MOTOR VEHICLE INSURANCE - RECOVERY OF HIRE CHARGES

(Dimond v Lovell [1999] 3 ALL ER 1)

The decision of the Court of Appeal in Dimond v Lovell [1999] 3 All ER 1 considered the legal implications of the recent growth of companies which provide, on hire, replacement vehicles for motorists whose own vehicles have been damaged in road traffic accidents due to the fault of some other person. The hire charges are not paid by the hirer: instead, the motorist’s cause of action against the person at fault is pursued by the hire company in the motorist’s name, and the damages recoverable from that person include the hiring cost. The legality of this type of arrangement was confirmed by the House of Lords in Giles v Thompson [1994] 1 AC 142, where it was decided that the common law rules on champerty and maintenance were not infringed by the various schemes operating in this way. However, Giles left important questions unanswered, in particular the circumstances in which hire charges are actually recoverable as a legitimate head of damages from the wrongdoer’s insurers. Dimond v Lovell, which proved to be a test case, raises issues as to the status of such agreements and also as to the right to recover hire charges by way of damages. The leading judgment was given by Sir Richard Scott V-C: Lord Justices Thorpe and Judge agreed with his judgment, although Lord Justice Judge added some important comments of his own on the recoverability of damages.