Copley v Lawn – Revisited

28 Mar 2019

For a self-insuring company or, an insurer whose driver has been involved in a road traffic accident, there are a number of things which need to be established quickly.

For example, is there a report of the incident; are there injuries; and how serious is the damage to both vehicles. But, what it essentially boils down to is ‘whose fault is it?’ and ‘how much will the claim cost?’

In the event that it is clear from initial investigations with your own driver, and any witnesses to the incident, that your driver will be held at fault, it becomes a matter of assessing whether anything can be done to reduce the claim to be presented. Whilst a Claimant is always under a duty to mitigate their own losses and not run roughshod, there are things that can be done from the Defendant’s side to reduce the Claimant’s claim from an early stage.

Also, unless there is something which is blatantly overstated within the Claimant’s claim, the duty to mitigate is not an easy one for a Defendant to prove. Taking aside any claims for personal injury that may arise, the earliest concern is likely to be repairs to the Claimant’s vehicle and a replacement vehicle for the Claimant.

If liability is not going to be disputed it certainly makes sense for contact to be made with the Claimant directly and as soon as possible. Quite often, if a Claimant feels that they are not at fault for an accident then they will be reluctant to pursue a claim through their own insurer as this is likely to impact their no claims discount, at least initially. This is where accident management companies (AMC) may come in. An approach from an AMC is likely to be attractive to a Claimant who believes that they are not at fault for an accident, the offer of repairs to their vehicle and a replacement whilst their vehicle is off the road is likely to be accepted as is the fact that it will involve payment on credit terms.

From the Defendant’s perspective the use of an AMC by the Claimant is likely to mean an increase in what would have been paid for the repairs and also to the cost of a replacement vehicle (the particular focus of this article). This is due to the services of the AMC being offered on a credit basis. Whilst there could be challenges to quantum of the claim at a later stage once the payment packs for repairs and hire are presented to the Defendant, the sum claimed is likely to be a higher sum than could have been charged by the Defendant’s own repairer or the rates that they could obtain a replacement vehicle for.

This is where the joint appeals of Copley v Lawn and Madden v Haller come in. Whilst this case was decided nearly 10 years ago, from the writers’ experience, what was outlined within this case is still underused, or not correctly used, by Defendants. There are likely to be a number of reasons for this, but use of the principles outlined within the case can represent a high saving to a Defendant if used correctly.

What was the Copley v Lawn case?

The Copley case concerned the question of whether a Claimant had essentially failed to mitigate their losses by refusing the offer of a hire vehicle by the Defendant in favour of an offer from their own insurer. The Defendant insurer had offered the Claimant a vehicle for free whilst their own vehicle was being repaired. In a letter to the Claimant, the Defendant insurer had outlined their offer and that nothing would have to be paid by the Claimant for the use of the hire car, this cost would be borne by the Defendant insurer. No response to this offer was received.

The Court of Appeal found that it was not a failure to mitigate in this claim as the offer of a ‘free’ vehicle was not factually correct as there was a charge to be incurred by the Defendant insurer. The Claimant was in a position where they had been offered a hire vehicle by an ACM on credit, as far as they were concerned no payments would be required from them and this was an offer of a free vehicle . There was no difference between the two offers in the eyes of the Claimant. What the court established was that in order for a Claimant to be held as failing to mitigate they needed to be in possession of all of the information so that an informed choice could be made.

What the Defendant therefore needs to do is approach the Claimant directly and provide the following information; whether they can provide repair services for their damaged vehicle and, most importantly, whether they can provide a replacement vehicle for the period of repairs and what that vehicle will cost the Defendant. The court accepted that the daily rate that can be obtained by the Defendant may not be of interest to the Claimant but, that it would be of great interest to the Claimant’s insurer or representative.

Crucially, the court established that where the Claimant has the information to hand, which would indicate that a Defendant can obtain a vehicle at a lesser cost than can be obtained by the Claimant’s own insurer or an AMC, they will have failed to mitigate their loss if they continue to utilise the services of their own insurer or the AMC. The court said that in such circumstances a Claimant will only be entitled to recover the rate that would have been paid by the Defendant . In hire claims where there could be high daily rates for long periods this could represent a significant saving on a claim.

In the later case of Sayce v TNT (UK) Limited the court of appeal indicated that the Claimant would not be entitled to recover anything as it would be put into the category of ‘…avoidable loss [which] is not recoverable’ . If applied, this would be an even greater saving by the Defendant where it is proven that the Claimant has failed to mitigate their loss in refusing the offer of a vehicle from the Defendant.

In terms of practicality, the court in Copley stated that the Claimant would need to have access to the information in order than an informed decision could be made. As such, it cannot be correct that a Defendant is able to supply a letter after the repairs have taken place and the hire has ended and outline that they could have obtained a vehicle more cheaply.

The Defendant has to act quickly in putting their proposal to the Claimant. They need to indicate that they can take the vehicle for repairs, that they can offer a replacement vehicle, that that vehicle is available for hire and at what cost it would be obtained. The court were scathing of the letter from the Defendant in Copley as they considered that the tone was threatening. It is therefore key that the letter written to the Claimant should only be informative and set out the information in a non-threatening way whilst outlining the legal position in terms of mitigation. The letter also needs to clearly state that it needs to be passed to the insurer, solicitors or the AMC directly.

Given that time is of the essence, and that a Claimant needs to have been in possession of the offer to consider it, sending the letter via a tracked means will give extra comfort to a Defendant and a firmer argument down the line. Ideally, this needs to be done very shortly after the accident. This may not always be possible as information on liability may take some time but, in cases where it is clear that liability is not going to be disputed, large savings can be made with an offer.

Whilst not specifically mentioned within the case it is the view of the writer that the Defendant must be able to obtain the rates offered and a vehicle must be available for the Claimant’s use and this vehicle must be comparable to the one owned. A Defendant cannot simply make an offer which they know cannot be fulfilled in an effort to reduce the Claimant’s claim at a later date.

Andrew Boba is a paralegal in the Insurance and Regulatory team at Trethowans, specialising in defending motor claims on behalf of self-insuring companies. You can contact our team of experienced insurance litigation solicitors today on 0800 2800 421.