Keeping the details to a minimum for obvious reasons…

Friend of mine (really) has a business that is based around a specially converted van.
Van went into garage for some work, including brakes.
A day or so later the brakes failed completely. Van crashed.
Police/accident inspectors have concluded crash was caused by faulty work.
Van written off. Insurance pays out for van. Insurer claiming on garage liability insurance.

My friend has lost a lot of pre-booked work because of the van being off the road – over £10K. She wants to claim against the garage for this loss.

She’s looking for a way of doing this that doesn’t involve paying £200 per hour to a solicitor – so a “no win/no fee” option – but can’t find anything not related to personal injury.

Any ideas?

Small claims (£10K limit) would be a fallback position.

Could this not be covered by the legal cover on the insurance policy?

Got Legal cover on the policy? This’d be the time to use it

No, that’s been investigated, won’t cover this claim.

On any particular grounds?

The no win no fee crowd would probably take the job. Personal injury is just a lot more relevant to most of the population

My friend has lost a lot of pre-booked work because of the van being off the road – over £10K.

what did she do to mitigate the loss? Did she hire another van so that she could complete the work? if not, why not?

On any particular grounds?

The legal cover would probably cover the consequences of the crash and claims resulting from that, not what ‘may’ have caused it.

Even with a police report proving the cause of a brake fault could be very expensive and time consuming.

Is the damage to the van covered, and is the van being repaired?

Would her business insurance (not van insurance) cover her for the business interruption? Her business insurance may also have a legal helpline for just these sort of cases.

what did she do to mitigate the loss? Did she hire another van so that she could complete the work? if not, why not?

It’s a specialist van – it relies on looking like it does for the work (e.g. Weddings) Some mitigation was done for work where the looks were less important.

Would her business insurance (not van insurance) cover her for business interruption?

Good question, will find out.

Van was written off, she bought it back, rest of money from insurer (plus more) is being used to repair/restore.

Even with a police report proving the cause of a brake fault could be very expensive and time consuming.

Yep, my thinking too. Riskier than a pure personal injury claim.

It’s a specialist van – it relies on looking like it does for the work (e.g. Weddings) Some mitigation was done for work where the looks were less important.

perfect answer.

I’m guessing that the custom modifications rule out a standard van.

Business insurance would be the best route (assuming she has some).

Could you try approaching the garage insurers with evidence of brake failure, lost work, mitigation etc.. and see if they’ll settle without going to court?

No business insurance apart from public liability and van (sad face). That’s going to change now!

She’s approached the garage but had no response, hence looking at legal options.

[EDIT – 3 letters sent and visited in person too]

I would advise being very careful with no win no fee outlets. My understanding is if they were to win, the fee would take up such a high % that she would end up with very little and not have been worth bothering with.

My friend has lost a lot of pre-booked work because of the van being off the road – over £10K

How much over £10K? That’s the limit for the small claims court, so if not much over and she does not want to pay for a solicitor, would the small claims court be an option? EDIT – but see my comments below about the possible need for any court action to include both the damage to the vehicle paid by her insurers and also her loss of earnings, which would presumably be well over the £10K limit.

With regard to insurance, Business Interuption insurance is usually only for premises and their contents (not vehicles), i.e. loss of profits as a result of a shop or factory or the machinery or stock inside being destroyed by fire etc.

I presume her vehicle insurers are going to seek to recover the cost of her claim for the vehicle from the garage’s Public Liability insurers. If there is a successful recovery, that may make it much easier for her to then sue the garage for her loss of earnings, since a successful recovery for the vehicle itself beforehand would mean an admission of fault (albeit that the standard phrase ‘without prejudice’ would be used by the garage’s Public Liability insurer when paying the recovery), and I suspect the only defence against her claim would then be whether the consequential losses were – or were not – reasonably foreseeable. Given the unusual nature of the vehicle, I suspect that the garage’s Public Liability insurers would struggle to argue that the financial losses were not reasonably foreseeable, since the commercial purpose of the vehicle would have been obvious to the garage when they took custody of the vehicle and worked on it.

Maybe one of the lawyers on the forum might be able to point her towards some similar case law, which she can use/quote.

It’s possible that her vehicle insurers may not seek a recovery, although I suspect that is unlikely (so called knock for knock agreements between insurers used to be a lot more common). I suggest she speaks to her insurers and asks what they are planning to do and to be kept informed. If the garage/their Public Liability insurers deny liability outright, then it will be more complicated. In such circumstances, if it goes all the way to court, then she and her vehicle insurer will need to liase closely, because only one court action will be permitted. This is because her vehicle insurer would have to sue the garage in HER name (in the technical jargon, because they have paid for the vehicle, her insurer ‘subrogates’ her right to recover from the garage). However, if she also has uninsured losses such as the loss of earnings and/or excess, then they need to be included in the claim submitted to the court, since any court award will be in full and final settlement of the damage/losses suffered by her (including the payment by her vehicle insurers), and she would not be able to submit a separate claim of her own later for the loss of earnings. Hopefully it will never need to go to court, and she will instead be able to agree a settlement with the garage’s liability insurers.

Thanks slowster – slightly more info:

“insurance are calling it a third party fault so are reclaiming the damages from them (insurance and police engineers concluded that it was the garages fault)”

That’s a great point about waiting for successful recovery of the van claim, or liaising with the insurers if it does need to go to court – I suspect it won’t as the overall payout for the vehicle is only £9K hence not much room for legal fees vs risk of loss in there.

Keeping the claim under the £10K SCC cap is probably the best option at the moment.

She can claim – my accident in 2014 is still going through the courts.
Loss of earnings is in there due to the admittance of liability from the third party along with uninsured losses like hotel, holiday, phone calls, etc.
The police report in her case deals with that.
Its a “direct loss” and as such attributable to them.
It may end up being a “without prejudice” payout from their insurers BUT they will be expecting it no doubt.
Don’t let her be fobbed off – her insurance will have it in place and its odd they haven’t had their own chasers/claims handlers calling her considering they’re already going after them for their costs.

“insurance are calling it a third party fault so are reclaiming the damages from them (insurance and police engineers concluded that it was the garages fault)”

On the face of it, with that technical expert evidence, the garage and their Public Liability insurer don’t have a leg to stand on as far as being negligent/at fault is concerned, so it’s all question of what uninsured losses can legitimately be claimed, including loss of earnings, excess, and any personal/business property damaged inside the vehicle etc. On that note, I am not suggesting fabricating or fraudulently claiming, but the accident must have been a frightening experience if it involved complete brake failure, and it’s possible that she may experience some adverse effects as a result which might not even manifest themselves immediately, so at this early stage I would not completely rule out including nervous shock or other personal injury in the claim. Hopefully she is fine and can quickly put it all behind her, but in the unlikely extreme event that she started to suffer effects which made it difficult/impossible to drive, then the loss of earnings due to no vehicle for a short period would pale into insignificance. Fraudulent personal injury claims are a blight on the whole motor insurance industry, but genuine nervous shock type injuries do occur and should be claimed for (but if the effects are very serious, then solicitors should be involved).

That’s a great point about waiting for successful recovery of the van claim, or liaising with the insurers if it does need to go to court – I suspect it won’t as the overall payout for the vehicle is only £9K hence not much room for legal fees vs risk of loss in there.

Keeping the claim under the £10K SCC cap is probably the best option at the moment.

If her vehicle insurers make a recovery without going to court, then I suspect that the amount of that recovery would not be deducted from the £10K small claims court limit, but she should not instigate any such action without checking with her own insurers first given my comments above about only one court action by her and her insurers being permitted.

I can’t see how she will claim for loss of earnings. The garage have paid out to the insurance company for the loss of the van. That is all settled successfully.
What was stopping her from hiring a van to complete the £10K of business. This would have been covered as part of the insurance claim and allowed her to carry on working but not the earnings as nothing was stopping her from doing her job.

The vehicle is specific to her business – without it she can’t operate her business in its correct capacity.
Therefore she can claim for loss of earnings due to the third parties negligence.
Without their negligence – she would not have lost anything so they are wholly and directly to blame.

The garage’s insurers have/will pay out to her insurers.
Her insurers will pay out to her.
The garage may be chased by their own insurers for recompense due to negligence (may – depends on their terms of business).

She is well within her rights to go after the garage for loss of earnings, damage to items, personal belongings, etc. The “uninsured loss” element that many policies don’t cover which are often what the claims handlers/ambo chasers are used for.
Most will work “no win no fee” with a cap on the max % and an insurance policy to cover the event.

What was stopping her from hiring a van to complete the £10K of business

You can’t hire these, as I explained earlier in the thread. A good analogy would be a custom stretch Hummer for a wedding. If you booked one of these you wouldn’t accept a normal limo as a replacement, you’d go elsewhere.

30 years ago i was quite good at contract law, (that made me feel old) there was a case on this very point it is about remoteness of loss , ie if the consequences of breach of contract /negligence are obvious the person at fault is liable so if i don’t fix these brakes right the van will crash and be damaged liable for the damage , if the loss is too remote then not liable ie if i don’t fix these brakes the van will crash on the way to the airport the owner will miss their flight and not negotiate their part in a movie so never get the part in the blockbuster . if the damage is remote then the person at fault is only liable if they were specifically aware of the consequence , i suspect the garage did know a custom wedding van was part of a business that would need it so i think she would be “in with a shout” in a civil claim.
cant imagine any one touching it on no win no fee though , small claims would be the way to go , her insurers will ignore till you get serious she needs to be clear to her insurers etc not to settle in full and final on her behalf on their end of things.

Ta everyone. It’s very obvious that it’s a vehicle that is for a business and is essential to the operation of the business, heavily customised.

The owner is watching this thread and is very grateful for all the input, discussion and advice! Once again STW comes up trumps.

http://uk.practicallaw.com/4-107-7138
Should give an idea of the concept ,
Ninfan’s bit above was duty to mitigate loss , you have to do what you can to reduce avoid your losses not just sit back and let the world to go pair shaped because it’s their fault and expect them to pay.

Crankboy, you are a lawyer and I’m not, but you referred to ‘contract law’. Whilst there has been breach of contract in this case (failure to repair the vehicle and return it to the owner in roadworthy condition, which would presumably be an implied/unwritten term of the contract), I suspect that the contract/normal written terms and conditions that the garage asks customers to sign/accept specifically excludes liability for consequential losses, something which is fairly common in contracts. I would expect therefore that the claim would need to be based on negligence/breach of duty of care (something for which the garage cannot exclude liability), for which the test of reasonable foreseeability/remoteness applies (the test case usually quoted used to be The Wagon Mound 1). The apparently obvious nature of the commercial use of the vehicle suggests this should fairly easily pass the test of reasonable foreseeability/remoteness.

If beej’s friend’s case goes to court, a solicitor would need to make sure they based the claim on the most appropriate parts of civil law (contract or negligence etc.), but I would hope that there would be no need for a lay person to do that in the small claims court. I would hope that it would not even come to that, i.e. the garage’s Public Liability insurer claims handler was competent enough to be able to recognise that they would likely lose any court case, and decide that the best and cheapest thing to do would be to accept liability for loss of earnings, and enter into negotiations with beej’s friend to determine quantum. She needs to be able to demonstrate to the insurer that she did her best to mitigate the loss with a hired vehicle, and show evidence of the earnings that she nevethless still lost despite the mitigation.

Unfortunately, how the garage’s Public Liability insurer responds may simply be down to the luck of the draw between different insurers and their employees. However, the Woolf Reforms which govern how insurers must deal with liability claims, will help beej’s friend, because if the insurer attempts to repudiate her claim, it must explain the grounds for doing so in its repudiation, i.e. it cannot just say that it considers the garage not liable and refuse to engage with her any further unless she issues a writ. So, for example, if it says to her that the garage is not liable because consequential losses are excluded in the terms and conditions, she can respond that the claim is for negligence/breach of duty of care, and the insurer must respond to that.

At the end of the day, the case sounds relatively straightforward, and I would hope that the garage’s Public Liability insurers don’t try and play games, and instead enter into negotiation with beej’s friend in good faith.

Yep I’m a lawyer but my civil law is way out of date as I hope I made clear above. The issue here is both contract and negligence any claim could and should plead both nowt wrong with that and there is a massive overlap in the concept of remoteness which is common to both , see my link above. I have yet signed a contract with a garage for work on a car nor have I ever been aware of any terms seeking to exclude liability.
Why do you think a garage can’t exclude liability for negligence ? Genuine question . my detailed knowledge ends with the unfair contract terms act which says you can’t exclude liability for death or personal injury , not economic loss . ( I’m still using memory not google )

I have yet signed a contract with a garage for work on a car nor have I ever been aware of any terms seeking to exclude liability.

When I’ve taken a car in for service etc., I’ve usually been asked to sign a form, which I have never bothered to read. It would not surprise me if that form contained either the garage’s usual terms and conditions (e.g. on the reverse in hard to read small grey print) or referred to those terms and conditions being available elsewhere. However, I admit I am guessing when it comes to garages, but when I do bother to read the small print of consumer contracts, there is usually an exclusion of consequential losses. This is not surprising given that consequential losses can be so unpredictable and large.

Regarding the ability to exclude liability for breach of duty of care, I am much less up to date than you on civil law, and confess that I did simply assume that the Unfair Contract Terms Act or similar would prevent a ‘get out’ in such a blatant case as this one. Having looked at the Act, I think I’m right:

Avoidence of liability for negligence, breach of contract, etc.
2 Negligence liability.

(1)A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.

(2)In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness.

(3)Where a contract term or notice purports to exclude or restrict liability for negligence a person’s agreement to or awareness of it is not of itself to be taken as indicating his voluntary acceptance of any risk.

[F3(4)This section does not apply to—

(a)a term in a consumer contract, or

(b)a notice to the extent that it is a consumer notice,

(but see the provision made about such contracts and notices in sections 62 and 65 of the Consumer Rights Act 2015).]

I can only offer a lay person’s view of such ‘reasonableness’, and the final arbiter would be a judge, but it seems to me that it might be reasonable for the garage to rely on such an exclusion if, say, they had damaged the vehicle accidentally while in their custody, and as a result it would take a week longer to repair it, resulting in a week’s loss of earnings for beej’s friend. In contrast, to return the vehicle in a potentially lethal condition which resulted in an accident which destroyed the vehicle, does not seem to me to pass the test of reasonableness to allow any such exclusion of liability to stand, but maybe you or others can advise better.

NB I don’t know if the Consumer Rights Act would apply, given that the vehicle was a commercial vehicle and not a private car, but even if it did, I would expect the Consumer Rights Act would give even greater protection to beej’s friend than the Unfair Contract Terms Act.

It’s all snails and ginger beer, crankboy.

Stoner Donahue and Stevenson lost on appeal .
Slowster there is an issue as to whether terms in hard to read small print not drawn to your attention form part of a contract.
Reasonableness in the act makes direct reference to who could reasonably insure against the loss so here a commercial customer knows their own business and can more sensibly and practically insure than a garage fixing a van .
The fact we can find stuff to debate in this supports the idea that the Ops friend has a claim , once she can make an argument that has a sensible chance of winning the insurers may well seek to settle .

Donahue and Stevenson lost on appeal

I must update my reference books then 😉

Reasonableness in the act makes direct reference to who could reasonably insure against the loss so here a commercial customer knows their own business and can more sensibly and practically insure than a garage fixing a van .

Yes, my lay person’s assumption of what constitutes reasonableness was wrong, i.e. the extent of the negligence is irrelevent. As you indicate, the Act itself has a list of various guideline criteria for reasonableness, and test cases have also included emphasis on whether either party could have obtained insurance against the loss. As you say, the van owner is best placed to know how badly she would be affected by loss of the vehicle, and to decide what insurance cover she needed.

However, the vehicle has a very particular/unusual commercial function, and it may be that such cover for loss of use is not available, or if it is, that it is a very niche market and expensive. I guess the equivalent might be something like a burger van, and a quick Google of a couple of specialists offering motor insurance for burger vans makes no mention of any loss of use extension being available to purchase. (Frankly, that does not surprise me: quantifying a loss of use claim for a burger van business is probably going to be extremely troublesome for a loss adjuster, given that it is a cash based business [cough] and earnings may be difficult to predict even based on past accounts, e.g. event, pitch and weather dependent.) Beej’s friend’s business sounds even more niche, in which case loss of use insurance cover is probably even less likely to be available. In contrast, Public Liability insurance for garages is routine.

Also as you say, if there is an exclusion for consequential losses but it is buried in hard to read small print and not drawn to her attention, then the garage/their insurer may not be able to enforce it.

Overall, it seems that a decision about whether an exclusion of liability for consequential losses would be valid may not be straightforward.

If I were beej’s friend I would keep hold of any paperwork supplied by the garage and check to see if it has an exclusion for consequential losses caused by their negligence. I would also write to the garage and advise them that I intended to claim for loss of earnings etc., and ask them to forward the letter/email to their insurer and ask them to contact her. I would do this to trigger the requirements in the Woolf Reforms/pre-action protocols for the insurer to acknowledge receipt of the communication and – if they intend to repudiate liability on behalf of the garage – to have to give their grounds for doing so. This should establish fairly quickly if the insurer is going to seek to rely on any exclusion for conseqential losses.

stoner lost on appeal was a gloss to convey the point, from memory they won on a preliminary appeal on the issue is there a duty of care which is where we get lord Stevensons(?) neighbour principle from , the case was sent back to the trial crt where they then lost on the factual issue was there a breach of that duty , Still working off 30 year old memory (to cover myself if it was not stevenson) if i can be bothered and finish preping my paying work i’ll google the accurate answer later.

obvious edit Lord Atkin i looked it up it was bugging me.

2nd edit went back for retrial claimant died estate settled out of court so my lecturer or my memory may be wrong on the lost point, source wiki.

Once again, ta for the advice. She’s been reading the responses and has gone back to her insurer requesting to be kept informed of their progress. Small claims is probably the way she’ll go.

She’s so impressed by the info she might even join STW… I’ll have to warn her properly.

She might want to lurk and read a little more first so she really knows what she’d be letting herself in for….