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Cunningham v Damon, County Court, 1 December 1999

6 July 2000
The issues

Credit hire – car provided under a policy.

The facts

The Claimant brought an action against the Defendant following an RTA. Liability was not in issue. The only outstanding claim when proceedings were issued were hire charges in the sum of £1085.64. The Claimant had an insurance policy with AA under which AA provided it would indemnify him against the cost of hiring a replacement vehicle provided:

(1) The costs of the hire did not exceed 21 days
(2) That the Claimant would be able to recover the whole of the hire costs whether initially paid by the insured or the insurer.
(3) That AA was entitled to pursue recovery of the costs on the Claimant’s behalf.

The Claimant said he was unaware of the provisions of the policy. Following the accident the Claimant was provided with a replacement car by a hire company EUK.

The insurance company paid the charges and no invoice was ever sent to the Claimant. The insurance company brought a claim in the name of the Claimant for the recovery of the hire charges on the basis that it was subrogated to the Claimant’s rights of recovery against the Defendant. At first instance, it was held that the Claimant had no liability to pay the hire charges as there was no enforceable agreement between himself and EUK – he therefore had no loss and could not recover the hire charges from the Defendant. Moreover the right to subrogation only arose where the Claimant has been indemnified for a liability that he had incurred. As there was no liability on the part of the Claimant to pay the hire charges no right of subrogation arose.

The Claimant appealed.

The decision

The appeal was dismissed. There was no agreement between the Claimant and EUK. He had no loss. He could not recover the hire charges from the Defendant. Doctrine of subrogation as a restitutionary remedy for unjust enrichment was a developing area of the law – see Lord Steyn in Banque Financier de Cite SA -v- Parc (Battersea) Limited (1999). However such as the law was it appeared to be distinguishable on the basis that previously the right to recover on the part of the insurance company was limited to the rights of the insured against the Defendant.

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