In the case of W v Veolia Environmental Services (UK) PLC [2011] EWHC 2020 (QB), Judge Mackie QC was asked to consider the validity of a claim for damages. The Claimant, W, owned a 21 year old Bentley (worth approximately £16,000) which was hit by a refuse truck owned by the Defendant, Veolia Environmental Services (UK) PLC (Veolia). While his car was being mended, W rented a modern Bentley under a hire agreement with Accident Exchange at the rate of £863.68 per day. Under the hire agreement, which the Judge found was standard, W assumed liability for the contractual rate of hire; but this liability was deferred for a set period of time until the claim was pursued against Veolia. In case the hire charges were not recovered from Veolia within the specified period, the charges and legal fees were also insured up to £100,000 under the agreement. W entered into this agreement at home when the car was delivered to him. In the end, W’s own Bentley took 135 days to be repaired despite having suffered no serious damage. As a result, W incurred £138,000 in hire charges.

Accident Exchange brought subrogated proceedings on W’s behalf against Veolia. Veolia put forward two arguments in its defence to this claim for damages. First, it alleged that W had failed to mitigate his loss. The Judge disagreed. He explained in his judgement that Veolia was kept informed of the delay and made no complaints at the time. He also found that, according to case law, W did mitigate his loss by hiring a comparable car. Second, Veolia alleged that the hire charges were irrecoverable by Accident Exchange because they had contravened the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008 (the 2008 Regulations) which required Accident Exchange to inform W of his right to cancel the contract. The Judge agreed with this argument and stated that the provision in question was mandatory and, as a result, could not be waived by W.  However, Judge Mackie QC found that the agreement entered into with Accident Exchange also contained a valid contract of insurance. Accident Exchange had paid W (and was now subrogating his claim) under that contract when Veolia first raised the argument regarding the 2008 Regulations. As a result, Accident Exchange was entitled to recover the amount it had provided to W as an indemnity up to the policy limit.

The case shows that what appear to be excessive damages can be recovered by a claimant in certain circumstances. Defendants should be vigilant when monitoring the claimant’s ongoing costs. In this case, Veolia’s achilles heel was their contemporaneous knowledge of W’s increasing cost and the fact that no action was taken to try to minimize the costs. Insurers should also be aware that if a hire company does not comply with the notice provisions in the 2008 Regulations then the insured’s contract with such a company will be void and as a result the insured will not have suffered a loss.