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Sayce v TNT, Court of Appeal, 19 December 2011

27 January 2012
The issues

Credit hire – provision of replacement vehicle by tort feasor – Copley v Lawn – procedural irregularity – status of obiter statements of principal by made by senior court

The facts

The claimant had a road traffic accident on 30 May 2007. She brought a claim for the costs of hiring a replacement vehicle for the period during which her own car was off the road as a result damage caused by the collision, in the sum of £3,446.28. The driver of the defendant’s vehicle was an employee of TNT (UK) Ltd, at the time of the accident he gave the claimant a card asking her to contact TNT as soon as possible. When she did this she was told that if her car could not be driven TNT would see about providing a courtesy car. On the back of the card was a paragraph telling her that a car would be provided “the same or equal to yours, free of charge” but also containing a warning that failure to contact TNT might affect her entitlement to recover, hire or storage charges and recommending that she show the card to her insurer for any third party hire company or her legal representative.

The district found that the claimant had failed to mitigate and awarded her nothing. The judge upheld the district judge’s decision. In the interim the Court of Appeal had given judgment in case of Copley v Lawn. When the matter came before the judge on appeal he noted Copley but declined to follow it on the ground that he considered it was inconsistent with previous decisions both of the House of Lords and the Court of Appeal. He therefore dismissed the appeal. The claimant appealed to the Court of Appeal.

The decision

The judge had erred in deciding the case on a basis inconsistent with way in which the parties had argued it and had done so without giving the parties an opportunity to address him on the approach he was minded to take or the relevant legal principles. Secondly he had failed to follow and apply the decision in Copley v Lawn which was binding upon him. Counsel for TNT had felt unable to challenge either of those matters and for the purposes of the appeal the parties had prepared a joint statement in support of an order that the appeal be allowed. TNT however, had in addition, requested permission to appeal to the Supreme Court.

In view of the way in which the judge had dealt with the authorities and in view of the fact that TNT had sought permission to appeal to the Supreme Court, the Court of Appeal, felt notwithstanding, that it was appropriate to review the principles put forward in Copley and to consider whether the judge was indeed bound by them. It was not entirely easy to identify the principle of law behind the Court of Appeal’s decision in Copley. The Court of Appeal must have intended to mean that the claimant could not be found to have acted unreasonably in refusing the defendant’s offer, unless he had been made aware that by doing so he would impose a greater burden on the defendant. That appeared a surprising view to take, since it involved looking at the matter from the point of view of the defendant rather than that of the claimant, an approach which was not reflected in the leading authorities. Indeed, in one of those authorities ‘Solholt’, the Master of Rolls had said the court was concerned with the buyers loss and not with the sellers profit, the latter being wholly irrelevant. If this was the ratio of Copley v Lawn then the judge was bound to apply it, as was indeed the Court of Appeal itself. Following Milingos v George Frank (Textiles) Ltd, a decision of the House of Lords in 1976, to quote Lord Simon “it is the duty of a subordinate court to give credence and effect to the decision of the immediately higher court, not withstanding that it may appear to conflict with a decision of a still higher court … any other course is not only a path to legal chaos but in effect involves a subordinate court sitting in judgement on a decision of its superior court”. The judge was therefore not entitled to disregard the decision of the court in Copley v Lawn, however much he may have disagreed with it and however much he considered it could not be reconciled with previous decisions of the House of Lords.

The issue did not end there. There were circumstances in which, although not technically bound by the decision of a higher court, a lower court should follow and apply that decision, even though it might disagree with it. Where a higher court had decided a question of principle albeit obiter, for the purpose of clarifying the law for the profession at large, it would not be right for a lower court to disregard that clarification. Therefore, the second part of the judgment in Copley v Lawn, although in the view of the Court of Appeal, it did not form part of the ratio of the decision and was therefore not binding on the judge, should none the less have been followed and applied.

The second part of the judgement relates to the consequences of the failure to mitigate – to the effect that it could not be correct in principle that a claimant who rejected a defendants reasonable offer as entitled to nothing because the claimant had still suffered a loss – there was an undoubted loss to the claimant because their cars had to be repaired and they needed replacement cars during the period of repair – that loss could not be wiped out by an offer from the defendants to provide ‘free replacement’.

It was not necessary to discuss the second part of the judgment in Copley in any detail but again in the light of the arguments put forward in sport of the application for permission to appeal, the Court of Appeal would touch on one or two aspects of it. If the claimant had unreasonably refused an offer by the defendant, which the offer being accepted would have avoided the need to hire a replacement vehicle, the claimant would have suffered no loss arising out of inability to use his own car. In those circumstances the Court of Appeal could understand why some found it difficult to see why the claimant should be entitled to recover anything from the defendant in respect of the loss of use of his own car since it was a loss that he could and should have avoided. The decision in Copley in respect of this issue did not take account of the established rule that avoidable loss is not recoverable. The fact that the opportunity of avoiding the loss was provided by the wrong doer might complicate the matter but it had not previously been regarded as sufficient to displace the principle. The court had difficulty with the conclusion in Copley that a claimant who had unreasonably refused an offer from the defendant of a free car could recover at least the costs which the defendant could show that he, the defendant, would reasonably have incurred. That was not an approach reflected in the authorities nor was it easy to reconcile with the principle relating to avoiding loss to be derived from the leading cases summarised in McGregor on damages 18th edition paragraph 7-004 and 7-014. It would be beneficial for these issues to be considered at the highest level as soon as a suitable opportunity arose, but the Court of Appeal did not think it right to give permission in this case.

Note
The main judgment was given by Lord Justice Moore Bick with which Lord Justice Aiken’s agreed. Lord Justice Pill added some comments of his own to the effect that he agreed with the decision in Copley as to the stand point from which mitigation should be viewed, namely from the view point of the particular victim. He took the view that the victim would be in a better position to decide upon the reasonableness of his own arrangements in mitigation if he knew the costs to be incurred by the tort feasor. Lord Justice Aiken’s commented that it was not acceptable that a tort feasor should be permitted to dictate to his victim what the victim should do to mitigate his loss. The victim of a road traffic accident could be expected to be in vulnerable state of mind following an accident and accepting the offer free vehicle from the tort feasor would not always be the only or best way to mitigate loss. The victim might reasonably prefer to deal with a company in which she had confidence based perhaps on previous dealings. There were issues also relating to insurance cover. An important consideration would be the cover to be provided particularly as to third party liability and whether it accorded with cover enjoyed by the victim under his or her existing arrangements. This might provide for example for the cover of any authorities driver or for named drivers under the age 25, particularly arrangement would need to be set up to deal with particular needs. Tortfeasor’s might have to ‘to descend to particulars’.

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