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Bee v Jenson, High Court, 21 December 2006

7 February 2007
The issues

Help Hire – subrogation – whether insurer obliged to reimburse spot rates or retail rates – whether agreement for hire was with Help Hire or insured person.

The facts

Mr Bee had an accident when the car, in which he was stationary at the time, was hit by Mr Jenson’s car. Mr Bee’s car needed repairs and whilst the repairs were undertaken his car was not driveable. During this time he was provided with another car by his insurers. His insurers sought to recover the cost of that hire from Mr Jenson’s insurers.

Mr Bee had the benefit of a motor policy with the Cooperative Insurance Society. As part of his insurance package with CIS he had legal expenses and assistance insurance provided by DAS. As part of his policy with CIS, CIS agreed to pay vehicle hire costs following an accident where the insured vehicle could not be driven and the accident was entirely the fault of an identified driver of another vehicle on which there was valid motor insurance. The insured policy holder was obliged to accept CIS’s choice of vehicle hire company.

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 the insured’s own vehicle could not be driven. From 2003 DAS changed its vehicle supply arrangements and entered into a business agreement with Help Hire, whereby Help Hire agreed to supply hire vehicles for DAS policy holders, for DAS to make payment of hire charges to Help Hire.

On the 11th March 203 Mr Bee contacted DAS. A replacement vehicle was delivered to him the next day, supplied through Help Hire. He signed an agreement agreeing to hire a vehicle from Help Hire “on the terms of this agreement”. One of these terms was to the effect that “the company (DAS) has agreed to pay the hire charges and any extras shown over leaf as payable by them for your use of the hire vehicle÷”.

The car was provided for 21 days at a gross amount of £610.46 at a rate equivalent to the ABI GTA rate for the relevant category of vehicle. A subrogated claim was brought in the name of Mr Bee to recover this amount from the Defendant. The Defendant argued that DAS could have provided the vehicle more cheaply than they had done through Help Hire using corporate hire rates and should give credit for the introduction which Help Hire may have paid to DAS or an associated DAS company. They argued that if Mr Bee was entitled to recover the amount claimed his insurers would have made a significant profit from the transaction at the expense of Mr Jenson’s insurers.

The decision

Contractual subrogation and subrogation as a remedy to prevent unjust enrichment were two distinct institutions and should not be confused. References in this case to principals of unjust enrichment were misplaced.

Whether or not Mr Bee was liable to pay the hire under the hire contract, an action could be brought in his name to recover it. The fact that the insurers paid the charges because they were liable to do so as opposed to making the insured pay them and indemnifying him against the cost, was inconsequential. What mattered was that but for the insurance arrangements Mr Bee would have been entitled to hire a car and recover the cost of doing so from the Tort Feasor. The insurance contract for which Mr Bee paid premiums made the arrangements for the replacement car more convenient.

Once it was accepted as a fact that Mr Bee was entitled to hire a replacement car at a reasonable rate and for a reasonable period, it followed that he was entitled to recover those hire costs from the Tort Feasor. The Tort Feasor was solely concerned with the reasonableness of the charges assuming a need for a replacement vehicle. If they are reasonable then he must pay them, whatever insurance arrangements Mr Bee may have made, or more importantly whatever arrangements Mr Bee’s insurers may have made.

An issue had arisen as to whether Mr Bee was liable for the hire charges. He was named as the hirer. It was Help Hire however who looked to the insurers who were named in the hire agreement and who unquestionably accepted responsibility for paying them hire. The question was whether Mr Bee was also responsible. There was a possible interpretation on the basis of the wording of the policy that the insurers only were responsible. However, the view of the Court was that Mr Bee was under a liability to pay the hire charges and that Help Hire would have been entitled to recover from him had they had to. In agreeing to hire a vehicle he was taking on himself an obligation to pay the hire charges if the insurers reneged on their agreement with Help Hire in the absence of any express terms to the contrary.

The Court was not concerned to know whether DAS had made a large profit or a loss on their insurance arrangements. The Defendant had never articulated any intelligible reason as to why Mr Bee would be expected to give credit for a payment to which he was not entitled himself. There was no reason in law why any profit made by DAS should be transferred to the Tort Feasor or his insurers.

The evidence was that the rate charged by Help Hire with a nil excess was good value for money by comparison with other spot rates.

It would have been reasonable for the replacement vehicle to have been provided with a nil excess, regardless of the excess on Mr Bee’s own car following the decision of the Court of Appeal in Marcic v Davies where the Court held that a Claimant who hired a replacement vehicle and paid the waiver fee to achieve a nil excess when his own excess had been £150.00 was entitled to recover that fee since, if there had been no collision, the Claimant would “never have come under any contractual liability to the car hire company”.

There was no issue in the view of the Court as to whether or not Mr Bee should have been confined in his claim to the cost of hiring a car on corporate as opposed to spot rates. It was a mistake to suggest that Mr Bee’s claim was the insurer’s claim and that the insurers were to be treated as parties to the action. That was not the law. The law was blind to insurance arrangements. Had Mr Bee gone into the market to hire a car he would have paid the Help Hire rate or more. He was entitled to recover the full cost of the hire, namely £610.46.

Judgment for the Claimant.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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