Ever increasing repair costs continue to cause the insurance industry a significant challenge. There are many factors fuelling this rise: supply chain issues; lack of qualified staff; general inflationary pressures; and the war in Ukraine to name just a few.
Whilst there is no silver bullet to resolving the problem, especially in light of the decision in Coles v Hetherton (Coles), insurers can still successfully challenge unreasonable invoices and should do so. For the challenge to be successful, evidence will need to be secured demonstrating that the total sum claimed is unreasonable.
The framework created by Coles
In Coles, the Court of Appeal addressed three preliminary issues:
1. Type of claim: The claim is in general damages for diminution in value of the vehicle that crystallises at the moment of impact. This means that the loss is a direct loss and nothing that happens after that moment will have any effect on the value of that loss. This includes any steps taken by insurers to arrange repair. It is not a claim in special damages as is often pleaded.
2. Evidence: The diminution in value must be evidenced, and where the vehicle can be repaired it is usually measured by reference to the reasonable cost of repair. There is no hard and fast rule that it must be the cost of repairs itself – although it usually will be. It could, for example, be evidenced by an engineer’s report or by an estimate of repair costs – whether or not the claimant ever intends to carry out those repairs.
3. Whose claim is it: The claim is always that of the named claimant and as such, the reasonable cost of repair will always be assessed by reference to the claimant – and not by reference to any better rate that an insurer could achieve.
What does this mean in practice?
Whilst the framework set by Coles provides useful guidance, in practical terms, the key question is whether the sum claimed is a reasonable sum rather than what sum was actually incurred. This is because it is a claim in general rather than special damages and is based on notional not actual repair costs.
Despite Coles many claims are still presented as the “cost of repairs” in special damages. Where they are presented in that way it is easier to challenge individual line items. If claimed in special damages, the sum should represent the “actual” sum incurred and it should be possible to challenge individual line items.
Successful challenges
DAC Beachcroft has now successfully defended numerous repair claims having secured evidence that the total sum claimed is unreasonable. The arguments raised are as follows:
Non accident related damage & 'extras'
Principle: Non accident damage and itemised extras are not recoverable.
Case: In Moore v Curry heard in the Clerkenwell and Shoreditch County Court, the issue DJ Beecham had to determine was: what is a fair/reasonable proportion of the repair cost attributable to the defendant in view of the admission by the claimant of the pre-existing damage to his vehicle?
The Judge formulated one question for the determination of the dispute: what element of the repair cost represents a reasonable diminution in value of the claimant’s car in view of the pre-existing damage? The court agreed that the repair cost must contain elements of pre-existing damage from the previous accident. The court also took note of the fact that the claimant was able to drive the car some distance across the country after the first accident and the car only became unroadworthy after the material accident.
In his judgment, the extras claimed at £647.90 were discounted and a 25% reduction was applied to the remaining balance as relating to the pre-existing damage to the vehicle.
PPE Charge
Principle: If repairs were not effected during a lockdown period these should be disputed.
Case: In the case of Parr v EUI Limited the repair invoice included a cost listed as ‘other’. On further questioning the cost was detailed as Covid 19 safety measures and sub-let works in the sum of £117.60. There was no explanation provided as to what this cost related to and so the amount was deducted from the settlement offer, which was then accepted without question.
Tech Data/ Methods Research
Principle: There is a repair method research charge on ABP guidelines it might be arguable that this should be covered under an assessment charge. If both are on the invoice, it might be possible to dispute the charge.
Case: In Purdy v EUI Limited, heard in the Torquay and Newton Abbot County Court, the claimant attempted to recover costs relating to a repair on a vehicle which had been deemed a total loss. This included method research, estimate fees and the BSI fees.
The immediate issue was that a shortfall in the PAV payment had been pleaded in conjunction with a recovery and storage charge, but the engineer’s report provided only supported the sum already paid. There was no invoice for recovery and storage, only an overall ‘invoice’ from the claimant's insurer.
The claimant then filed a witness statement which contained facts and submissions which must have been outside the claimant’s knowledge.
DAC Beachcroft filed a witness statement in support of unreasonable conduct and sought wasted costs.
In summary, the losses as pleaded were not advanced, the claimant’s solicitors were reprimanded for misleading the court and even if the claim had been properly pleaded the losses were not recoverable and their conduct was unreasonable.
The Judge formed the view that the claimant could not really comment on the matters contained within his witness statement and the claimant accepted there could be no recovery and storage as his vehicle has been on his drive the entire time. The claimant stated that he had explained this to his solicitors.
DAC Beachcroft were awarded costs in the sum of £1,000 due to multiple failures by the claimant's solicitors.
Labour rates and increase in cost of parts
Principle: Any increase in labour and parts should be evidenced, if they are not, then they should be disputed.
Case: In Lovat v IQUW Syndicate Management Limited, the claimant's supplemental engineers report included an increase for labour and parts, the labour had increased by an additional 7 hours without any explanation or images to support the additional labour charge. The only additional parts were a bumper bracket and screws, as a result repairs were reduced by £320.
Failure to adequately plead and evidence diminution in value
Principle: A claimant still needs to suitably evidence the reasonable costs of repairs and bring their claim with a proper understanding of the relevant law.
Case: In Capital Lifts Limited v Gruchet heard in Croydon County Court, the claimant stated that the repair invoice and assessor's report were sufficient evidence in line with Coles, despite the fact that they had pleaded repairs in special damages.
At the hearing the claimant advanced an argument that the sum claimed was not “clearly excessive”, that the invoice did not include any cost for parts, that the claimant did not have a duty to mitigate, that the ability to have the repairs done at “less than cost” did not mean it could not claim the reasonable cost of repairs and that the invoice was not determinative.
The claim was defended on the basis that the claimant had failed to properly plead or evidence the claim in that:
- The claimant had brought the claim in special damages and had not applied to amend. The loss suffered was the invoice sum and that is all that should be awarded.
- Alternatively, the reasonable cost of repair/diminution in value was the invoice sum because:
- The requirement in Coles that the sum claimed be “clearly excessive” for the court to investigate was more geared towards a scenario where there was not specific evidence of what the repairs had cost on the open market (unlike the present case), alternatively, the sum claimed was clearly excessive because it significantly exceed the invoice sum.
- The question was what was the cost to the claimant, not to the claimant's insurer. There was direct evidence of the cost to claimant, namely the invoice.
- The claimant had provided no evidence on the invoice or why there was no sum included for parts. The court should not speculate in the absence of such evidence.
- There was no reason to prefer the assessor's report to the invoice especially since the claimant had no permission to rely on expert evidence and the report did not value the vehicle, meaning there was no evidence was to whether the vehicle was economically repaired.
DDJ Blake gave the following judgment:
The issue is the cost of repairs to the claimant's vehicle. I find that the vehicle was certainly repaired and at the final page in the hearing bundle, there is an invoice for those repairs in the sum £1,053.15 after deduction of the excess of £250. That is the amount the defendant submits should be allowed. The claimant relies on what has been called an assessor's invoice. An estimate was prepared in the sum £1,614.66. The argument is about what is the reasonable cost.
Coles says it is only where the sum claimed is “clearly excessive” can it be justified in investigating whether the sum claimed exceeds the cost the claimant would have paid a reputable repairer. The claimant therefore says the matter ends there because the sum claimed is not clearly excessive. In terms of the document called an invoice, it refers to the matter being reported to the insurer, an inspection taking place and an invoice being prepared in those circumstances.
A side issue, in relation to the claim being for special damages, not general damages. The claimant submits this is a small claim and there is a degree of latitude. I agree. Having also being referred back to Coles I think I can regard the claim as being made for general damages.
However, that argument being initially attractive, that the sum claimed is not “clearly excessive” and so the matter goes no further. However, in terms of a pretty minor repair, the difference of £600 is a big difference and so it seems to me might be clearly excessive.
I have concerns about the manner in which the evidence has been put before the Court in any event. The assessors report is not expert evidence. If there were something which allowed the Court to rely on the assessors report, the matter might be different. I look at §42 of Coles and whilst the repair charge is only evidence, it is often the best evidence. There is a point made by the Claimant; I think I am invited to speculate about the invoice because it does not refer to any cost of parts. I don’t think I am in a position to go behind the invoice. There is a paucity of evidence produced by the claimant which I am not prepared to accept. I will expand on my reasons. I take the view that the repair charge actually incurred, regardless of whether it was incurred by the claimant or the claimant’s insurer, I think it is the best evidence, having found that the estimate produced by claimant’s insurer is clearly excessive. The best evidence of the diminution in value is the repairs invoice.
Excessive repairs
Principle: If repairs are excessive, the court can investigate whether the sum exceeds the cost that the claimant would have incurred.
Case: In Turner v Dennis heard in the Port Talbot County Court the repairs that the claimant was seeking to recover were unreasonable. No clear evidence as to the diminution in value had been served. The Judge referred to paragraph 27 of Coles: only if the sum claimed is clearly excessive is the court justified in investigating whether that sum exceeds the cost that the claimant would have incurred in having the repairs carried out by a reputable repairer.
There was a stark difference of over £1,000 between the invoice and the quote provided. That amounted to a significant difference which was found to be excessive in the circumstances.
In summary, whilst insurers will have to navigate the Coles framework, repairs can be challenged successfully as demonstrated by the case examples above.
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