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Clarke v McCullough, High Court of Justice in Northern Ireland, 21 December 2012

27 August 2013
The issues

Cancellation of contracts made in a Consumer’s Home or Place of Work etc Regulations 2008 Regulation 7 – mitigation of loss – replacement vehicle

The facts

The court was asked to determine quantum of damages for the plaintiff (C) against the defendant (M) following a road traffic accident whereby the defendant opened the driver’s door of her parked vehicle, giving rise to an impact with the nearside of the plaintiff’s moving vehicle.

The plaintiff sought damages for the following:
(a) the cost of hiring a replacement vehicle from 12 April 2010 to 5 March 2011, period of 328, totalling £32,380.97
(b) repairs to the plaintiff’s vehicle £2,496.68
(c) vehicle storage charges for a period of 244 days at £2,214.00
(d) insurance policy excess of £200.00

Items (b) and (d) were no longer disputed once liability had been decided.

In regards to item (a) there were five successive hire agreements with the defendant disputing the amount claimed. The main issue was whether the defendant had established that the plaintiff had failed to take reasonable steps to mitigate his loss or acted unreasonably in the mitigation measures he undertook. In addition to this the court considered whether the cancellation notices in respect of the credit hire agreements of 14 April 2010 and 14 July 2010 were unenforceable by reason of non-compliance with Regulation 7 of Cancellation of Contracts made in the Consumer’s Home or Place of Work etc Regulations 2008.

The decision

The main question for the court was the reasonableness of the plaintiff’s conduct throughout the duration of almost eleven months hire. A clear hiatus was reached at the time of the third of five hire agreements expired and was to be superseded by the fourth, on 23rd September 2010. As of September 2010 there was no end in sight in regards to the ongoing dispute in respect of liability and the future was impossible to predict yet hire charges continued to be incurred. At this juncture the plaintiff accepted a superior replacement vehicle thereby committing himself to a higher rate of hire, despite the fact that his vehicle could be repaired for some £2500.00. The court found that at this point the plaintiff had two options: to commit himself to a further period of incalculable and indefinite hire or to pay for the repairs to his own vehicle. The court concluded that the defendant had discharged the burden of establishing that the plaintiff’s failure to arrange for the repair of his vehicle at his own expense by 23 September 2010 was as a matter of law a failure to take reasonable steps in mitigation of his loss.

In respect of the enforceability of the hire agreements of 14 April 2010 and 14 July 2010 the issue of enforceability was irrelevant as the plaintiff through his ‘protection’ insurance policy had discharged fully his contractual liability to Accident Exchange. As such the plaintiff’s claim was for a financial loss already incurred by him and such loss was recoverable as a matter of law.

The plaintiff’s recoverable damages were therefore as follows:

(a) cost of repairing his vehicle £2,496.68
(b) insurance policy excess payment of £200.00
(c) vehicle storage from 1 May 2010 to 23 September 2010, a period of 145 days, £1,305.00 (inclusive of VAT)
(d) cost of hiring replacement vehicle from 12 April 2010 to 23 September 2010, a period of 164 days, £8,263.94 (inclusive of VAT)
(e) the administration fee of £30.00 and engineer’s fee of £58.75, neither of which were in dispute, £88.75
(f) total: £12,408.37

Report prepared by Emma Hearn, Insurance Claims and Public Risk Department, Exeter

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