreement provides as to commencement at clause 1.1:

"This agreement will come into effect on 1 January 2003 ("Date of Commencement") PROVIDED THAT the Existing Contract is satisfactorily terminated."

17. As to DAS' obligations, clause 2.1 provided:

"DAS will use Helphire exclusively to provide the Requirements to the extent that relevant Business Partners of DAS involved in the Requirements do not object."

18. Under the Business Agreement rates were to be set by reference to the scale of rates under the ABI GTA. The defendant has pleaded that DAS received commission payments from Helphire in return for arranging hires. In this regard it relies on a standard prospectus produced by Helphire which refers to such payments as standard and which refers to DAS as a customer of the scheme. DAS does not admit or deny that commissions were paid as it regards this matter as commercially confidential. The claimant regards it as irrelevant to his claim.
19. On 11 March 2004 the claimant contacted DAS to confirm that his vehicle could not be driven. In accordance with his insured benefit a replacement vehicle (registration HT53 ZHP) was delivered to the claimant the next day. The vehicle was supplied through Helphire. Helphire was nominated as the supplier by DAS and was not chosen by the claimant. The claimant signed a hire agreement with Helphire to which I refer. Under the heading "Hirer Details" appeared Mr Bee's name. Under the heading "Company" there appeared the name DAS. Charges including VAT were set out. Mr Bee's signature appears under the following words:

"I agree to hire a vehicle ("Hire Vehicle") from Helphire (UK) Limited ("Helphire") on the terms of this Agreement.

"I accept it is my responsibility to pay for all penalties set out in Condition 10 overleaf...

"I acknowledge receipt of a copy of this Agreement."

20. Condition (1) was in these terms:

"The company has agreed to pay the Hire Charges and any Extras shown overleaf as payable by them for Your use of the Hire Vehicle during the Approved Period shown overleaf or any extension the Company authorises."

21. The claimant says that he thereby became liable to pay Helphire's rental charges as stated on the face of the agreement. The defendant says that it did not require him to pay the hire charges but provided that DAS would do so. In that regard the defendant relies upon clause (1) of the terms and conditions of hire and says that that clause placed on DAS the obligation to pay the hire charges.
22. Paragraphs 5 to 8 of the statement of facts are as follows:

"The repair of the claimant's car was undertaken by Wilson & Co of Hewitt Avenue, Grimsby, an insurer-approved garage. The garage was unable to provide a courtesy car to the Claimant. The repairs were completed on 1 April 2004. The costs of repair have been paid for by the RSA.

"Helphire provided a car hire to the Claimant for 21 days from 12 March 2004 until 1 April 2004. The car was provided at a daily rate of £24.74 + VAT (£29.07 inclusive) and the total cost of hire was £519.54 + VAT (£610.46 inclusive). This rate is equivalent to the ABI GTA rate for this category of vehicle. The rate included delivery of the vehicle to and collection from the Claimant as well as fully comprehensive insurance. This sum was invoiced to DAS and has been paid. The Claimant has personally not been required to pay these costs. A subrogated claim is now brought in the name of the Claimant to recover this amount from the Defendant.

"The Claimant required a vehicle at the time of the accident because, apart from his own personal requirements, each weekday he would have to drive his daughters to work and his grandchildren to school. In addition, twice a week he had to drive sixteen miles and back to Louth to help his elderly step-mother with her shopping and errands. There was no other vehicle available for his use. He would not have been able to fulfil his commitments with the use of public transport.

"The Claimant was 71 years old at the time of the accident and a retired insulator."

23. On 8 July 2003 Mr John Hall of RSA wrote to Miss Victoria Scott of DAS making a pre-emptive global "offer" to provide free replacement cars (subject to criteria) to any DAS insured who would in future be involved in a motor accident caused wholly by an insured of the RSA. The claimant says that it was an integral part of that proposal that it would be disseminated by DAS to its individual assureds. I refer to the terms of the letter of 8 July 2003 for its full terms and effect:

"Upon notification to you or to any claims handler in your office of an Accident involving someone insured by the RSA, we would ask that the following steps be followed:

"1. Please assess whether or not the Accident could be categorised as a 'non-fault accident' for which the DAS insured ["Your Client"] was entirely blameless and the RSA insured was 100% to blame. In the vast majority of cases this assessment is straightforward. If, and only if, it is assessed that the RSA insured was entirely to blame, then please move onto step #2.

"2. Please inform Your Client that if his/her vehicle was damaged in the Accident that (subject to proviso at #4 below) the RSA is prepared to provide the following services to him/her entirely free of charge:

"(i) A free replacement vehicle appropriate to their needs and if required similar to his/her own vehicle for the reasonably (sic) period whilst repairs are completed or whilst he/she has to wait for a settlement cheque for his/her vehicle's pre-accident net value in the event that it is determined to be uneconomical to repair. The RSA will meet the delivery and collection costs of providing the replacement vehicle. Your Client will only incur the obligations of a bailee of the free replacement vehicle including all fuel costs whilst the vehicle is in his/her possession and control.

"(ii) The service of having his/her vehicle damaged in the Accident inspected by a qualified engineer to assess the economic viability of, and the cost of repairing the damage.

"(iii) In the event that his/her car is deemed by the engineer referred to at (ii) to be economically viable to repair, to carry out the repairs at an RSA authorised garage or an alternative of your clients (sic) choice. We will arrange and meet the reasonable cost of collection and delivery of the vehicle. If the vehicle is uneconomical to repair we will quickly issue a cheque for the net pre accident value of the damaged vehicle.

"3. Please provide your insured with a copy of this letter or ensure that details of our offer are conveyed. We attach a copy of our standard letter which you may find useful.

"4. The proviso referred to at #2 above is that the RSA must be provided with a reasonable period following notification of the acceptance by or on behalf of Your Client of one or more of the services offered at #2 above, so that it may investigate the claim and satisfy itself that an RSA insured was 100% to blame for the Accident.

"In accepting the offer contained in this letter either your handler or Your Client should ring the Royal & Sun Alliance office handling the claim on behalf of our policyholder where one of the RSA's qualified representatives will be able to assist. If you require any assistance to identify that office we would be pleased to arrange special facilities for you and your client.

"For legal reasons, we must advise you that if you or your claims handlers fail to notify those Clients who satisfy the parameters at #1 above of the contents of this letter, then we will reserve the right to rely on this letter to show that by not affording Your Client the opportunity to allow the RSA to meet some of his/her post-accident needs free of charge, that you have acted unreasonably, and that your insured should look to you and not to our insured for redress."

24. On 27 August 2003 Victoria Scott of DAS responded, indicating that RSA's proposed scheme was rejected. I refer to that letter for its full terms and effect. In particular the letter stated:

"Thank you for your letters clearly explaining a new initiative that RSA are embarking on.

"As I have mentioned before it is our desire to work with all insurers to achieve mutual customer satisfaction whilst mitigating losing. This is always at the forefront of our minds and I am therefore disappointed that your stance would indicate it is not.

"The hire element of our DAS policy is a valuable benefit to our policy holders and it is totally unacceptable to consider outsourcing this service to any third party. For these reasons we carefully selected a suitable new hire supplier -- Helphire -- to commence from January this year.

"We firmly believe that the ABI GTA rates are the most appropriate for our business and in line with other rates available to our insured by other means. We shall pursue recovery on this basis.

"I agree that we should now proceed to settle outstanding claims that were put on hold whilst we sought to reach an agreement. I can confirm that we will take all appropriate action to recover the full hire invoice value."

25. From that point in time DAS did not explore the proposal further or seek to negotiate as to its terms. Its response indicated that it had no interest in using the service and the claimant says that RSA manifestly understood it in that way and knew that DAS would not inform its insureds of RSA's proposal. The claimant says that DAS has never notified any policyholder of the RSA scheme. At no point was the claimant contacted by the RSA with regards to any offer to provide a free replacement car, nor was he ever informed by DAS of such an offer from the RSA, either before his accident on 8 March 2004 or afterwards.
26. Paragraph 11 of the statement of facts reads as follows:

"The Defendant says that the RSA 'free car scheme' remained open for use by DAS or its policy-holders after August 2003. He further says that RSA made direct proposals to DAS policy-holders after that date. The Claimant is unable to admit or deny that such proposals were received, or were satisfactory, and says that in any event they have no bearing on his claim. However, he denies that RSA implemented any 'standard procedure' for making such 'offers' through the 'pro-active teams' referred to in Mr Hall's letter of 8 July 2003."

27. The relevant paragraphs in the reamended Defence are as follows:

"The Defendant contends that the Claimant was under a duty at all times to take reasonable steps to mitigate his loss following the accident. If it was reasonable for him to hire a substitute car, he was required to minimise his loss by spending no more on the hire than he needed to do in order to obtain a substitute car.

"The Defendant contends (and seeks the right to cross-examine the Claimant on this point) that the Claimant did not take any steps to analyse his choice in the market place when seeking to replace his damaged car with a replacement vehicle, but that instead he delegated that function to a third party. That third party was his legal expense insurer, DAS, and for the purposes of sourcing him a replacement car, DAS became his agent.

"Having delegated his duty to mitigate his losses to DAS, the Claimant became fixed with the knowledge of DAS about his choices in sourcing a replacement car.

"The Defendant is entitled to demand that, where there were choices to be made by the Claimant, the least expensive route which would have achieved mitigation was the one that in law he was required to select. The Defendant contends the Claimant had a choice here. Either he could have accepted the free car on offer to him from the RSA or he could have opted for the route of having to incur a cost of hiring a replacement vehicle from Helphire in the expectation that, subject to the terms and conditions of his insurance policy, he would be indemnified for that cost by DAS. The Defendant contends that this latter option was not 'free' to the Claimant and that it was certainly not the least expensive route when considering both his and the Defendant's interests, as he was required to do when mitigating his loss.

"It follows therefore that the Claimant failed to mitigate his loss by incurring the replacement vehicle hire charges because that choice was not the least expensive choice available to him. Had he mitigated his loss, he would have had the use of a free replacement car thereby incurring no financial outlay for which he (or his agent through subrogation) would need to seek recompense from the Defendant. Accordingly, his claim for vehicle hire charges is denied in its entirety."

The submissions on behalf of the defendant

28. Mr Julian Flaux QC on behalf of the defendant submitted as follows.
29. In mitigating his loss of use the claimant delegated to DAS the task of sourcing a car. In performing that task, DAS was the claimant's agent. DAS was aware of the RSA proactive scheme and its knowledge is to be attributed to the claimant. The decision not to use the RSA proactive scheme and to source a car from Helphire amounted to a failure to mitigate on the part of the claimant or his agent. That failure to mitigate can operate as a defence to the claim. The defendant's primary case is that the claim should be limited to the sum which the claimant would have had to pay if the RSA scheme had been used, ie nil.
30. The defendant's secondary case is that the claim should be limited to what it would have cost RSA to provide a car under the scheme (around 55 per cent of the sum claimed). The lack of choice of a hire company by virtue of a pre-existing contract does not preclude the existence of an agency. In any event the contract of insurance does not oblige DAS to arrange the supply of a vehicle so that to the extent that DAS does that, it is going beyond the contract of insurance in acting on behalf of its policyholder. The factual situation that this case raises is classically one of agency. The relevant task or transaction was the sourcing of a vehicle from a hire company. The contract of insurance does not identify from whom the vehicle will be hired.
31. The scheme proposed by RSA remained open for DAS to consider and communicate to policyholders even after DAS had indicated to RSA that it would not be used. DAS was the agent of the claimant for the purpose of surveying the hire market and sourcing a car. In such a relationship the general market knowledge of DAS is attributed to the claimant, whether or not it was acquired during the period of agency. It can be no answer to the Defence for DAS to rely upon its own initial response to the RSA proposal. Reasonable mitigation can involve approaching a party in breach if it is known that that party would make an offer to remedy the loss. Although the RSA proposal uses the term "offer", the defendant has made it clear that the proposal might properly be regarded as an invitation to treat.
32. As to imputation of knowledge of the scheme, DAS was the agent of the claimant for the purpose of sourcing a car. Against that background DAS was performing the function of surveying the hire market to find a suitable supplier. In such a relationship of agency, the prior knowledge of DAS as to the available options (including the RSA scheme) would be regarded as legally immaterial. Where an agent is employed to conduct a transaction and it is the essence of the arrangement that the agent will use his own commercial knowledge, that knowledge will be attributed to his principal whenever the knowledge was acquired (El Ajou v Dollar Land Holdings [1994] 2 All ER 685 at 702 C to H per Hoffmann LJ).
33. The applicable principle that the principal will be fixed with the knowledge of the agent, even where that knowledge is acquired outside the agency, in circumstances where the principal uses the agent to negotiate and complete the relevant transaction and the knowledge and experience of the agent is relevant to the particular transaction. This principle is enunciated in Jessett Properties v UDC Finance [1992] 1NZLR 138 at 143-4 per Hardie Boys J and in Permanent Trustee v FAI General Insurance (2000) 50 NSWLR 679 at 696-7 (paragraphs 88 to 91) per Handley JA.
34. Although the formal agreement with Helphire may have been signed by the claimant, all the arrangements and negotiations (such as they were) were conducted on behalf of the claimant by DAS. Thus the claimant delegated to DAS the task of sourcing a car, using all its commercial knowledge and acumen. He relied upon the background knowledge of DAS and what was available in the market. DAS was aware of the RSA scheme and knew that it was still open to be used.
35. The defendant accepts that to use the RSA scheme, DAS or the claimant would have had to approach RSA. Where it is known that a party in breach would be prepared to remedy a loss, the failure to make an approach to that party can amount to a failure to mitigate (The Solholt [1983] 1LR 605). The defendant's case that the decision of the claimant or his agent not to approach RSA was a failure to mitigate, is arguable and sustainable. It will be very important for the court to consider whether it was reasonable for DAS to reject the scheme. The defendant does not pretend that that argument is a simple one.
36. In all the circumstances, for the reasons set out above, the application should be dismissed.

The claimant's submissions

37. Mr Christopher Butcher QC on behalf of the claimant submitted as follows. Mr Bee, the claimant, had a simple insurance contract with DAS under which DAS agreed, amongst other things, to:

"pay Vehicle Hire Costs following an accident involving a collision between the Insured Vehicle and another vehicle where (i) the Insured Vehicle cannot be driven and (ii) the accident was entirely the fault of an identified driver of another vehicle on which there is valid motor insurance."

38. After the accident Mr Bee indicated to DAS that his vehicle could not be driven. He therefore took advantage of his contractual entitlement under his insurance. DAS arranged for him to enter into a hire agreement with Helphire, under which he became responsible for the hire charges. The payment of the charges was made to Helphire direct by DAS in pursuance of its obligations under the insurance to pay Vehicle Hire Costs. Mr Bee's claim in the present case is thus for the amount of the hire charges which DAS paid on his behalf. The fact that DAS paid them is a matter which is, on basic principles, res inter alios acta.
39. It is accepted by the claimant that if the Helphire charges were in excess of the "spot rate" for vehicle hire charges (referred to in Dimond v Lovell 2002 [1AC] 384), then the amount which he can recover will be reduced to that sum. Accordingly it is recognised that if the Helphire rates were in excess of the market rates, then there cannot be a recovery for the excess over the market or spot rate.
40. Mr Bee did not appoint DAS as his "agent". He took up his contractual right under his insurance. Mr Bee did not "delegate his duty to mitigate his losses to DAS".
41. The only evidence as to what Mr Bee asked DAS to do is in the agreed statement of facts and Mr Bee's witness statement. This material does not begin to suggest that Mr Bee delegated to DAS the task of mitigating his loss. What Mr Bee did was simply to take up his contractual entitlement under his policy. He was not asking DAS to perform for him the job of mitigating his loss. He was not asking DAS to perform a review of the entirety of the market to any such end. Doubtless he did not mind as to the particular reasons why DAS should have preferred one hire company rather than another, so long as the car was ready promptly, was suitable and he did not actually have to pay the charges out of his own pocket. There can be no attribution of knowledge to Mr Bee of the RSA scheme, given that it was known that that would not be communicated to Mr Bee. A third party who seeks to rely on the knowledge of an agent and to contend that the principal is fixed with that knowledge, will not be able to do so if he knows that the agent has not communicated that knowledge to the principal, Sharpe v Foy (1868) 4 Chancery App 35 at 40.
42. There is no issue that RSA knew full well that DAS had not communicated the RSA offer or scheme to Mr Bee. El Ajou v Dollar Land Holdings supra is a limited exception to the general rule that a principal will only have notice of knowledge acquired by the agent during the course of the agency. This principle is irrelevant to the present situation, where the defendant does not seek to rely on DAS' knowledge of the RSA scheme as relevant to the terms of the Helphire contract, but in seeking to fix Mr Bee with knowledge for the purposes of an argument that he did not mitigate his loss. This comes nowhere near the category referred to by Hoffmann LJ. This is a case in which, as Hoffmann LJ put it, "real imputation of knowledge is required".
43. The present case is governed by ordinary and very well established principles. The principal could only be said to have notice of (or be fixed with) knowledge which the agent had acquired in the course of the agency, and in any event could not have notice of matters which the agent had unequivocally indicated he would not pass on to the principal.
44. The defendant has not put forward any argument which has any realistic prospect of success that DAS' knowledge of the scheme is relevant to Mr Bee's claim.

Analysis and conclusions

45. I consider that paragraphs 9 to 12 of the reamended Defence should be struck out under part 3.4 in particular (but without limitation) for the following reasons.
46. (i) The defendant did not have a choice as pleaded in the second sentence of paragraph 11 of the reamended Defence. He was contractually obliged (in circumstances where DAS agreed to pay vehicle hire costs) to accept DAS' choice of vehicle hire company, type of vehicle and period of hire, see section H6(a) of the policy.
47. (ii) It is inaccurate, misleading and embarrassing to plead in paragraph 11 of the reamended Defence that Mr Bee "could have accepted the free car on offer to him from RSA" when it is common ground that at no point was the claimant contacted by RSA with regard to any offer to provide a free replacement car, nor was he ever informed by DAS of any such offer from RSA, either before his accident on 8 March 2004 or afterwards.
48. (iii) I do not consider that in the circumstances of this case, and having regard in particular to the agreed statement of facts, that Mr Bee had any imputed knowledge of the letter of 8 July 2003.
49. (iv) Even if I am wrong as to (iii) above, I do not consider that the letter of 8 July 2003 contained an offer (I emphasise the word "offer") of a free car from RSA to Mr Bee (see in this connection the opening words of the third sentence of paragraph 11 of the reamended Defence).
50. (v) It is to be noted that, whereas specific offers have apparently been made by RSA in cases where RSA insureds were represented by Badhams Law, the defendant's solicitors, to DAS insureds who were involved in accidents between July 2003 and July 2005 (Mr Flaux mentioned 15 out of the 71 cases), no specific offer of any vehicle of any type for any period was made by RSA to Mr Bee.
51. (vi) Paragraphs 9 to 12 allege that Mr Bee had a choice between "accept[ing] the free car on offer to him from the RSA" and the Helphire route, when in truth and in fact his choice was between exercising his contractual rights under the policy or hiring a vehicle in the open market at his own expense.

For these reasons I order that paragraphs 9 to 12 be struck out.