Lloyd's Maritime and Commercial Law Quarterly
Property damage, remoteness and consequential contractual liabilities
Alexander Georgiou*
Armstead v Royal & Sun Alliance
Armstead v Royal & Sun Alliance Insurance Co Ltd
1 joins the canon of “car hire cases” which have driven forward the law of damages.2 Regrettably, it may be more of a false start than a photo finish.
Background
Ms Lorna Armstead was involved in a road traffic accident, as a result of which her car was damaged and required repairs. She hired a replacement car from Helphire Ltd. The car hire agreement was on “credit hire” terms: Armstead was not liable in the first instance to pay the hire charges to Helphire; instead, Helphire would seek payment from the other driver—they would turn to Armstead for payment only if that claim failed. As a result, the rate of hire under the agreement was greater than under an ordinary car hire agreement. Significantly, the agreement also contained a clause (cl.16) which stipulated that:
You [Armstead] will on demand pay to the lessor [Helphire] an amount equal to the daily rental rate specified overleaf … in respect of damages for loss of use for each calendar day … when the hire vehicle is unavailable to the lessor for hire because … the hire vehicle has been damaged.
Shortly afterwards, Armstead was involved in another collision—this time with a van driven by a Mr Pawel Galewski. The hire car was damaged, but Armstead was able to continue to use it until her own car was repaired. She then returned the hire car to Helphire. The hire car required repairs, which lasted 12 days. Helphire then sought from Armstead the money payable under cl.16 in respect of their loss of use: £1,560.
Armstead initiated proceedings against Galewski’s insurers, Royal & Sun Alliance (“RSA”), seeking the cost of repairing the hire car (around £1,990) as well as the £1,560 demanded under cl.16. By the time the case reached the Supreme Court, only the latter remained in issue.
The Supreme Court’s judgment
A number of arguments were canvassed before the Supreme Court. It was suggested that Armstead’s liability under cl.16 was a purely economic loss for which Galewski owed no duty of care.3 It was alternatively suggested that the cl.16 liability was either outside the scope of Galewski’s duty,4 or was “legally caused” by the hire agreement with Helphire
* All Souls College, University of Oxford. I am grateful to Matthew Hoyle and Rob Stevens, with whom I shared a fruitful discussion of this case.
1. [2024] UKSC 6; [2024] Lloyd’s Rep IR Plus 14 (hereafter “Armstead”).
2. See eg Dimond v Lovell [2000] UKHL 27; [2002] 1 AC 384; Burdis v Livsey; Lagden v O’Connor [2002] EWCA Civ 510; [2002] Lloyd’s Rep IR 524; [2003] QB 36.
3. Armstead, [14].
4. Armstead, [23] and [55].
CASE AND COMMENT
387