Claimant Lorna Armstead has ultimately won against insurer RSA following three appeals, in a case involving a small amount but the final ruling on which can affect a significant number of other cases, according to the UK Supreme Court.
In Armstead (Appellant) v Royal & Sun Alliance Insurance Company Ltd (Respondent), Armstead sought to claim an additional £1,560 on top of the cost to repair the hire car that she was using and that was damaged through the fault of an RSA-insured driver.
The £1,560 sum was the amount being demanded from Armstead by Helphire Ltd in accordance with their hire agreement, a clause (16) in which required the hirer to pay Helphire the credit hire company’s daily rental hire rate for every day the vehicle was unavailable for hire due to it being damaged from the abovementioned accident.
Prior to the Supreme Court appeal, Armstead’s claim to the clause 16 sum was rejected by a Deputy District Judge, a Recorder, and the Court of Appeal.
In the 23-page judgment seen by Insurance Business, Lord Leggatt and Lord Burrows said: “We have explained why, in our opinion, the courts below were wrong to hold that Ms Armstead could not recover from RSA the sum which she was liable to pay to the hire company under clause 16 of her vehicle hire agreement as damages for its loss of use of the vehicle.
“Of the various reasons given for rejecting the claim, only one was in principle a legally valid reason. This was that the loss was too remote to be recoverable because the clause 16 sum was not a reasonable estimate of the hire company’s likely loss of revenue while the car was off the road for repairs.
“However, RSA, on whom the burden of proof lay, did not plead or adduce any evidence to show that the clause 16 sum was not a reasonable estimate of the hire company’s likely loss. In the absence of any such pleaded allegation or evidence, it was not open to the Court of Appeal to reject the claim on this ground.”
The Supreme Court appeal was, therefore, allowed.
In the court document dated February 14, Lord Leggatt and Lord Burrows noted: “Although the sum at stake is small, the decision has the potential to affect a significant number of other cases.
“Moreover, it raises some fundamental questions in applying the tort of negligence in a situation where economic loss, comprising a contractual liability to pay a sum of money, has resulted from physical damage to property.”
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