Motorist offered a replacement car

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What could be more straightforward?

A negligent motorist damages your car and their insurer offers a suitable replacement while your car is being repaired.

Is it reasonable to refuse the car and then to hire one from the credit hire company which was given your details by your garage?

And if you do that, what loss, if any, have you suffered?

In Copley v Lawn [2009] EWCA Civ 580, [2010] 1 All ER (Comm) 890, the Court of Appeal decided that any offer made by the defendant’s insurers must contain all such information as will be relevant to the claimant and his representatives to make a reasonable response, including the cost to the defendant of hiring the car.

At paragraph 32, Lord Justice Longmore said: ‘…the general rule that the claimant can recover the "spot" or market rate of hire for his loss of use claim is upheld, unless and to the extent that a defendant can show that, on the facts of a particular case, a car could have been provided even more cheaply than that "spot" or market rate’.

In Sayce v TNT (UK) Limited (Oxford County Court, 25 January 2011, Lawtel 16 March 2011), Judge Charles Harris QC heard an appeal from a decision of District Judge Flood, which predated Copley v Lawn.

In dismissing the appeal, he boldly declined to follow the reasoning in Copley, holding it to be inconsistent with binding House of Lords authority.

He held that a claimant who had unreasonably refused an offer of a suitable replacement car should not recover at all.

At paragraph 20, he said: ‘The claimant contended quite properly that she wanted a replacement car. She did not need to hire one. She was offered one free of charge.

'If she had accepted it she would have had no claim for the cost of hiring [£3,500]. On the finding of the district judge, it would have been reasonable to have accepted TNT’s offer.

'To put it more firmly, it was unreasonable not to have accepted it. Why then should the defendant have to pay anything at all?

'The fact that it would have cost it something to provide the car free to the claimant is of questionable relevance, since the question is what sum did the claimant (not the defendant) need to incur.

'To order TNT to pay that sum, which is the Copley principle distilled, seems more like an attempt to punish a defendant than to provide an answer, which fulfils the elementary rule that the purpose of an award of damages is to place the injured party in the same position as he was before the accident as nearly as possible, viz, in this case with a car for which no rental is payable by her.’

The reasoning of Judge Harris QC may thus be summarised:

The issue of mitigation was a question of fact, and District Judge Flood had been entitled to conclude that ‘the claimant clearly had all the necessary information to make an informed choice and decided to make a choice which would lead to her incurring and attempting to recover charges of nearly £3,500 when she could have had a car for nothing’ (paragraph 10).
If a claimant accepts a satisfactory substitute car from the defendant then there can be no claim for damages because the need for a car has been met (see the rationale of Lord Bridge in Hunt v Severs [1994] 2AC 350 HL at 360, cited with approval by Lord Hoffmann in Dimond v Lovell [2000] 2 WLR 1121 at 1133.
Why should the position be different if the claimant acted unreasonably in refusing to accept the substitute car?
Failure to mitigate can result in an inability to recover anything at all (Payzu v Saunders [1919] KB 581 CA and The Soholt [1983] 1 Lloyd’s Rep 605 CA).
In McGregor on Damages 18th Edition at 7-004 it is stated that: ‘The first and most important rule is that the claimant must take all reasonable steps to mitigate the loss consequent upon the defendant’s wrong and cannot recover damages for any such loss which he could thus have avoided but has failed through unreasonable action or inaction to avoid. Put shortly, the claimant cannot recover for avoidable loss.’
In Lagden v O’Connor [2003] 3 WLR 1571 HL, Lord Hope indicated at 1580 that ‘[i]f it is reasonable for him to hire a substitute he must minimise his loss by spending no more on the hire than he needs to in order to obtain a substitute vehicle’. The claimant did not need to spend anything at all.
Lord Justice Longmore’s observation in Copley v Lawn that ‘if a claimant does unreasonably reject or ignore a defendant’s offer... he does not forfeit his damages claims altogether’ may not be an accurate summary of the law. The reasoning in Copley appears to confuse the obligation or duty to mitigate (‘where there are choices to be made the least expensive route which will achieve mitigation must be selected’ – per Lord Hope in Lagden supra), with the cost consequences of refusing offers made in the course of litigation (the claimant may be penalised in costs if he only recovers the rate based on the cost to the defendant). It is also inconsistent with earlier authority that a claimant who fails to take a reasonable step to mitigate is debarred from claiming any part of the damage which is due to his neglect to take such steps.
The principle of mitigation is that a claimant cannot recover damages for a loss which he could have avoided but failed to. If a claimant is offered a car free of charge to him he can and should avoid incurring the expense of hiring one himself. If the free car is accepted there is nothing to claim from the defendant.
‘What could be more simple, or more reasonable, than to say to a person with a damaged car who needs a temporary replacement: "If the defendant has offered you a satisfactory car free of charge, you should take it"? This, it seems to me, accords both with the law, and with common sense’ (paragraph 21). It will be interesting to see what happens in the inevitable return of these arguments at the county court level. Clearly, the sooner the issue is reconsidered by the Court of Appeal, the better.