"On8 March 2004 , the Claimant was involved in a road traffic accident caused solely by the negligence of the Defendant. The Claimant's vehicle (registration number FX52 RDV) was stationary on Frederick Way in Grimsby when, the defendant's vehicle (registration number FV02 NMY) collided into the rear of his vehicle. The defendant has admitted sole liability for the accident." 9. At all material times the claimant had the benefit of a motor insurance policy with the Co-operative Insurance Society (the CIS) and DAS. The relevant policy was incepted on18 July 2003 . The defendant was insured at all material times by the Royal & Sun Alliance (the RSA). As part of the claimant's insurance package with the CIS the claimant had legal expenses and assistance insurance provided by DAS Legal Expenses Insurance Company Limited (DAS). 10. It is necessary to refer to the terms of the motor vehicle policy. The introduction stated: "
"Vehicle hire costs: means the cost of hiring a replacement motor car or standard commercial vehicle in one continuous period. " 12. "
"For the purposes of this Section we, us and our means DAS Legal Expenses Insurance Company Limited who provide the cover and manage all claims under this Section. Please note that any costs incurred without the prior authorisation of DAS are not covered. "
"The Claimant has been a CIS motor insurance policy holder since 1997 and DAS had provided legal expenses insurance as part of that policy since July 1999. "
"1 DAS is a Legal Expenses Insurance Company authorised to underwrite Legal Expenses Insurance. DAS deals with a number of companies ("
"This agreement will come into effect on1 January 2003 ("
"DAS will use Helphire exclusively to provide the Requirements to the extent that relevant Business Partners of DAS involved in the Requirements do not object." 18. Under the Business Agreement rates were to be set by reference to the scale of rates under the ABI GTA. The defendant has pleaded that DAS received commission payments from Helphire in return to arranging hires. In this regard it relies on a standard prospectus produced by Helphire which refers to such payments as standard and which refers to DAS as a customer of the scheme. DAS does not admit or deny that commissions were paid as it regards this matter as commercially confidential. The claimant regards it as irrelevant to his claim. 19. On11 March 2003 the claimant contacted DAS to confirm that his vehicle could not be driven. In accordance with his insured benefit a replacement vehicle (registration HT53 ZHP) was delivered to the claimant that next day. The vehicle was supplied through Helphire. Helphire was nominated as the supplier by DAS and was not chosen by the claimant. The claimant signed a hire agreement with Helphire to which I refer. Under the heading "
"I agree to hire a vehicle ("
"The company has agreed to pay the Hire Charges and any Extras shown overleaf as payable by them for Your use of the Hire Vehicle during the Approved Period shown overleaf or any extension the Company authorises. " 21. The claimant says that he thereby became liable to pay Helphire's rental charges as stated on the face of the agreement. The defendant says that it did not require him to pay the hire charges but provided that DAS would do so. In that regard the defendant relies upon clause (1) of the terms and conditions of hire and says that the clause placed on DAS the obligation to pay the hire charges. 22. Paragraphs 5 to 8 of the statement of facts are as follows: "
"I take it to be clear beyond all argument that an assured under a policy insuring him against loss of or damage to a chattel, on being indemnified by his insurers for a loss he sustained, does not thereby lose his right of action against the wrongdoer who caused the loss. Under the doctrine of subrogation he must bring an action against the wrongdoer if he is called upon by his insurer to do so and is indemnified against the costs; but it is his own cause of action, not that of his insurer, that he sues on; as against the wrongdoer the insurer has no cause of action of his own." (2) "[The Defendant] has never articulated any intelligible reason as to how, in the light of these familiar principles, Mr Bee can be expected to give credit for a payment to which he is not entitled himself." [paragraph 13 of the Skeleton; my highlight]. (3) The Defendant has advanced a number of ways in which he alleges that credit should be given. (a) He relied on the rule that benefits obtained in the course of mitigation may be brought into account as a credit in the assessment of loss: Dimond v Lovell[2002] 1 AC 384 at 401H - 402F. There, the claimant driver obtained a hire car from a company whose services also included suing the tortfeasor, in her name to recover the hire charges which would be postponed until any such claim was concluded. That agreement was in breach of consumer credit legislation and was unenforceable. Even though the claimant had acted reasonably in using this hire car service, her claim for loss of use of her car was irrecoverable. The House held that all that the claimant would have been entitled to was the cost of hiring a car at spot rates; the other services offered by the hire car company with whom she dealt, such as the costs of litigation and credit were additional benefits to her and were not recoverable. But this case has no present application since the principle is clear: if a claimant receives a benefit in the course of mitigation and if that benefit is caused by the tort then that benefit must be brought into account in calculating his loss. But here, Mr Bee received no additional benefit from hiring the car from Helphire; the fact that his insurers may have made a profit is irrelevant. The court would not, for example, inquire into the insurers' profit and loss accounts to see how much profit they were making from large premiums. (b) Second, the Defendant relied on the principle that an insurer may not, by exercising its rights of subrogation recover more than its outlay, and if it does, it will hold the surplus on trust for the insured. That principle has no application to the facts of this case. The rule is not engaged since any payment by Helphire does not result from the exercise by DAS of Mr Bee's rights and in any event any benefits held on trust for Mr Bee are not credited to the tortfeasor; they do not result from the tort; they result from the payment of the premium. (c) The most recent way the case was put related to the Hire Agreement. The Defendant says that under this Agreement, Mr Bee was never under an obligation to pay the hire. This argument does not lead to the conclusion that Mr Bee is not entitled to recover the cost of hire from the Defendant; but what it does mean, according to Mr Flaux, is that the cost of hire is the cost to DAS and not the charge by Helphire to DAS, at least without taking account of the commission payment. But, submitted Mr Butcher, the argument failed in limine since Mr Bee was liable under the Hire Agreement. He relied upon an analogy with costs where an employer paid for the costs of the defence of one of their employees and sought to recover those costs from public funds: R v Miller [1983] 1056. The application was initially refused on the grounds that the defendant himself was under no liability for the costs and therefore could not recover them from Central Funds. Allowing the defendant's appeal, Lloyd J. said, at page 1059: "
"When once it is established that the solicitors were acting for the plaintiff with his knowledge and assent, it seems to me that he became liable to the solicitors for costs, and that liability would not be excluded merely because the union also undertook to pay the costs. It is necessary to go a step further and prove that there was a bargain, either between the union and the solicitors, or between the plaintiff and the solicitors, that under no circumstances was the plaintiff to be liable for costs."
"... I think that it is highly probably, though the matter has not been discussed, that the solicitors have a personal right against the trade union to receive a proper remuneration for their services. It has not been discussed, and we do not know the precise terms of the relation between the trade union and the solicitors, but I assume there exists such an obligation. Nevertheless there is nothing inconsistent in that obligation co-existing with an obligation on the part of the plaintiff to remunerate the solicitors. Naturally, as a matter of business, the solicitors would, I have no doubt, apply in the first instance to the trade union, as being the persons ultimately liable to pay the costs as between all arties - that is to say, the persons who would have to indemnify the plaintiff against the costs. But that does not exclude the liability of the member, and it seems to me not in the least to affect the position that the client may be liable, although there may be a third person to indemnify the client. "
"Where a party receives legal aid in connection with any proceedings ...and those proceedings are finally decided in favour of the unassisted party, the court... may...make an order for the payment to the unassisted party out of the legal aid fund of the whole or any part of the costs incurred by him in those proceedings. "
"In this case the solicitors, no doubt first instructed by the insurance company, were the solicitors on the record as the solicitors for the respondent. They acted for him and, in the absence of proof of an agreement between him and them or between them and the insurance company that he would not pay their costs, they could look to him for payment for the work done and his liability would not be excluded by the fact that the insurance company had itself agreed to pay their costs. In my opinion the costs incurred were incurred by the respondent in the sense in which those words are used in theLegal Aid Act 1964 ."
"Subrogation works by giving the insurer who indemnifies the assured the right to raise proceedings in his name and, by the very nature of the circumstances in which it comes into play, the proceedings by the insurer must necessarily be to recover sums which have already been paid to the assured or paid on behalf of the assured. The remedy could not exist unless, in insurance as in other cases of indemnity, our law took the view that payments made by the indemnifier fall to be ignored in proceedings raised by him in the name of the assured against a third party. Those payments are ignored in all cases where subrogation applies, whatever may be the basis of the action which is raised in the name of the assured after he has been indemnified by the insurer"
"The company has agreed to pay the Hire Charges and any Extras.... as payable by them for your use of the Hire Vehicle during the Authorised Approved Period shown overleaf or any extension the Company authorises."
"The fallacy in [the Defendant's expert witness'] case on [collision waiver damage] is that whilst asserting the betterment of the nil excess, he disregards the detriment [Mr Bee] suffered by being placed in a car belonging to a hire company. He treats Mr Bee as if on receiving the hire car, he was in the same position after the accident as he was before it. Obviously, he was not. He was not in his own car; he was in somebody else's. He was obliged to return the car in the same state as he received it. Were his own car damaged, he could defer repairs, perform amateur or temporary repairs or not bother with repairs. These would not be options with Helphire. Moreover, were [Mr Bee] to blame for damage to that vehicle, he would be subject not only to a claim for the cost of repair, but also for Helphire's loss of profit whilst it was out of commission. In other words, by forcing [Mr Bee] into a hire vehicle, [the Defendant] was exposing him to risks which he did not previously face, such that his insurance needs were different. As such, it is impossible to portray the nil excess as a betterment. It was a reasonable arrangement, consequential on the tort. "