The Supreme Court has handed down judgment in Armstead v RSA: an important decision on the recovery of contractual liabilities, remoteness and the burden of proof. Ben Williams and Ben Smiley acted for the successful appellant.
The case directly concerned whether the victim of a car accident is able to recover from the negligent driver of the other car (or his insurer), the contractual liability which the victim owes the hire company, consequent on the damage to the car. However, the question of whether a claimant can recover a contractual liability to a third party which results from a tort from the wrongdoer is likely to be of much more general application.
At first instance and in the first two appeals, the Courts had consistently found (for different reasons) that such liability was not recoverable. The Supreme Court has held that each of the Courts below was wrong in its reasoning and the conclusion.
The Court rejected the findings below that the loss in question was irrecoverable as a pure or relational economic loss or due to specific principles of bailment. Rather, the case was a straightforward example of a person with a possessory interest in a damaged chattel seeking to recover a liability which was consequent on it being physically damaged . The fact that the liability arose as a result of a contract between the claimant and her hire company was not itself a barrier to recovery. The appropriate limitation on recovery in the situation (if any), was the principle of remoteness. In order to be a reasonably foreseeable kind of loss, the contractual liability needed to be a reasonable pre-estimate of the hire company’s loss as a result of the damage to the vehicle.
Of still wider significance, the Court also held that the burden of proof in respect of a remoteness defence is on the defendant. In common with other defences which seek to cut down a claimant’s recoverable loss after the claimant has established the defendant’s liability (i.e. scope of duty, intervening cause, failure to mitigate and contributory negligence), it is for the defendant to prove that a loss is too remote to be recoverable.
It was also held that the “checklist” of six questions which arise in a negligence claim (formulated in Khan v Meadows and Manchester Building Society) was inapplicable to a case such as this. That list was suggested in order to assist with analysing SAAMCo scope of duty issues, which were not engaged in Armstead where no scope of duty issues arose.
Click here to read the judgment in full.
For more information on Ben William’s practice, please speak to his clerk James Barrass.
For more information on Ben Smiley’s practice, please speak to his clerk Alex Dolby.
