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Coles v Hetherington [2012] EWHC 1599 (Comm), [2012] All ER (D) 102 (Jun)

The Commercial Court handed down a preliminary judgment in this case concerning the recovery of the cost of repairing cars damaged in road traffic accidents.

The Claimant’s insurer, Royal Sun Alliance Insurance (RSAI), had established a system whereby a company within the RSA group, Motor Repair Network Management (MRNM), contracted with RSAI to perform repairs for RSAI customers. MRNM either carried out these repairs in their own network of garages or contracted with local garages to have the repairs carried out. MRNM then charged RSAI for those repairs and RSAI claimed the cost of repairs on the basis of documents provided by MRNM, typically a Breakdown of Invoiced Costs (BIC) which often bore little resemblance to the charges levied by the repairing garage, a copy of a borderuex invoice from MRNM to RSAI and a desktop engineer’s report affirming the reasonableness of the claimed cost of the repairs – but crucially not the invoice from the garage which actually did the work.

The key preliminary question before the court in this case was whether the recoverable damages in these cases was the reasonable cost of repairing the damage, which the Claimant asserted could be evidenced by documents other than the invoice from the repairing garage. The Claimant further asserted that the reasonable cost of repair could be assessed by reference to what the injured party could have obtained on the open market.

It was held that the Claimant succeeded on both counts. It was an established rule of law that the Claimant’s loss crystallised at the moment the chattel was damaged. The reasonable cost of repair was a way of assessing the diminution in value of the chattel caused by the physical damage. The reasonable cost of repair could be assessed by the court with reference to any documentation which was sufficient to discharge the burden; it was not essential to have the original repair invoice.

The reasonableness of repair charges would be assessed by reference to the position of the individual claimant rather than that of the insurer – i.e. it should not concern the court whether or not the insurer had, by virtue of its size, managed to negotiate a lower price for repairs than an individual could. The reasonable cost of repairs should be assessed by asking what an individual claimant could have obtained had he been in the marketplace himself.

August 4, 2012 · Editorial Team · Comments Closed
Posted in: Cases