B e f o r e :
LORD JUSTICE HARMAN
LORD JUSTICE PEARSON
and MR JUSTICE PENNYCUICK
Between
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Between:
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DARBISHIRE
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Plaintiff Respondent
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v
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WARRAN
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Defendant Appellant
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(Transcript of the Shorthand Notes of the Association of Official Shorthandwriters, Ltd.. Room 392, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London, W.C.2.)
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MR PATRICK O'CONNOR, Q.C. and MR A.D.GAVIN (instructed by Messrs Burton, Yeates & Hart, Agents for Messrs Nye & Donne, Brighton) appeared as Counsel for the Appellant.
MR PATRICK GARLAND (instructed toy Messrs Montague, Williams & Piper, Hurstpierpoint) appeared as Counsel for the Respondent.
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HTML VERSION OF JUDGMENT
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LORD JUSTICE HARMAN: The facts of this case are simple and except on one point, a matter of quantum, not seriously in dispute. The plaintiff's car was in collision with the defendant's and was seriously damaged by what was admittedly entirely the defendant's fault. The plaintiff therefore sued the defendant in damages. These damages he based on the cost to him of repairing his car. The defence is that the cost of doing this was unreasonable and not recoverable from the defendant having regard to the duty lying upon the plaintiff to mitigate his damages which in the circumstances it is said were not more than the market value of the car at the time of the accident together with some damages for the loss of its use while he was reasonably engaged in looking out for a comparable one.
The facts are that the plaintiff's car was a 1951 Lea Francis which he had bought in the year 1958 for the sum of £330. He is by profession a mechanical engineer and had always kept the car by his own efforts in a high state of efficiency having regard to its age. He had done a number of mechanical repairs and renewals and at the time of the accident was in the course of repairing a damaged door which was actually off the car at the time. The market value, that is to say, the replacement value, of the car according to the ordinary guide in use in the trade was at the time £80. The garage to which the plaintiff took the car originally took the view that repairs were uneconomic or, as the manager said, not an economic proposition. The engineer called by the defendants took the same view and the Insurance Company advised against repairs. The Insurance Company valued the car at £85 and, as the plaintiff was liable under his policy for the first £5 of damages, he was paid £80.
Notwithstanding the advice he received, the plaintiff determined to have the car repaired and this he did at a cost of £192. He took the view that the car was worth that to him. It suited his needs and the needs of his family and his opinion was that he could not buy a car of the same worth to him for less than £192. He accordingly gave the defendant credit for the £80 received from the Insurance Company and sued for the balance together with the cost of hiring a car during the period of repair of his own. The County Court Judge made certain deductions from the hire charges owing to delay in doing the repairs and awarded £25 under this head together with £5, being the first £5 of the insurance: otherwise the Judge in effect acceded to the plaintiff's claim, which, however, he reduced to £100 and gave the plaintiff judgment for £130, that is to say £100 for repairs plus the £5 and the £25. The defendant appeals.
The law of damages arising out of collisions on land has been developed out of the Admiralty rule on collisions at sea and the rule of liability is the same in Admiralty and common law cases - see lord Dunedin's speech in The Susquehanna (1926 Appeal Cases, p.655, at p.661). The principle is that of restitutio in integrum, that is to say to put the plaintiff in the same position as though the damage had not happened. It has come to be settled that in general the measure of damage is the cost of repairing the damaged article; but there is an exception if it can be proved that the cost of repairs greatly exceeds the value in the market of the damaged article. This arises out of the plaintiff's duty to minimise his damages. Were it otherwise it would be more profitable to destroy the plaintiff's article than to damage it. In the latter cases the measure is the value of the article in the market and this, of course, supposes that there is a market in which the article can be bought. If there is none, then the cost of repairs may still be claimed. This appears from J. & E. Hall Ltd. v. Barclay (1937, 3 All England Reports, p.620) where it was held that the appellant was entitled to the value of the articles converted which was ordinarily the price of similar articles in the market. As there was no market in the articles concerned, the measure of damages was the cost of replacement. That was a case of conversion but the principle applies. Lord Justice Greer said this at page 623:
"In my judgment it is an undoubted fact that there are two rules with which we begin in ascertaining how the damage should be ascertained. The first is this: A plaintiff who is suffering from a wrong committed by a defendant is entitled, so far as money can do it, to be put into the same position as if he had not suffered that wrong. That is what is referred to as restitutio in integrum. The second principle which is accepted is that what he is entitled to, as damages for conversion or detention in respect of the article so detained or converted and not returned, is the value of that article. 'Then the question is, what is the meaning of 'the value of that article'? Where you are dealing with goods which can be readily bought in the market, a man whose rights have been interfered with is never entitled to more than what he would have to pay to buy a similar article in the market. That rule has been acted upon over and over again, and that, I think, means that, where there is a market, the man whose rights have been interfered with is bound to diminish the damages by going into the market and buying the goods in the market, so as to put himself in the position in which he is entitled to be put, namely, the position in which he would have been if he had not suffered any wrong at all; and, in my judgment, the case to which our attention had been called of Banco de Portugal v. Waterlow & Sons, Ltd, has really nothing to do with the question that we have to decide here, except in so far as I think it supports the view which I have been expressing".
He there decided that as the article in that particular case was one for which there was no market and which you could not buy in the market, the loser was entitled to have it replaced.
The Judge here held that the plaintiff was reasonable in having the car repaired notwithstanding that the cost was more than twice the value. It may well be that the plaintiff, so far as he himself was concerned, did act reasonably and that what he got was of more value to him than the damages represented by the value of the car. The plaintiff, however, did not show that he had any special use for which this car alone was suitable, as, for instance, in his business, or anything more than that it was a sound car very well maintained and suited to his ordinary life. In my opinion the Judge asked himself the wrong question. The true question was whether the plaintiff acted reasonably as between himself and the defendant and in view of his duty to mitigate the damages. The evidence was that a Lea Francis 1951 car might be difficult to find but that other similar estate cars were on the market and could be had for between £85 and £100 which the plaintiff himself stated to be the value of his car. The learned Judge relied on the case of O'Grady v. Westminster Scaffolding Ltd. (1962, 2 Lloyds List Reports, p.238) where the learned Judge held the plaintiff entitled to the cost of repairing his car at a cost considerably exceeding its market value. This case, of course, is not binding on us but if it be right it may be supported perhaps on the ground that the car there in question was unique and could not be replaced. It was a remarkable vehicle having been supplied by the plaintiff, the apple of whose eye it was, with no less than three new engines, a new body and other replacements. In my judgment the facts are very different from those in the present case.
Our attention was also drawn to a case in the Court of Session, Pomphrey v. James A.Cuthbertson Ltd. (1951 Session Gases, p.147). That case went off on a point of pleading and the plaintiff in fact asserted a new measure of damages in that he went into the market and bought a new car, the cost of which he claimed against the defendant together with the cost of adapting it upon the footing that this was in fact cheaper for the defendant than the cost of repairs would have been. Nevertheless the Court delivered itself of the following opinion. At the end of the headnote you will find this:
"Opinions that, on the footing that the damaged car was a constructive total loss, the true measure of damages was its market value at the date of the collision plus the cost of hiring a substitute until a new car could be procured and made ready for use, less the 'scrap value' of the damaged car",
so that the decision, such as it was, is in the defendant's favour.
To the same effect is the decision in The Minnehaha (6 Lloyds List Reports, p.12), an Admiralty case where the Master of the Rolls, Lord Sterndale, said this:
"That applies to a matter between assurer and assured, but it is a convenient way of stating the question because unless there is some circumstance to justify him the shipowner does not act reasonably in repairing the ship if the repaired value is very much less than the cost of repairing her. Prima facie that is not reasonable. It may be shown to be reasonable if there are certain special circumstances which make the ship of such great value to him that it is better for him and reasonable to spend a very much larger sum than her repaired value. But it requires some special circumstances to show that, because what lies at the bottom of taking the repair value in a case of this kind is that it is assumed that the owner can go into the market and replace his ship at that value. If he car, satisfy the tribunal that he cannot be replaced in the position in which he was before the collision by being paid the repair value of the ship, because he cannot replace the ship and cannot buy another in the market, that is another matter, but unless he can show these two points he is not acting reasonably in spending this very large sum".
In my judgment the defence succeeds: this was not an irreplaceable article and therefore as the cost of repairs greatly exceeded the value, the car should be treated as a constructive total loss and the measure of damage is its value.
What is the result? It is now agreed that the cost of hiring as found by the learned Judge is right and this amounts to £25. The value of the car in the market must I think be taken to be £85. I do not wish to be understood to hold that the market value is always the true measure. There may be exceptional circumstances, as my brother Pearson shews in his judgment about to be delivered, which justify a higher figure, but for myself I do not think there is enough evidence of that in this particular case. The plaintiff has received £80 from the Insurance Company and for this he must give credit, so that he was entitled against the defendant to £30 and judgment should be entered for him for that sum. What effect that will have on the costs is a matter for discussion hereafter.
LORD JUSTICE PEARSON: In August 1958 the plaintiff bought a used motor car for about £330. It was a 1951 Lea Francis shooting brake. Being a mechanical engineer the plaintiff maintained it well and it was reliable. There was no special adaptation of it. On the 26th July, 1962, it was seriously damaged in a collision caused by the defendant's negligence. The plaintiff sued the defendant in the Haywards Heath County Court for damages for negligence, and the defendant admitted liability but denied the alleged loss and damage.
The issue in the appeal arises in this way. The learned Judge included in his assessment of the damages a sum of £180, being the cost of repairing the damage to the vehicle, but he also made a finding that the market value was £80. It is contended by Mr O'Connor for the appellant/defendant that the assessment should have been based on the market value and not on the cost of repair. The other figures can be mentioned briefly. The plaintiff is admittedly entitled to a sum of £25 for the cost of temporary hiring of a substitute vehicle. The plaintiff gives credit for £80 received from his own Insurance Company. As between the plaintiff and his Insurance Company the market value was taken at £85, but the plaintiff under his policy bore the first £5 of the loss. This point is unimportant, but I think the Judge's figure of £80 for the market value should be adjusted to £85, and Mr O'Connor does not contest that.
There is no complete definition of the expression "market value" in the evidence or the judgment, but I understand it as meaning standard replacement market value, that is to say the retail price which a customer would have to pay in July 1962 on a purchase of an average vehicle of the same make, type and age or a comparable vehicle. It is not the price for a sale to a dealer or between dealers. It appears from a passage in the judgment that the "market value" does not include any allowance for the good maintenance and reliability of the plaintiff's vehicle.
What are the principles applicable? The first and main principle is that the plaintiff is entitled to receive as damages such a sum of money as will place him in as good a position as he would have been in if the accident had not occurred. In the Liesbosch case (1933 Appeal Cases, p.449 at p.454) Lord Wright said:
"It is not questioned that when a vessel is lost by collision due to the sole negligence of the wrongdoing vessel the owners of the former vessel are entitled to what is called restitutio in integrum, which means that they should recover such a sum as will replace them, so far as can be done by compensation in money, in the same position as if the loss had not been inflicted on them, subject to the rules of law as to remoteness of damage".
Now but for the accident the plaintiff would have continued to have the use of his existing motor car, the 1951 Lea Francis shooting brake, undamaged. The accident deprived him of it. To be restored to substantially the same position, he needed such sum of money as would enable him to provide himself with an equivalent vehicle either by having the existing damaged vehicle repaired or by finding and acquiring another vehicle equally good.
There is, however, a second principle which was stated by Viscount Haldano in the Wostinghouse case, 1912 Appeal Gases, p. 673 at p. 689:
''The fundamental basis is thus compensation for pecuniary loss flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable stops to mitigate the loss consequent on the broach, and debars him from claiming any part of the damage which is duo to his neglect to take such steps. In the words of Lord Justice James in Dunkirk Colliery Co. v. Lover, 'The person who has broken the contract is not to be exposed to additional cost by reason of the plaintiffs not doing what they ought to have done as reasonable men, and the plaintiffs not being under any obligation to do anything otherwise than in the ordinary course of business'".
For the purposes of the present case it is important to appreciate the true nature of the so-called "duty to mitigate the loss" or "duty to minimise the damage". The plaintiff is not under any actual obligation to adopt the cheaper method; if he wishes to adopt the more expensive method, he is at liberty to do so and by doing so he commits no wrong against the defendant or anyone else. The true meaning is that the plaintiff is not entitled to charge the defendant by way of damages with any greater sum than that which he reasonably needs to expend for the purpose of making good the loss. In short, he is fully entitled to be as extravagant as he pleases but not at the expense of the defendant.
Now did the plaintiff in this case take all reasonable steps to mitigate the loss consequent on the breach? he knew from his dealings with the Insurance Company that they assessed the replacement market value at £85, and he accepted payment from them on that basis. The Insurance Company advised against repairs. He was told, at one time at any rate, by the repairers that It was uneconomic to have the vehicle repaired. He had estimates of the cost and there is no evidence of the estimates being inaccurate. After spending about £180, he would have a vehicle worth only about £85. And yet he made no attempt to find another car. It Is true he said in his evidence in chief that he could not replace the car with one of similar type and quality for £85, nor for less than £192, but that evidence cannot carry conviction, as he admitted in cross-examination that he did not attempt to find another car. The witness Langley, the works manager of the repairers, said in evidence that he would not have expected to get anything reliable for £100 in September 1962. he also said that the plaintiff discussed the repairs with their manager Redhouse and that Redhouse said it was not an economic proposition. Barnes, the defendant's expert witness, gave the figures of prices from Glass's Guide, and said that in July to September 1962 it would be difficult to find a Lea Francis but you could find other estate cars. Then in the notes of his evidence there is the word "uneconomic".
In my view it is impossible to find from the evidence that the plaintiff took all reasonable steps to mitigate the loss, or did all that he reasonably could do to keep down the cost. He was fully entitled to have his damaged vehicle repaired at whatever cost because he preferred it. But he was not justified in charging against the defendant the case of repairing the damaged vehicle when that cost was more than twice the replacement market value and he had made no attempt to find a replacement vehicle.
The learned Judge in his Judgment stated his view very cogently and at first I thought It was right, but after consideration of the arguments in this appeal I am unable to accept it, because he was not giving due effect to the principles of mitigation of loss or minimising of damage. He was not paying sufficient regard to the economic aspect of the matter.
He said:
"Evidence has been given on behalf of the defence that it was uneconomical to repair, but I do not think that kind of phrase really helps. What was reasonable for the plaintiff to do?"
Later he said:
"What would a reasonable man do? I do not think I ought to look at it merely from the point of view of a lawyer or a hard-headed business man or of the precise mathematician. What would the ordinary man in the street do in a case like this?"
In my opinion there is an error of principle involved in these passages. It is vital, for the purpose of assessing damages fairly between the plaintiff and the defendant, to consider whether the plaintiff's course of action 'was economic or uneconomic, and if it was uneconomic it cannot (at any rate in the absence of special circumstances, of which there is no evidence in this case) form a proper basis for assessment of damages. The question has to be considered from the point of view of a business man. It seems to me the practical business view is that if the cost of repairing your damaged vehicle is greatly in excess of the market price, you must look around for a replacement and you would expect to find one at a cost not far removed from the market price, although unless you were lucky you might have to pay something more than the standard market price to obtain a true equivalent of a well-maintained and reliable vehicle.
In my view the appellant/defendant succeeds on the issue of principle. The assessment should be based on the market price and not on the much higher cost of repairing the damaged vehicle, and therefore the learned Judge's assessment was made on a wrong basis and should be reduced.
In considering what reduction should be made, it may not be appropriate to take the exact figure of the market price, which I understand to be the standard market price of an average vehicle of the make, type and ago of the plaintiff's vehicle. There should be an element of flexibility in the assessment of damages to achieve a result which is fair and just as between the parties in the particular case. In the Liesbosch case Lord Wright at p. 463 quoted Lord Sumner in Admiralty Commissioners v. S.S.Chekiang (Owners) 1926 Appeal Cases, pp.637, 643:
'"The measure of damages ought never to be governed by mere rules of practice nor can such rules override the principles of the law on this subject'".
Lord Wright went on to say:
"Lord Sumner also distinguishes 'a rule of thumb' from what is binding law. In these cases the dominant rule -of law is the principle of restitutio in integrum, and subsidiary rules can only be justified if they give effect to that rule".
Although I am not able to agree with the learned Judge that £180, the cost of repair, can be regarded as a reasonable figure as between the parties, I do agree with him that the bare market value seems too low, as he accepted the plaintiff's evidence as to good maintenance and reliability, and there was the evidence of Langley that he would not have expected to get anything reliable for £100 in September 1962. I am impressed by this passage in the Judgment:
"Did the plaintiff act reasonably? What would a jury say? Would a jury say that the plaintiff had acted so unreasonably that he is not entitled to a penny-piece more than the market value of the car? I do not think they would. Certainly if they had had any experience of buying an old secondhand car they would not".
As it would be no kindness to either party to order a new trial on this merely residual question as to what the exact figure should be, it would be appropriate for this Court to fix it by a rough and ready estimate. I would fix it at £105 less £80 received by the plaintiff from his own Insurance Company plus £25 for hiring charges, and the resulting figure is £50. I would allow the appeal, reducing the damages to £50. However, as both my brethren take a different view as to the extent of the reduction which should be made on the evidence given in this case, their view as to the final figure of damages prevails.
I should add this. In the case of O'Grady v. Westminster Scaffolding Ltd., 1962, 2 Lloyd's List Reports, p.238, the decision was justified by the very unusual facts, which made the vehicle unique, so that the standard market value was irrelevant. This is clear from two passages of the Judgment referring to the car known to the plaintiff and his family as "Hortensia", On p.239:
"But it is clear that she was regularly maintained by a competent firm of motor engineers and the defendants did not seek to dispute that this cost Mm some £300 to £400 per annum. During the period of his ownership her engine was replaced on three occasions, an entirely new one having been put in in the year before the accident at a cost of £162.10s. and that same year the coachwork had been completely renewed for the sum of £180. Work had also recently been done on, among other things, the wheels, the steering column and the hood".
On p• 240:
"...the remainder of the letter significantly adds: ... we appreciate that this figure (that is £200) is in excess of what a car of this type would normally fetch, but owing to its condition (and I stress that word) it could be considered as unique and it is doubtful whether a car in similar condition would be available".
The present case is quite different, as the plaintiff's vehicle was an ordinary Lea Francis shooting brake of the year 1951 though according to the evidence it was better than average in respect of maintenance and reliability.
MR JUSTICE PENNYCUICK: I agree that this appeal should be allowed.
The basic measure of damage, so far as now material, is restitution. In the case of injury to a chattel, it may happen that restitution can be effected either by repair of the existing article or by the purchase of a comparable article, i.e. an article possessing broadly similar attributes though not necessarily identical. In such a case the measure of damage is restitution by whichever method it would be reasonable for the owner of the chattel to adopt in the particular circumstances. In considering what is reasonable one must, I think, having regard to the owner's obligation to mitigate damage, treat him as looking only to his pecuniary interest and leave out of account matters of mere taste or convenience. The injured party can in these respects suit his fancy at his own expense but not at the expense of the other party. Where the cost of repairs would exceed the market value of the article, and in the absence of special circumstances, the reasonable method must be to purchase a comparable article. By 'market value' in this connection is meant the price at which the article before damage, or a comparable article, could be purchased. As a rule the scrap value of the damaged chattel must be brought into account but this is not a factor here.
Turning to the present case, the market value of the damaged car was admittedly £80. It was, however, taken by the Insurance Company at £85 and I will treat the latter figure as being the market value. The cost of repair was £192. On these figures, in the absence of special circumstances, it is clear that the reasonable course for the plaintiff would have been to purchase a comparable car rather than repair the damaged car.
The learned Judge correctly held that the test was whether the plaintiff acted reasonably in spending £192 on repairs to the damaged car. He proceeded to answer this question in the affirmative as regards the £180. The grounds for this conclusion may be taken from the following passage in his Judgment:
"The reasonable man would say he would sooner have his own car which he knew than spend £80 on a similar car if available. He would get a car about eleven years old with unknown history and unknown mechanical condition and probably with worn tyres".
Then a little later:
"The plaintiff preferred to repair something he had got and know than take his £80 into the market and buy an unknown quantity. He acted reasonably by and large".
In so far as the learned Judge is here taking into account the personal convenience of the plaintiff, he is I think departing from the correct test of pecuniary interest. In so far as he is taking into account pecuniary interest, his reasoning seems to me to contain a flaw. In reaching the market value of the car, the hypothetical value must be regarded as having taken into account all its relevant attributes, that is mechanical condition, state of tyres and the like. It cannot be legitimate to take the market value and then make an addition for good condition. To do so is to bring the same factor into account twice over. The point may be illustrated by reading two answers by the plaintiff in the notes of evidence.
(i) "Could not replace for £85 i.e. not of similar type and quality - not for less than £192".
(ii) "Market value at accident £80 to £100".
The Judge accepted the plaintiff's evidence completely. But these two answers are in truth irreconcileable. If one could not obtain a car of similar type and quality for less than £192, then that would be the market value of the car and vice versa. It is to be observed that there is no evidence to suggest that it would have been impossible to obtain a comparable car. The plaintiff deposed that he did not attempt to find one.
The case of O'Grady v. Westminster Scaffolding Ltd., 1962, 2 Lloyd's List Law Reports, may be distinguished on the ground that the car "Hortensia" was a unique article and that no comparable article could have been purchased. It is as though someone had elected to drive around in a mechanised replica of the Lord Major's coach. I would prefer not to express any view of the measure of damage which falls upon a party unfortunate enough to injure a freak article.
I would reduce the damages here to £30, i.e. £25 for hire and £5 for damage not covered by insurance. I do not myself think there is any evidence in this case which would justify an award over and above this amount.
Order: Appeal allowed with costs. Plaintiff to have the costs in the County Court down to the date of delivery of defence and defendant will have the costs of that action thereafter — Scale 2 for the plaintiff up to the date of defence and Scale 4 for the defendant.
