Armstead v Royal & Sun Alliance Insurance Company Ltd [2024] UKSC 6
The Supreme Court handed down its judgment in Armstead v Royal & Sun Alliance Insurance Company Ltd on 14 February, a Valentine’s gift of a sensible legal decision.
The case relates to a claim by Lorna Armstead, who was issued a hire car by a credit hire company, Helphire, after being involved in a road accident in 2015. She was struck by another car, driven by Pawel Galewski, while at the wheel of her hired vehicle. Armstead received a bill for the credit hire company's lost rental income while the vehicle was repaired as well as for the repairs to the hire car.
Mr Galewski's insurer, Royal & Sun Alliance (RSA), accepted liability for the repair of the vehicle but refused to pay for the lost rental income. The Court of Appeal ruled in favour of RSA in March 2022, stating that the amount of income said to be due was the result of a contractual obligation between Armstead and Helphire, rather than something directly caused by Mr Galewski's negligent driving.
The Supreme Court disagreed, finding there was no sound principle under which the losses suffered by the claimant through her contract with the hire company could be rendered irrecoverable from the third party. Furthermore, the Court found the losses were not pure economic losses, which would be irrecoverable, but stemmed from the negligence of Mr Galewski.
The case also had a number of other interesting points, with junior counsel making submissions on behalf of the claimant and the analysis of the court being once a claimant has proven a tort has been committed, and losses stem from the breach of duty, the burden of proof is on the defendant to prove any defence which may limit damages.
The decision in the case is one ACSO welcomes, as it benefits consumers who are no longer burdened with costs stemming from a third party’s negligence. The ruling is a fair outcome for the recovery of reasonable losses resulting from a loss that, as with credit hire overall, contributes very little to the overall cost of insurance on the consumer.