Armstead v Royal Sun Alliance Insurance Company Ltd [2022] EWCA Civ 497 (28 April 2022)

Armstead v Royal Sun Alliance Insurance Company Ltd [2022] EWCA Civ 497 (28 April 2022)

A bailee (hirer) cannot recover from a negligent third party as damages the sums contractually owed to the bailor (hire company) for loss of use under a hire agreement clause where those sums do not represent a genuine and reasonable assessment of the actual loss of use suffered. Such sums, arising from internal contractual arrangements, constitute pure economic loss and are not recoverable in negligence against the tortfeasor. The proper measure of damages is the actual loss of use suffered by the owner or bailee, not the contractual liability per se.

Citation
[2022] EWCA Civ 497
Parties
Claimant/appellant: Ms Lorna Armstead; Defendant/respondent: Royal Sun Alliance Insurance Company Limited
Jurisdiction
England and Wales
Judgment Date
28 April 2022
Procedural Posture
Civil Appeal / Appeal From County Court to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Negligence, Pure Economic Loss, Bailment, Damages, Loss of Use, Remoteness of Damage, Subrogation
Tort Law Contract Law Insurance Law Negligence Pure Economic Loss Bailment Damages Loss of Use +2 more

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Parties

Ms Lorna Armstead

Claimant/appellant

Royal Sun Alliance Insurance Company Limited

Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From County Court to Court of Appeal

Legal Issues

  1. 1 Whether a bailee (hirer) can recover as damages from a negligent third party the sums contractually owed to the bailor (hire company) for loss of use under a hire agreement clause after damage to the hired vehicle.
  2. 2 Whether such sums constitute recoverable consequential loss or irrecoverable pure economic loss in tort.

Ratio Decidendi

A bailee (hirer) cannot recover from a negligent third party as damages the sums contractually owed to the bailor (hire company) for loss of use under a hire agreement clause where those sums do not represent a genuine and reasonable assessment of the actual loss of use suffered. Such sums, arising from internal contractual arrangements, constitute pure economic loss and are not recoverable in negligence against the tortfeasor. The proper measure of damages is the actual loss of use suffered by the owner or bailee, not the contractual liability per se.

Court Disposition

Appeal dismissed

Orders

  • Ms Armstead's appeal is dismissed; she cannot recover the sums claimed under clause 16 of the Helphire agreement from RSA as damages in negligence.