Armstead vs RSA

This case revolved around the recoverability of hire costs as damages in a negligence claim brought by Ms. Armstead against RSA.

TLDR:

• Ms. Armstead sued RSA for damages resulting from a car accident caused by RSA's insured.
• The dispute centered on whether the hire costs incurred by Ms. Armstead were recoverable.
• The Court of Appeal ruled that the hire costs were not recoverable as they were too remote.

The claimant, Ms. Armstead, was involved in a car accident caused by RSA's insured. As a result of the accident, her car was damaged, and she was unable to use it while it was being repaired. Rather than using a replacement car from her own pool, she hired a vehicle on credit hire terms from Helphire.

The issue before the court was whether the cost of hiring the replacement vehicle was recoverable as damages for the loss of use of the car. The Recorder initially held that the hire costs were not recoverable, as they did not represent a reasonable estimate of Helphire's actual loss of use.

On appeal, the Court of Appeal upheld the Recorder's decision. The main judgment, delivered by Dingemans LJ, concluded that the hire costs were not recoverable for several reasons. Firstly, the hire agreement between Helphire and Ms. Armstead was considered an 'internal arrangement' and not a basis for recovering losses from a third party. Secondly, the agreement was not negotiated at arm's length and did not represent a genuine attempt to assess likely losses.

Dingemans LJ further argued that the hire costs constituted pure economic loss, which is generally irrecoverable in tort. Singh LJ concurred, emphasizing that the loss did not flow directly from the physical damage to the car. Bean LJ agreed with both judgments.

The Court of Appeal's decision was based on established principles of tort law. The court reiterated that a person owes a duty of care not to cause physical damage to another's property and is liable for the diminution in value and other financial losses consequent on the damage. However, financial losses suffered by a third party due to damage to another's property are not recoverable.

The court also discussed the concept of 'pure economic loss,' which refers to financial loss not consequent on damage to the claimant's property. In this case, the hire costs were deemed too remote and not a foreseeable consequence of the physical damage to the car.

In conclusion, the Court of Appeal ruled that the hire costs incurred by Ms. Armstead were not recoverable as damages. The decision provides important guidance on the recoverability of economic losses in negligence claims and underscores the principle that such losses must be a foreseeable consequence of the defendant's breach of duty.