England and Wales High Court (Commercial Court) Decisions

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

		Rolls Building Fetter Lane, London, EC4A 1NL
		15/06/2012

Mr JUSTICE COOKE :

Introduction

1. There are three preliminary questions for the Court to determine in thirteen actions which have been the subject of combined case management orders in this Court because of the issues of principle involved. Each of the managed cases arises out of a minor road traffic accident in which the vehicle of a person insured by Royal & Sun Alliance Insurance plc (RSAI) was damaged by the admitted negligence of a driver insured by either Provident Insurance plc (Provident) or Allianz Insurance plc (Allianz). In each case RSAI indemnified its policy holder by having the vehicle repaired. The claims are therefore subrogated claims brought in the name of the policyholders. Throughout this judgement, I will refer to the RSAI insureds as the claimants, even though some claims in the actions are brought by Provident policyholders seeking declarations as to their liability.
2. The claimants are insured by RSAI under a variety of policies. However the wording of the policies, although not identical, shares a common feature – an option for reinstatement. Each policy contained the option, where the car was repairable for less than its market value, whereby the policyholder could choose a repairer or elect to use RSAI's system for repairing cars. In each of the managed cases the option exercised was for utilisation of the RSAI system which also entitled the policyholder to the use of a courtesy car, if the policyholder so desired. The RSAI system is the subject of challenge by Provident and Allianz (supported from the sidelines by other Insurers) essentially because, it is said, the system has the effect of inflating claims for repairs which fall to be paid by the insurer of the tortfeasor.

The RSAI Scheme.

3. RSAI's case is that it engaged MRNM, which is the trading name of RSA Accident Repairs Limited, a member of the RSA Group, to undertake repairs to the claimants' vehicles. MRNM owns and operates 6 repair garages which are staffed by its own employees. These are known as Quality Repair Centres (QRCs) and are located in Birmingham, Bristol, Glasgow, Leeds, Luton and Stockport. RSAI maintains that around 15% of repairs of its policyholders' vehicles take place at QRCs. It is unclear what proportion of the repairs undertaken at QRCs relates to cases where RSAI's own insured was at fault. 2 of the 13 managed cases involve repairs undertaken at QRCs. RSAI says that MRNM subcontracts other repair jobs to independent garages outside of the RSA Group, which then do the repair work. 11 of the 13 managed cases involve repairs undertaken at such independent garages.
4. RSAI maintains that MRNM undertakes the repairs under the terms of a Services Agreement which lays down rates and charges for repair services. Those rates and charges have been periodically varied under documents called "Retail Adjustment Criteria". Clause 3.1 of the Services Agreement provides that MRNM is required to provide services as detailed in schedule 1. Clause 3.2 permits RSAI to require MRNM to obtain specified products, goods and materials from designated suppliers. Under clause 4.1, MRNM gives a series of warranties, representations and undertakings as to the quality of the repairs to be carried out while clause 4.2 provides that any failure to perform or procure the performance of these services in accordance with the agreement should be remedied as soon as possible, without prejudice to other rights of RSAI. Clause 7 provides that contract charges should be as set out in schedule 3 whilst clause 7.4 requires MRNM to raise invoices in an agreed manner and to provide such information as RSAI reasonably requires to substantiate the charges made. Clause 28 makes it plain that nothing in the agreement is to give rise to any agency between MRNM and RSAI.
5. Schedule 1 itself (headed "Services") contains a series of service standards which are required to be met by repairers in MRNM's Priority Repair Network (PRN repairers). There is a requirement to provide a delivery/collection service, if sought, and an obligation to provide estimates of repair work in a particular format (the Audatex form) and the requirement to provide courtesy cars where the customer requires it.
6. Schedule 3 provides for labour and other charges to follow a set formula, (revised in various amendments to the Services Agreement) which allows for MRNM to make a profit over and above the charges paid by it to PRN repairers. The amounts charged by MRNM are designed not to exceed that which would be payable by an individual who went out into the market to get the repairs done, whilst RSAI/MRNM is able to negotiate substantial discounts with its PRN repairers by reason of its bargaining power and the volume of work that it can supply to them. MRNM charged the same rates when the work was done by its QRCs, though documentation shows the QRCs providing lower figures to MRNM. It is said by RSAI that the QRCs , as a separate division of MRNM invoice the procuring division of MRNM at the lower rate, whilst the procuring division charge the commercial cost to RSAI.
7. QRCs and PRNs are utilised by RSAI according to the geographical convenience or other preference of the policyholder. Where neither a QRC nor a PRN is used, RSAI will engage a non-recommended garage (NRG) outside the terms of the system on a one-off basis, usually or perhaps only where the option is exercised by the policyholder to utilise that other garage.
8. Schedule 3, in the form which applied to most of the managed cases, provided for labour to be charged according to agreed hourly rates and on three different scales. The standard hourly rate was £29.50 with parts and paint charged at normal prices. Under the New Repairer Costs Model (NRCM) the hourly rate was £39.50 but with a discount on parts and paints, said to be between about 15% and 40%. A rate of £49.50 per hour was used for high value prestige vehicles.
9. In cases where the net invoice total exceeded £300.00 and the labour involved in the repair exceeded 4 hours, the Schedule provided for additional charges to be made for "Sundry Services" provided. The Sundry Services charge was a flat rate charge which RSAI and MRNM agreed to cover a range of services for which repairers could charge retail customers on an individual service basis. RSAI's case is that some of the services were provided in all cases though other services might not be, depending upon the particular nature of the work involved. The flat rate charge, whatever the services provided under this head, amounted to three times the hourly labour rate utilised. In addition the provision of a courtesy car to the customer was subject to a charge of £11 per day and where the customer's vehicle or a courtesy car had been delivered and/or collected, a charge of £110 could be added.
10. On RSAI's case, MRNM was engaged to repair or procure repairs and subcontracted the repair obligations to PRN repairers or NRG repairers where its QRCs did not do the work. Bordereaux moved from the garage to MRNM and from MRNM to RSAI, with its mark up, and payment proceeded down the chain in the same fashion. The bordereaux contained very limited information about the repair work done. In consequence, when RSAI presented a claim to the insurance company of a tortfeasor, a Breakdown of Invoice Charges (BIC) was put forward as the basis of claim. This set out the figures payable by RSAI to MRNM which, in most cases, exceeded the sums paid by MRNM to a subcontractor, as the rates agreed with PRN repairers were, on RSAI's evidence, lower than those which could have been obtained by any individual obtaining repairs from the same garage because of the discount which MRNM could obtain from the garage by reason of its bargaining power and the bulk volume of work produced to the garage by it. RSAI maintains that the figures charged by MRNM to it were no more than any individual policyholder would have had to pay a garage and in most cases were somewhat less. Provident and Allianz calculate that the overall effect of the interposition of MRNM between RSAI and the repairing garage was to increase the cost of the work done by approximately 25% on bills which, in the managed cases, were generally of the order of hundreds, rather than thousands of pounds. RSAI says that the charging scheme is the same whether or not the RSAI policyholder is at fault or a claim is presented to the insurers of another driver.
11. RSAI's case is that the claim presented on the BIC properly represents the loss sustained by the policyholder which he or she is entitled to claim from the tortfeasor insured by Provident or Allianz, as the case may be, because it reflects what the policyholder would have to pay individually for such repairs. It accepts that it is a question of fact in each case whether the amount claimed does or does not exceed the reasonable cost of repairs to the claimant but is confident that the sums claimed do not exceed that reasonable cost because the scale of rates agreed with MRNM produces total costs for repairs which are at, or lower than, what the insured motorist would himself have to pay. It prays in aid the Retail Charge Guide published by the Auto Body Professionals Club, which is a motor repairer trade body, which gives a guide as to the recommended retail price for repairs. The £39.50 hourly rate is about the same level as the ABP guide but the effect of the discount for parts/paint is that the overall repair bill is below that which would be paid by the individual policyholder. The ABP guide rate specifies a minimum charge of £110 for recovery, collection and delivery services whilst the RSAI/MRNM charging formula provides for £110 to be charged for any one of those services or for all of them together. As to the Sundry Services charge, RSAI's case is that the flat rate charged is less than would be charged for the Sundry Services in a given case, if provided to a retail customer by a garage.
12. RSAI accept that the model described generates income for MRNM which is a company in the same group as itself, though not a subsidiary. It points however to a number of other models of repair of policyholder's vehicles used by other insurers which have the effect of generating income or savings for the insurer or associated companies. The evidence of Mr Currie sets out some of these other models, including repairing subsidiaries or related repair companies, related claims management companies, recommended repairing garages which pay referral fees, arrangements with the suppliers of parts, with credit repair companies, credit hire companies or accident claims organisations all of which similarly pay referral fees. The effect is that other insurers, when presenting claims to the tortfeasor's insurers make claims for sums invoiced gross to them without taking account of profits earned by related companies or rebates or referral fees whereby the insurer recoups some of what has been paid out but do not account to the tortfeasor or the tortfeasor's insurers for those benefits. The difference in RSAI's model, according to Provident and Allianz, is that MRNM charges higher rates than those charged by the subcontracting repairers, where used, and charges flat rate fees for collection and delivery, courtesy cars and Sundry Charges even where the garage charges nothing when providing those services. It is also suggested that in some cases MRNM imposed such charges, even where no service was provided by the garage at all, an allegation which is hotly disputed. Whereas insurers have, as between themselves, plainly tacitly accepted a level of rebate or referral inuring to the benefit of the claiming insurer, without any credit accruing to the paying insurer (or the extent of it being disclosed) the RSAI model is one to which other insurers have taken objection, because of the mark up on repair charges. If an insurer had a repairing subsidiary however, it would presumably charge repair costs to its parent at a level which provided for some profit, rather than simply charging at cost. I understand that the OFT is currently looking into some or all of these practices.
13. I have described the RSAI model as RSAI put it forward. It is not accepted by Provident or Allianz that the model does work in this way nor that it applied to the repair arrangements in some of the managed cases. Issues of fact are said to arise in relation to the identity of the party contracting with the repairing garage, it being said in some cases that it was RSAI and in other cases that it was the policyholder individually.

The preliminary questions

14. The three preliminary issues are set out in the order of Teare J: -

"(1) Measure of loss: Where a vehicle is negligently damaged and is reasonably repaired (rather than written off), is the measure of the claimant's loss taken as the reasonable cost of repair?

(2) Test of 'reasonable repair charge': If a claimant's insurer has arranged repair, is the reasonableness of the repair charge to be judged by reference to (a) what a person in the position of the claimant could obtain on the open market; or (b) what his or her insurer could obtain on the open market?

(3) Recoverable amount: Where a vehicle is not a write-off and an insurer indemnifies the insured by having repairs performed and paying charges for those repairs, and where the amount claimed is no more than the reasonable cost of repair (on the correct legal test determined under (2) above), is that amount recoverable?

The principles of law applicable to the first issue

15. It is clear in law that where a person's chattel is damaged by the negligence of another, the loss suffered by the victim is the diminution in value of the asset resulting from the physical damaged caused. It is also clear that the loss is suffered immediately upon the damage occurring, whether or not any repairs are effected. These principles apply across the board to all types of chattels, including ships and cars, This is direct loss. In addition to the claim for physical damage to the asset, there may also be a consequential loss claim for the loss of use of the asset. If it is a profit earning chattel, that loss can be measured by reference to the profit which would have been made during the period of repair, but if it is not a profit earning chattel, special damage can be recovered if a substitute is hired in for the relevant period or general damages may be recoverable for the inconvenience of not having the asset available. The law distinguishes between claims for physical damage on the one hand and loss of use on the other.
16. The usual way in which diminution of value of an asset is measured in consequence of physical damage is by reference to the repair cost. This can be described as "the normal measure", "the ordinary rule" or "the prima facie" measure. The authorities make it plain however that the victim of the negligence does not have to repair his asset nor does he have to pay for repairs if they are done. He can choose to leave the asset unrepaired; an intervening event destroying the asset may occur before repairs are done; the victim may become insolvent before paying the repairer. The principle is that the victim can recover because, from the moment the physical damage has occurred, the value of the asset is diminished. The cost of repair is the ordinary way of measuring that loss. If repair has taken place, production of the invoices showing the cost of repair would be the ordinary way of establishing the loss. If repair does not take place then estimates for repair or expert evidence as to the cost of repair could equally establish the extent of the recoverable loss. In small claims of the kind with which the managed cases are concerned, a County Court will usually be faced with invoices in respect of repairs carried out and insurers, when dealing with other insurers, may accept summaries or spreadsheets setting out costs without reference to the underlying invoices or documentary evidence establishing such cost. The RIPE scheme ("Reduction in Paper Exchange") which operated between insurers was designed to minimise the need for documentary evidence to be produced to substantiate claims between insurers who would pay on the basis of a summary of costs incurred, insurers having the requisite experience to judge whether the repair costs for the type of damage suffered appeared acceptable. Some County Courts have, I was told, rejected claims made by RSAI policyholders because of the production of a BIC but no invoices from the garage showing the cost of repair.
17. In The Endeavour [1890] 6 Asp MC 511, repairs were effected by the owner of a vessel damaged in a collision but not paid for because the owners became insolvent. Sir James Hannen found for the liquidator of the insolvent company holding that the ship had been injured and that the owners were entitled to be paid in respect of that injury. The cost of repairs had been established and that was the measure of the damages recoverable. It made no difference if "somebody out of kindness were to repair the injury and make no charge for it". The wrongdoer would still be bound to pay the cost of repairs to the owner as the measure of loss suffered from diminution in the value of the asset.
18. In The Glenfinlas [1918] P 363 temporary repairs were made to a vessel following a collision but permanent repairs were postponed on the basis that they would be done at the end of the First World War. However in 1917 the vessel struck a mine and sank. The cost of the permanent repairs was accepted, the Registrar stating that it was clear law that the owner of a vessel was entitled to the cost of repairs though they had not been effected, by reference to the decision in The Endeavour. "Such estimated cost was in fact the measure of an actual injury resulting in actual damage to the plaintiff's property and was part of the cost of repairs". It was therefore allowed. Damages for detention were not recoverable however since there never was any loss of use by reason of the repairs, because such repairs did not take place.
19. The Court of Appeal in The Kingsway [1918] P344 was concerned with permanent repairs and loss of use in circumstances where those permanent repairs had not yet taken place at the time of the assessment of damages. Temporary repairs had been done but once again, it was improbable that the permanent repairs would be effected before the end of the war. The Court of Appeal had no difficulty in finding that the owners of the damaged ship were able to recover both for prospective permanent repairs and prospective loss of time on the basis of evidence as to what the cost would be and how much time would be lost in effecting those repairs. It was proved to the Court's satisfaction that repairs would be done so that there would be loss of time, as opposed to the position in The Glenfinlas where, since the ship had been lost, the repairs would never actually be done and no loss of time would be suffered.
20. In 1934, the Court of Appeal once again returned to the same theme in The London Corporation [1935] P70. After a vessel was damaged in a collision, it was sold for break up before the repairs were actually done. At first instance, Bateson J held that it was "beyond controversy" that the owner of a chattel was entitled to damages for injury to it when physical damage was done, by reference to previous authority. If the owners of the vessel chose to give her away after the incident, it would not be any ground for saying that the wrongdoer was not bound to pay for the damage he had done. The only way of getting out of paying for the damages would be to show that there was no diminution in the value of the ship. In the Court of Appeal, Greer LJ at page 77 stated that, prima facie, the damage occasioned to the vessel is the cost of repair - the cost of putting the vessel in the same condition as she was in before the collision and to restore her in the hands of the owner to the same value as she would have had if the damage had never been done. "Prima facie, the value of a damaged vessel is less by the cost of repairs than the value it would have if undamaged, though it is true that evidence may establish that the value of the vessel undamaged is exactly the same as her value after she had been damaged". It mattered not that the vessel had been sold for break up before repairs had been done. It was possible that the vessel might not have been sold had she not been damaged in any event. He went on in the following way:

"Quite apart from that, however, I agree with the learned judge that in cases of this sort, the prima facie damage is the cost of repair, and circumstances which are peculiar to the plaintiffs - namely, that they have, before the damage has been determined, sold the vessel to be broken up, is an accidental circumstance which ought not to be taken into account in the way of diminution of damages, any more than it is in a case of the sale of goods, where the difference in market price and contract price is always allowed, regardless of the fact that having regard to what the purchaser has done, no such damages are in fact suffered by him. It is desirable that there should be a measure of damage which can be easily and definitely found. In this case, circumstances which are accidental to the plaintiffs of which the defendants have no knowledge, or circumstances applicable to the defendants of which the plaintiffs have no knowledge, need not be taken into account. A number of cases have been cited, and I think it is clearly established now that where damage is done to a vessel, then some damages are recoverable. I think that is the result of cases like The Mediana (1) and The Marpessa (2) and the other cases that have been cited, such as The York (3); The Kingsway (4); and The Endeavour. (5) I need not go into the details of those cases It is now clear that the shipowner who claims damages in respect of injuries to his ship, if it turns out that before he has in fact repaired her he has suffered the loss of the ship by something other than the act of the defendant, can still recover the estimated amount of the costs of repairing the ship, which he would have had to incur if she had not been lost. It seems to me that the principles that apply in those cases apply equally in this: that the owners of the Benguela are entitled to recover what has been agreed to be the amount they would have had to expend for repairing their vessel, even though it has turned out, by reason of a subsequent transaction, namely, the sale to shipbreakers, that they never would have to repair her at all. Further, it does not by any means follow that the price paid by the shipbreakers would have been the same if the vessel had been fully repaired, as it was in her unrepaired condition."

21. These principles are of long standing and have more recently been reaffirmed by the Court of Appeal in 1986 and by the House of Lords in 2000. In Jones v Stroud District Council [1986] 1 WLR 1141, a claim for negligence against a local authority for failing properly to inspect the foundations of a house gave rise to recovery of cost of repair though it was not established that such costs had ever been paid. A scheme of work which involved both repairs for the damage caused by the defendant's negligence and improvements to the house in question was carried out by a company controlled by the first plaintiff. There was no evidence that the plaintiffs had paid or were liable to pay any sum to the company in respect of that work. The submission was advanced on the basis of The Endeavour that, if someone out of kindness was to repair the injury and to make no charge for it, the wrongdoer would not be entitled to refuse to pay as part of the damages the cost of the repairs. That submission was accepted by the court. (Although Neill LJ at page 1150H stated that, if the court was satisfied that the property had been or would be repaired, it was not necessary for the court to be concerned with the question of whether the owner paid for it or whether the funds came from another source, it is clear from the previous authorities that there is no need for the repair to be done, let alone paid for).
22. In Dimond v Lovell [2002] 1 AC 384, a case concerned with loss of use and credit hire arrangements, Lord Hobhouse at page 406B set out the general position thus:-

"Mrs Dimond was at the time of the accident the owner and person in possession of her car. It was damaged. Its value was reduced. This can be expressed as a capital account loss. This loss can be measured as being the cost of making good the damage plus the value of the loss of its use for a week. Since her car was not unrepairable and was not commercially not worth repairing, she was entitled to have her car repaired at the cost of the wrongdoer. Thus the measure of loss is the expenditure required to put it back into the same state as it was in before the accident. This loss is suffered as soon as the car is damaged. If it were destroyed by fire the next day by the negligence of another, the second tortfeasor would only have to pay the damages equal to the reduced value of the car and the original tortfeasor would still have to pay damages corresponding to the cost of putting right the damage which he caused to the car. These questions are liable to arise in relation to any damaged chattel and have long ago received authoritative answers in cases concerning ships: The Glenfinlas (Note) [1918] P 363; The Kingsway [1918] P 344; The London Corporation [1935] P70. These cases also distinguish between the cost of the damage to the chattel and consequential losses to the owner of the chattel such as loss of revenue. However even where the chattel is non profit earning (as was Mrs Dimond's car) there may still be scope for awarding general damages for loss of use: The Mediana [1900] AC 113; Admiralty Comrs v SS Chekiang [1926] AC 627; Admiralty Comrs v SS Susquehanna [1926] AC 655. I mention these cases and the principles they illustrate to demonstrate that persons such as Mrs Dimond do not have to survive in an environment where the law does not recognise the losses which they may have suffered and that the law is not without principles covering the provision of compensation and its assessment. Each case depends upon its own facts but loss of use of the chattel in question is, in principle, a loss for which compensation should be paid. However one of the relevant principles is that compensation is not paid for an avoided loss. So, if the plaintiff has been able to avoid suffering a particular head of loss by a process which is not too remote (as is insurance), the plaintiff will not be entitled to recover in respect of that avoided loss. If the loss has only been avoided by incurring a substituted expense, it is that substituted expense which becomes the measure of that head of loss. Under the doctrine of mitigation, it may be duty of the injured party to take reasonable steps to avoid his loss by incurring that expense. "

23. Since the loss suffered from the physical damage is the loss in value of the chattel in question and that loss is suffered immediately upon the occurrence of the collision, it is hard to see how questions of mitigation can arise. The diminution in value is ordinarily measured by the cost of repair and self evidently that must be the reasonable costs of the repairs rendered necessary by the damage. As has frequently been said, the notion of "the duty to mitigate" can be seen as a reflection of the issue of causation. Here however the issue which the Court has to decide is one stage removed from that, since it is only concerned with the diminution in the value of the asset which can be measured by the reasonable cost of repair, if repair is done. There is therefore a simple question of fact for the Court in assessing a loss in respect of the physical damage because the Court must arrive at a figure which reflects that diminution of loss, whether it is by reference to a repair estimate, a repair invoice or expert evidence as to what repairs would cost.
24. In Burdis v Livsey [2003] QB 36 the Court of Appeal was concerned with a Credit Repair Agreement where the cost of repair was funded by a commercial arrangement which was unenforceable by reason of the Consumer Credit Act. Aldous LJ, in the judgment of the court, at paragraph 84 referred to the fundamental distinction which had to be drawn between repair costs and hire charges. "When a vehicle is damaged by the negligence of a third party, the owner suffers an immediate loss representing the diminution in value of the vehicle. As a general rule, the measure of that damage is the cost of carrying out the repairs necessary to restore the vehicle to its pre accident condition", referring to Lord Hobhouse in Dimond (ibid). He went on to say that it was common ground in Burdis that the repairs restored the car to its pre accident value and there was no issue as to the reasonableness of the garages charges. At the moment when the accident occurred the owner suffered a direct and immediate loss, the measure of which was the cost of repairs which were in fact carried out, but it was not a condition precedent to recovery of compensation for that loss, that the car be repaired. The cause of action for recovery of damages representing the diminution in the value of the car caused by the tortfeasor's negligence was complete when the accident occurred. Nor did it matter whether the repairs were carried out at no cost, by contrast with the hire charges which were sought to be recovered in Dimond, since they represented a potential future loss consequent upon the defendant's tort, which was recoverable as damages only if and when it was in fact suffered. The hire charges for the substitute car for the period of repair constituted special damage so that, if the Credit Hire Agreement was unenforceable, as in Dimond, the hire charges were irrecoverable from the defendant because the claimant had never suffered that loss.
25. At paragraphs 87 onwards, the Lord Justice explored the issue of mitigation in the context of damages for tort which are "purely compensatory". He said that the process of determining what loss the claimant has actually suffered differs according to whether the loss was suffered when the tort was committed (direct loss) or whether it was suffered subsequently (consequential loss). In a case of direct loss, subsequent events can only operate to reduce or extinguish the loss in so far as the events are referable to the claimant's duty to mitigate and therefore operate in a causative sense in relation to the commission of the tort. He quoted Robert Goff J (as he then was) in Koch Marine Inc v D'Amica Societa di Navigazione ARL [1980] 1 Lloyds Rep 75 at page 88: "What is alleged to constitute mitigation in law can only have that effect if there is a causative link between the wrong in respect of which damages are claimed and the action or inaction of the plaintiff "
26. At paragraph 91 Aldous LJ held that the authorities established that subsequent events which were not referable in a causative sense to the commission of the tort, that is to say events which, on a true analysis, were collateral to the commission of the tort or res inter alios acta, or were too remote, do not affect the measure of a direct loss suffered when the tort was committed. For potential future losses however the general rule was that, to the extent that such a loss was in fact avoided, for whatever reason, it was a loss which was never suffered and was therefore irrecoverable. He pointed out that there were two well established exceptions to the general rule that potential future losses were irrecoverable if and to the extent that they were in fact avoided, those being the recovery of money under an insurance policy and the receipt of money from the benevolence of third parties prompted by sympathy. The point was however that repair costs were merely the measure of a direct loss suffered when the tort was committed so that it was hard to see how any issue of mitigation could arise and the claimant was entitled to recover even though she had paid nothing for the repairs because they had been funded by a finance company whose loan was unenforceable against her.

Question 1

Measure of loss: Where a vehicle is negligently damaged and is reasonably repaired (rather than written off), is the measure of the claimant's loss taken as the reasonable cost of repair?

27. Both the claimant and the defendants give an affirmative answer to this question as a matter of language but advance contradictory submissions as to what is meant by "the reasonable cost of repair" and how the amount in question is to be ascertained. The claimants submit that the basis of the claimants' loss is the diminution in value of the asset which is measured by the reasonable cost of repair which can be established by different kinds of evidence. If the car is repaired, then the conventional way of establishing the loss is by reference to the costs incurred but, in reliance upon the authorities, the claimants also say the loss could be established by reference to estimates of repair costs or expert evidence about that cost of repair, whether by reference to photographs of the damage or standard rates for repairing charges, regardless of any actual repair invoice, since the latter might or might not reflect the reasonable cost of repair. The defendants on the other hand put forward the proposition that, since the principle underlying damage is restitution, a claimant cannot recover more than the cost of the repairs which are actually effected and that this figure may be subject to some discount if there has been a failure to mitigate by not acting reasonably in obtaining a lower price for the repairs. The defendants effectively argue for a rule of law that the actual cost of repairs is the measure of damages and presents a cap upon it but the claimants submit, this confuses the measure of loss with the evidence which is adduced to support a claim.
28. The defendants put forward a two stage test: Stage 1 is a factual enquiry. What were the actual repairs and other services that were carried out to repair the damage to the claimant's car? What was the cost of the various entries on the repair bill? The defendants submit that the actual repairs and other services that were provided and the cost charged for each item are the starting point for the assessment of the claimant's damages. If, for example, the repair bill contains entries for items that were not in fact provided and/or were provided at no cost, the claimant will not be entitled to recover the cost of those entries. Stage 2 concerns reasonableness. Were the repairs reasonable? Was the cost of the repairs reasonable? Did the claimant act reasonably to mitigate his damages? If the answer to any of these questions is "no", the claimant will not be entitled to the actual cost of the actual repairs – the actual cost will fall to be reduced by deducting the unreasonable portion. Thus the cost charged for the actual repairs necessary to repair the damage caused in the accident operates as a 'cap' on the amount the claimant can recover as damages, but the damages he recovers may fall to be reduced to take account of the unreasonableness of the repairs, the unreasonableness of their cost or the unreasonable conduct of the claimant.
29. The defendants submit, that, if the claimants are right in the arguments they put forward, the principle of "restitution" is jettisoned, since it could result in the claimants recovering for costs of repairs not incurred by them. They draw attention to the judgment of HHJ Platt in the Romford County Court in Fallows v Harkers Transport and the usual method by which small accident claims have been historically proved in actions in the county court. It is said that the effect of allowing recovery on a MRNM BIC will be to allow recovery of costs which have not in reality been incurred by RSAI, let alone reasonably incurred.
30. I hope I do not do injustice to the defendants' case but, as I see it, their case turns upon the submission that, where repairs are carried out to a damaged car, that is in itself the measure of damages and the Court is then concerned to see whether or not the repair cost is reasonable. It was submitted that the claim for diminution in value crystallises in the cost of repair, once done, so that the cost of repair represents the loss in question and, in such circumstances the insurer which organises the repairs is bound to mitigate the loss suffered by the car owner, as the car owner's agent, by using its bargaining power to achieve the lowest repair cost possible, whether or not that would be a price obtainable by the policyholder himself. The policyholder is bound to mitigate through its agent whom it had authorised to procure or effect the repairs when entrusting the damaged car to it.
31. In my judgment these arguments fall at the first hurdle. The authorities make it plain that the loss suffered from physical damage is the diminution in value of the asset which is ordinarily to be measured by the cost of remedying the damage. Where however, for whatever reason, the claimant does not pay the repair cost in question, he is still entitled to recover. If he himself repairs the car or a friend does so without charge, the claimant is still entitled to recover the amount it would have cost him to have the car repaired had he gone out into the market for that purpose. If he can get a knock-down price for repairs by virtue of a particular relationship that he has, it is still open to him to claim the diminution in value of the car by reference to the market cost of repair. This is because the cost of repair is merely a way of measuring the loss in value. If no repairs are done, as I have already mentioned, the loss can be established by reference to estimates or expert evidence as to the reasonable cost of repair.
32. In my judgment, the propositions established by the authorities are fatal to the fundamental premise upon which the defendants' case proceeds. Issues of mitigation may arise in relation to the hire of a substitute car or the use of a courtesy car and conceivably to the cost of collection or delivery of a vehicle for repair (if the latter type of costs are not part of the repair cost itself) but cannot apply to the Court's assessment of the direct loss where it uses the reasonable cost of repair as a way of assessing the diminution in market value of the car.
33. I was referred by the defendants to a number of authorities which state that the Court should use all information available at the time of assessment of damages, regardless of its availability at the time of the tort or breach of contract or duty. Where repairs have been effected, it was said by the defendants that self evidently, the starting point must be the costs actually incurred in carrying out the repairs and that this must set a cap on the recoverable loss before considering the reasonableness of those costs and the question whether the claimant had mitigated or was claiming for avoidable loss. The Court should not look at matters hypothetically but on the basis of actuality when considering repairing cost.
34. Reliance was placed upon the decision of the Court of Appeal in Darbishire v Warran [1963] 1 WLR 1067. There the claimant owned a well maintained second hand car which had been damaged in an accident due to the defendant's negligence. The claimant chose to repair the car at a cost which exceeded its market value. Harman LJ, at page 1071 referred to the principle of restitutio in integrum and said that it had come to be settled that "in general the measure of damage is the cost of repairing the damaged article". He went on to say that there was an exception if it could be shown that the cost of repairs greatly exceeded the value in the market of the damaged article and that this exception arose out of the duty to mitigate. The question to be asked was whether the claimant had acted reasonably as between himself and the defendant in the light of this duty. It was held that he had not. Pearson LJ also referred to the principles of mitigation as set out in British Westinghouse Electric Manufacturing Co Ltd v Underground Electric Railways Company of London Ltd [1912] AC 673 and the true meaning of the duty to mitigate as being that the claimant could not charge the defendant by way of damages with any greater sum than that which he reasonably needed to expend for the purpose of making good the loss. He agreed that the claimant had not done so, as did Pennycuick J. The defendants submitted that the approach of the Court of Appeal in this case was the correct approach to adopt when considering the cost of repairs which, when repairs had been carried out, had the effect of crystallising the loss suffered.
35. The problem with this decision and with the defendants approach is that it flies in the face of all the authorities to which I have already made reference. There was no citation to the court in Darbishire of The Endeavour, The Glenfinlas, The Kingsway or The London Corporation. Moreover, since that decision, the principles set out in the earlier authorities have been restated in Jones v Stroud DC, Dimond v Lovell and Burdis v Livsey. The reasoning there cannot stand in the light of these decisions, including later decisions of the Court of Appeal and House of Lords.
36. The defendants further relied upon the decision of the Court of Appeal in Payton v Brooks [1974] 1 Lloyds Rep 241 where a car was involved in an accident and was repaired at a specified cost but the claimant sought a further sum for loss of market value even after the repairs had been done. The Court of Appeal upheld the first instance decision that the claimant had failed to prove any diminution in value over and above the cost of repair but each member of the Court agreed, that in addition to the prima facie measure of damages provided by the cost of repair, there was scope for recovery of any additional loss in market value after the repairs had been completed. The defendants submitted that, if the appropriate measure of damage was the diminution in the value of the car, there would have been no need to refer to the cost of repairs at all but, in my judgment that argument is not made good. The authorities establish that the normal measure of damages or the prima facie measure is the cost of repair which is, often, easier to establish than a loss in market value based upon expert evidence where there is room for argument. With a repair invoice, the cost is ascertained, even though it remains open to argument as to its reasonableness. It is noteworthy that, in Payton the claimant failed to establish the additional loss and had to be content with the repair cost that he had shown. Contrary to the defendant's submissions, Payton along with the other authorities shows that the damage suffered by the victim is the loss in value of the asset which can be shown evidentially by reference to the cost of repair in the ordinary way.
37. Although the defendant also relied upon authorities which referred to mitigation of a loss which had already crystallised in the context of a conventional measure of damage for the purchase of land or goods, none of these impact upon the position where damage is caused to a chattel by a tortfeasor. In Pagnan & Fratelli v Corbisa Industrial Agropacuaria ltda [1970] 1 WLR 1306 (CA), the prima facie rule for ascertaining the measure of damage provided by section 51(3) of the Sale of Goods Act 1893 was not applied because the buyers had in fact been able to go out into the market and purchase a substitute cargo at a lesser price than the contract price or the market value at the relevant time. In Hussey v Eels [1990] 2 QB 227 and Gardner v Marsh & Parsons [1997] 1 WLR 489, the Court did not rule out the possibility in law of a mitigation argument on a purchase of land which could have resulted in a different measure of loss from the conventional difference between the price paid and the market price of the property in its defective condition. In each case the argument failed on the facts in any event but, in the latter case, Hirst LJ, with whom Pill LJ agreed, accepted the submission that, where as a result of a defendant's negligence a claimant suffered loss in the form of diminution of value of the property, that loss was not avoided by the subsequent conduct of the claimant unless the conduct flowed inexorably from the original transaction and could properly be seen as part of a continuous course of dealing with the situation in which the claimant originally found himself.
38. There is nothing unusual in a Court assessing the diminution in value of an asset by whatever evidence is available although, as a matter of ordinary course, in a small claim, the production of a repair invoice is frequently the best way of doing that since the cost of repair is the prima facie measure of that loss. Where only part of an item is repaired or where the work does not restore the asset to its pre accident value or the claimant does not repair at all or merely effects temporary repairs, the diminution in value must be assessed by reference to other materials. Nor can it be said that there is a rule of law that where repairs are effected, the cost of repair has to be taken subject to mitigation arguments. None of the authorities suggest such a rule and indeed such a rule would run counter to the principles that have been set out from the time of the decision in The Endeavour through until Burdis. The recovery for damage done to a chattel is not dependant upon repairs being done or costs of repair being paid by the claimant since the compensation is for loss in value, not the cost of the repair as such.
39. The decision in Jones v Stroud BC (ibid) demonstrates the fallacy in the defendants position. There was no evidence before the Court that the claimant was liable to the company, in which he had an interest, to pay for the costs of repairs done to rectify the damage to his house. He failed to disclose any documents that showed any payment by him or any liability to make such payment. The Court had therefore to proceed on the basis that he had incurred no expense at all. Although no argument seems to have been raised about mitigation as such, the Court of Appeal held that the claimant was entitled to recover on the basis of expert evidence relating to an estimate for the cost of repair that had been obtained from a third party contractor who had been asked to quote but did not do the work. Repairs had been done, but the actual cost to the claimant had to be taken as nil. He nonetheless made a substantial recovery on the basis of the Court's assessment as to the reasonable costs of repairs. Mitigation did not feature in the argument because, in the context, that was rightly considered an irrelevant consideration where the damage had already been suffered in the shape of the diminution in value of the house.
40. The decision in Darbishire v Warran, in relation to mitigation, must be seen as an aberration. The same result would have been arrived at more readily by an application of the test of diminution in value. If the cost of repair exceeds the value of the damaged chattel, it is self evident that the value of the asset in its damaged condition is nil or scrap value. The diminution in value is assessed by reference to its market value at the time of the damage which represents the total loss of the claimant.
41. Burdis also exemplifies the point. The judgment of the Court, given by Aldous LJ held that, in accordance with Jones, the claimant could recover though she had paid nothing for the cost of repairs and was not liable to pay such cost because the Credit Repair Agreement, under which the finance company paid the cost of repair, was unenforceable against her. That agreement was held to be collateral to the tort and had to be left out of account in assessing her loss. It could not be said that the agreement flowed from any act of mitigation on her part because there was no relevant causal connection. The reason she entered into that agreement was the failure of the defendant's insurers to settle the claim and the fact that payment for the repairs was made by someone else was irrelevant in the context of assessing damages. ("Repair costs are merely the measure of a direct loss, suffered when the tort was committed, and are not to be regarded as falling within the category of potential future losses claimable as special damage" – paragraph 95).
42. I conclude therefore that, where a vehicle is negligently damaged and is reasonably repaired, rather than written off, the measure of the claimant's loss can be taken as the reasonable cost of repair. That reasonable cost is not necessarily the repair cost actually incurred, whether by the claimant or its insurer or indeed by anyone else who pays a repairer since the reasonable cost of repair is only a way of ascertaining the diminution in the value of the chattel by reason of the physical damage, though it is the normal and conventional way. Moreover it is clear that recovery is possible regardless of repair or payment for repair. Thus, a Court can assess "the reasonable cost of repair" by reference to any evidence which is sufficient to discharge the burden of proof upon the claimant to establish the amount in question. Whilst this would, in the ordinary case be achieved by producing invoices for repair costs, this need not necessarily be the case since estimates for future repairs might be sufficient as might be surveyors/engineers or other experts' reports, whether by reference to photographs, reports of damage and tables of rates for labour charges parts and paint or otherwise. In each case it will be a matter for the Court to determine whether the claimant has made out its case, whether or not repairs have been done and whether or not an invoice is produced for the repair costs.

Question 2:

Test of 'reasonable repair charge': If a claimant's insurer has arranged repair, is the reasonableness of the repair charge to be judged by reference to (a) what a person in the position of the claimant could obtain on the open market; or (b) what his or her insurer could obtain on the open market?

43. The RSAI Policyholders say that the answer is (a), whereas Provident / Allianz submit (b), with some qualification. The defendants do not say that the insurer can be substituted for the policyholder in determining this issue, but do say that, on the facts of the managed cases, the claimants' position must be considered in the round with that of their insurers, so that the options available to the insurers fall to be treated as available to them in establishing the reasonable costs of repair.
44. The defendants say that in each of the Managed Cases RSAI indemnified the claimant by reinstating the damage to his property. The amount claimed is the amount charged by MRNM which is higher than the amount RSAI could negotiate in the open market because, for example, of the uplift in the labour rate and because of the sundry services charge, as compared with the PRN repairers' charges.
45. The RSAI Scheme assumes that the higher amounts charged by MRNM are equivalent to the amounts the claimants would have pay to have their cars repaired if the claimants arranged the repairs themselves in the open market. Although it is not an issue to be determined at this hearing, the defendants dispute this assumption.
46. The claimants say that when assessing their damages it is not permissible to 'look behind the curtain' at the arrangements made between the claimants and their insurer RSAI or at the arrangements made between RSAI and third parties, including MRNM, which, they say, are res inter alios acta. Thus, the claimants say, it is irrelevant that RSAI could have arranged for the claimants' cars to be repaired more cheaply than the claimants could themselves and irrelevant that RSAI chose to have the cars repaired more expensively by MRNM.
47. The defendants submit that the reasonableness of the repair charge is to be judged by reference to the lower cost RSAI could obtain in the open market for three separate reasons.

i) RSAI reinstated the claimants' cars with their authority. In each case RSAI could have had the repairs carried out by instructing an independent garage to carry them out but (according to RSAI) chose not to do so and to instruct MRNM instead. The defendants submit that in these circumstances the reasonableness of the repair charge is to be judged by reference to the options available to RSAI as well as those available to an individual insured.

ii) The claimants delegated authority to RSAI to decide where to have their cars repaired. In each case RSAI with the claimant's authority unreasonably instructed MRNM to carry out the repairs at unnecessary expense under the RSAI Scheme instead of instructing an independent garage to carry out the repairs at the lower price RSAI could obtain on the open market. RSAI's acts are attributable to the claimants who thereby failed to mitigate their damages. The claimants are entitled to recover only the reasonable cost of repairing their cars, which is the cost RSAI could have obtained in the open market if it had instructed an independent garage to carry out the repairs.

iii) The increased cost of repair resulted from RSAI's decision in each case to instruct MRNM to repair the claimant's car, not from the accident. That decision (which is attributed to the claimants) was a new and intervening cause and was the cause of the increased cost of repair. The claimants are confined to claiming the cost of repair that RSAI could have obtained on the open market

48. These three reasons are said to reflect the three different ways of putting the case- by reference first to diminution of loss, secondly to mitigation and thirdly to causation. In reality they reflect much the same arguments which centre on the question whether RSAI's choice of MRNM / QRC, or of MRNM / PRN repairer, or of a NRG falls to be treated as attributable in some way to the policyholder claimant.
49. Various authorities were relied on to establish that RSAI would be committing a trespass to the goods of the policyholders if the latter had not authorised RSAI to arrange for repairs to be done. It is not alleged that RSAI had authority to commit the policyholder to a contract with MRNM or a garage, but it is said that limited authority was given to RSAI to choose the means of repair of the vehicle. It is said that there is no infringement of the principle that insurance is res inter alios acta, and that the court should not look behind the curtain when assessing the loss suffered by the claimant without reference to his insurance arrangements, as the only issue here is authority to procure repairs.
50. The problem for the defendants is however that RSAI procure the repairs as part of their obligation to indemnify the policy-holders under the insurances. The authority that they have to effect repairs arises from the insurance policy terms themselves and the options exercised under those terms. RSAI is acting qua insurer when making arrangements for the repair of the vehicles. Despite the defendants' protestations to the contrary, the submission requires the tortfeasor to have access to the claimant's insurance arrangements in order to pray in aid the options available to RSAI to reduce the costs of repair.
51. As a matter of principle, the loss is suffered by the policyholder. It is his asset that is diminished in value and that loss is suffered at the outset when the collision occurs, before any decision is made about repair, whether by the claimant or by RSAI or MRNM. The defendants' argument conflates the insurer and the insured long before the insurer is involved, so that there is a chronological problem about examining the insurer's options in respect of a loss which is incurred before its involvement. Moreover, since the defendants recognise that they cannot say that RSAI is authorised to contract on behalf of the policyholders with the repairer, they are unable to say that the cost of repair which RSAI incurs is an obligation owing by the policyholders. Those costs do not therefore reflect any loss suffered by the claimant himself. The repair costs incurred are simply part and parcel of the arrangements made by RSAI as insurer, to fulfil its obligation to indemnify its insurers by reinstatement of the vehicles.
52. The defendants' argument also falls foul of the decision of the Court of Appeal in Bee v Jenson (No 2) [2008] Lloyds' Rep IR 221 where Mr Bee had insurance cover which provided that if he was involved in an accident for which the other driver was 100% to blame, the insurer would pay for the cost of a replacement vehicle for the duration of the repairs, but, under the terms of the insurance, he had to use the car hire company nominated by the insurers. It was argued by the tortfeasor that the claimant could not recover the hire rate charged because the insurers could have negotiated a lower rate of hire as a bulk user, as opposed to the rate available to a retail customer and because the insurer received a referral fee, which meant that in practice it paid a lesser net fee than that claimed. Initially the defendant argued that the claimant had failed to mitigate its loss because he had delegated to the insurers, as his agent, the task of sourcing a hired car and the insurers could have utilised a different scheme at less or no cost. The claimant denied any agency and the allegation was struck out as being without substance. The claimant had no choice as to the source of the replacement vehicle and was, on making a claim under his insurance, obliged to use the company nominated by the insurers.
53. At first instance, Morison J held, at paragraph 11 that, but for the insurance arrangements, the claimant would have been able to hire a car and recover the cost from the tortfeasor. His insurance contract (for which he paid a premium) made it easier for him to do that, but he was entitled, without reference to that contract to claim for a replacement car, at a reasonable rate of hire for a reasonable period. That was the only issue with which the tortfeasor was entitled to grapple, since the insurance arrangements of the claimant were irrelevant and not the tortfeasor's concern. At paragraph 14 the Judge held that the court was not concerned to know whether the insurer made a profit or not on the insurance arrangements and there was no reason in law why any such profit should accrue to the benefit of the tortfeasor or his insurers. The claimant could not on any view be bound to give credit for some benefit which he had not received. The only issue was whether what was paid for the hire of the car was a reasonable rate for the claimant himself to pay. The insurer's position was not to be conflated with the claimant's as the law remained blind to the insurance (paragraph 17).
54. This decision was upheld by the Court of Appeal where Longmore LJ at paragraph 9 stressed the irrelevance of the insurance in assessing the claimant's loss and at paragraph 15 stated that the absence of any liability on the part of the claimant to pay for the hire of the car, because of that insurance, made no difference to his entitlement to claim the reasonable cost of a hired car as general, as opposed to special damages. As set out in paragraph 18 onwards, the claimant could recover the reasonable cost to him of a replacement as general damages, though he had paid nothing. What the insurer might have paid, was nothing to the point.
55. Thus, in that case, it was held that there was no room for the argument that the insurer's options fell to be taken into account in relation to the insured and any obligation he might be under to mitigate. It was his position alone which was relevant for the purpose of mitigation of consequential loss. It was argued on behalf of Provident and Allianz that there was a distinction to be drawn between Bee and the facts in the present case, because the agency argument was struck out in that case and because the insured had a choice under the RSAI policies whether or not to use the RSAI scheme or to get the car repaired at the garage of his choice. However Longmore LJ's statements of principle as to the irrelevance of the insurance arrangements were not dependent on any question of agency and, for the reasons already given, agency cannot arise here, where the insurer is acting as insurer. Moreover, it cannot be said that it was unreasonable of the claimants to opt for the RSAI scheme with the offer of a replacement car, and once that choice had been made, the repair arrangements were out of the hands of the claimants and were solely a matter for RSAI, MRNM and the PRN repairers. RSAI could choose whether to use MRNM and it would choose whether to use a QRC or a PRN repairer. That choice cannot be attributed to the claimants because it is all part of the insurance arrangements which are "behind the curtain".
56. The defendants relied on Copley v Lawn [2009] 1 Lloyd's Rep IR 496, where the Court of Appeal upheld a decision of a Mercantile Court Judge whom the court treated as conflating the position of insurers with their solicitors, brokers or insurers in two cases where advice was sought by the insured from such persons as to his future course of action in relation to the offer of a replacement vehicle in place of that which he had obtained on a credit hire scheme. In that context Longmore LJ, with whom the other members of the court agreed, was prepared, in paragraph 16 to look at the combined position of the insured and insurer in the second case on the basis that such advice had been sought so that mitigation by the insured fell to be judged by reference to the position where the insurers were involved in the decision. That is a far cry from the present case where the issue is whether to attribute decisions about repairers and cost of repair made by the insurer, without reference to, or the knowledge of, the insured. The decision is how the indemnity is to be provided to the insured by way of reinstatement. It is also, to my mind, clear, as it was to HHJ Mackie in W v Veolia Environmental Services (UK) plc [2012]1 AER (Comm) 667 at paragraph 39, that Longmore LJ was not introducing some radical change to the law relating to mitigation by an insured, as it had been set out by himself at paragraph 9 of Bee, to which I have referred above. The result in Veolia (where the defence was that the victim's insurer had paid too much on the credit hire agreements, where one such agreement was unenforceable against the victim) was that full recovery was made because the victim had reasonably mitigated in entering into the credit hire agreement and the insurance in question. The insurer's decision to pay was not attributed to him, and because sums had already been paid (attributable to him as hirer), they were recoverable from the tortfeasor, where, by reference to Dimond, had they not been paid, they would not have been recoverable, since the consequential loss would not have been incurred. There is a limited analogy with the present case and the defence arguments here.
57. For the reasons I have already given in coming to an answer on Question 1, the actual cost of repair is only evidence of the extent of the claimants' loss, so that choices about the way in which repairs are to be done would be evidence of the reasonable costs of repair which are said to reflect that diminution of the value of the vehicle. Yet, the claimants' position cannot be conflated with that of RSAI, whether the court is considering the position in the context of diminution of the value of the asset and reasonable costs reflecting that loss or in the context of mitigation, which, for the reasons given earlier, does not, in my judgment arise. The consequences of the defendants' argument, would indeed, as the claimants submitted, be far-reaching because, if correct, it would be open to the tortfeasor in every reinstatement case, to investigate whether the insurer could have come to some arrangement which was less damaging to the tortfeasor. That is not, in my judgment, the law.
58. The third reason advanced – the third way in which the defendants put this point - is also doomed to fail because there cannot be said to be any break in the chain of causation between the negligence of the defendants and the damage. For the same reason that mitigation cannot apply to a loss suffered at the time of collision, because the issue being considered is the diminution in the value of the damaged asset and the reflection of that in the reasonable cost of repair, decisions made about the actual repair cannot affect the loss suffered. It will always be the diminution in value of the asset with which the court is concerned, as measured by the reasonable costs of repair, whatever that may be and whatever the actual cost of repairs done, which may or may not reflect such reasonable cost. There can be no intervening cause constituted by any decision of the RSAI to utilise MRNM under the scheme, which had, in any event, already been set up prior to the collisions in question.
59. If foreseeability is relevant, the diminution in value and the need for repair to restore that value are obviously foreseeable, whatever the extent of the cost of the repairs carried out. The court is not concerned with the arrangements made by the insurers for repair, save insofar as there is reliance thereon as evidence of the reasonable costs of repair. The profitability or otherwise of the insurance is not a matter for the court, and whether or not a car owner could foresee the RSAI scheme, or any of the other schemes apparently operated by other insurers is nothing to the point.
60. In my judgment therefore, the answer to the second question is (a). The reasonableness of the repair charge, as a measure of the diminution in the value of the damaged car, is to be assessed by reference to the position of the individual claimant, without reference to his insurers or to any benefits which he obtains under his insurance policy, for which he has paid premium. The well known and well established principles of insurance, as set out in the authorities to which I have referred, mean that the claimants' dealings with their insurers and the insurers' actions in relation to the indemnity granted are res inter alios acta, in the context of assessment of diminution in market value or costs of repair and behind the curtain for any tortfeasor who seeks to argue about mitigation of loss in payment of repair costs.
61. I have not formed a judgment on any disputed issue of fact, whether relating to the contractual parties to the arrangements with garages which actually carried out repairs or otherwise. These issues matter not if the correct approach is to assess an objectively reasonable cost of repair from the perspective of the individual claimant. If the insurers' arrangements for repair are beside the point, unless the insurers, in the name of the claimant, pursuing their subrogated rights, choose to rely upon them, it is neither here nor there whether the insurers put in place a repair company such as MRNM, which subcontracts to repair garages, or whether they subcontract further to other specialist repairers, or whether RSAI contracts directly with a garage or repairs the cars itself. The only issue is the reasonable cost of repair to the individual claimant, which can be established by any form of admissible evidence in a court. There is no more reason for the defendants to say that the garage invoices represent the recoverable costs of repair than any other invoice from any further subcontractor further down the line or any invoice from MRNM, whether subcontracted or not. It is an objectively reasonable cost of repair with which the court is concerned, however that may be proved.

Question 3

Recoverable amount: Where a vehicle is not a write-off and an insurer indemnifies the insured by having repairs performed and paying charges for those repairs, and where the amount claimed is no more than the reasonable cost of repair (on the correct legal test determined under (2) above), is that amount recoverable?

62. I was asked to refrain from answering this question, because it is interconnected with an application by the claimants to strike out various paragraphs of the statement of case of the defendants and /or an application for summary judgment in relation to issues raised in them. Those issues await a further hearing for which it appears, a full day is likely to be required.
63. I do not wish to pre-empt any argument at that hearing and it will be open to the parties to make submissions on all that follows, but it may be of help to direct attention to the points which, it seems to me, flow from what I have so far held. It seems to me that there is a material distinction, as drawn in the authorities, between a claim for diminution in value of the asset as reflected in the reasonable costs of repair payable by the individual claimant on the one hand and a claim for loss of use of the vehicle as reflected in a claim for a replacement car on the other. An overall figure for the reasonable costs of repair of damage to a vehicle may be justified, even if individual items in the repair costs paid are not reasonable, since the cost of repairing the damage must be treated in the round, because it is to be taken as the measure of the loss suffered which is diminution in value of the car. Moreover, if a package deal for repair was agreed, then it would be the reasonableness of the package as a whole which was relevant, if any issue of mitigation could arise.
64. In this connection I mention a point taken by Provident /Allianz in relation to the way in which RSAI pleaded its cases in the county court. In each case to which my attention was drawn, the claimant sought "damages arising out of a road accident" in the brief details of the claim, going on to give particulars of financial losses specified as "vehicle repairs" and "incidental expenses.(eg tel.post). The claims were not framed as claims for diminution in value of the cars, by reference to the commercial cost of repair, but as claims for damages in respect of financial losses, represented by vehicle repairs. The sums claimed for vehicle repairs are those said to be paid by RSAI to MRNM. This does not affect the answers to Questions 1 and 2, and is unlikely to be of significance at the end of the day, since amendment of the claim forms would be hard to resist, in the absence of any prejudice to the defendants. The formulation of the individual claim forms does not sit happily with the thrust of RSAI's arguments however. I understand that the BIC was served with the claim form, but the claim form may well have given the appearance that all that was claimed by way of damages was the actual cost of repair paid to an arms length repairer, whilst included amongst the costs claimed, were "sundry charges", delivery charges and courtesy car charges, where it is suggested by Provident/Allianz that some of these items for which charges were made by MRNM to RSAI were not provided or charged for by the repairing garages.
65. It is accepted by the claimants that if no courtesy car was provided, then there is no room for a claim for a replacement vehicle. It is accepted also, I think, unless I have misunderstood the position, that if there was no collection or delivery of the damaged car, there is no room for a claim for that. However it may be that the item in the BIC referred to as "collection/delivery" of the car may cover, in some cases, the collection or delivery of a replacement vehicle, which would be a consequential loss claim along with the claim for the replacement vehicle. There may also be room for argument as to the characterisation of the cost of the collection or delivery of the damaged car, since, if it was driveable, it might not be a claim for a cost of repair, as opposed to a claim for lost use of the car, for which general damages might run.
66. I anticipate that there may be an application for permission to appeal on the issues I have decided, but, to my mind, it would make more sense to determine the balance of the outstanding issues first, in order to see the practical effect of the decisions so far made. I would be willing to extend the time for an appeal to allow for this. On the issues which I have decided, the claimants have succeeded and to that extent, it seems that they should have their costs. I will await submissions on that also before making any order however. All other matters will have to await another day