Lo Lee Len v Grand Interior Renovation Works Pte Ltd and Others

Belinda Ang Saw Ean J:

[1] The respondent’s motor vehicle was damaged in a road accident as a result of the appellants’ negligence. Judgment in default was entered against the four appellants. The deputy registrar assessed damages at $450 as being the policy excess and a further sum of $600 for loss of use of the respondent’s car for the time the car was in the workshop for repairs. On appeal, the district judge on 5 June 2003 affirmed the decision of the deputy registrar.

[2] On the back of the district judge’s ruling that the two items of claim are personal claims as distinct from claims brought by NTUC Insurance Co-operative Limited (“NTUC Income”) in exercise of subrogation rights, the appellants appealed against the award of damages on the ground that the respondent had suffered no recoverable loss. The appellants stress that damages are compensatory and a plaintiff who has suffered no loss cannot recover damages. It is argued that the respondent had received from his insurers collateral benefits which meet the same loss as the award of damages. Those collateral benefits are outside the two established exceptions to the rule against double recovery and they have to be taken into account to diminish any damages recoverable. A failure to account would offend the principle against double recovery.

[3] The respondent and NTUC Income entered into a quality cover in respect of the respondent’s motor vehicle, registration number SCE 5392Z. The contract was formed by the insurer’s acceptance of a proposal form duly completed by the respondent on 12 August 2000. The contract is contained in the policy, the schedule thereto and endorsement M4. The policy was renewed and still on foot on 7 December 2001. On that date, the respondent’s motor vehicle was involved in a road accident with two other vehicles. Zurich Insurance (S) Pte Ltd (“Zurich”) is the insurer of vehicles GT 4787Z and YK 6829H owned by the first and third appellants respectively. The drivers of the two vehicles were the second and fourth appellants. Although the parties to the proceedings are the owners and drivers of the vehicles involved in the road accident, counsel on both sides informed the court that insurers are behind the respective parties named in the action.

[4] The unchallenged evidence of the respondent is that he did not make a claim under his policy. After the accident, the respondent had signed a form to make a claim against the third party and had left it to his insurers to handle the matter. I find the respondent’s unchallenged evidence plausible. His car was damaged from behind and understandably he regarded himself as not being at fault and would not wish to compromise his No Claim Discount (“NCD”). A claim on the third party would leave his NCD intact. Section 3 of NTUC Income’s Key Information for Motor Policyholders of 1 October 2001 reads as follows:

[5] Section 2 of NTUC Income’s Key Information relates to the policyholder’s own damage claim. If a claim is made by the respondent on his own policy, the NCD would be reduced or withdrawn.

[6] The respondent arranged for his damaged car to be repaired by a “Quality Workshop”. In return, he was given, in lieu of a courtesy car, a taxi allowance of $50 daily on the terms of NTUC Income Agreement no A12451. The terms there were largely about the use of the courtesy car and the insured’s responsibility for it. However, section B is relevant to the taxi allowance. Section B reads:

[7] The upshot of my analysis of the evidence is that I am not required to consider at any length the earlier arguments as to whether the policy was by its terms a non-excess policy. The payment of $600 came about pursuant to s 3 of the Key Information and NTUC Income Agreement no A12451. It was not made pursuant to a term contained in endorsement M4. I was mindful that the arguments canvassed below by both parties and before me on 6 November 2003 were premised upon a claim having been made under the NTUC Income policy. I therefore gave leave to the parties to tender their further written submissions, which they did, on 3 February 2004.

[8] The position taken by counsel for the appellants, Mr Quentin Loh SC, in the further written submissions is that s 3 of the Key Information and the respondent’s evidence that he was making a third party claim would not adversely affect the arguments counsel made on 6 November 2003. He maintains that the claims for excess and loss of use were personal claims. The payments of excess and loss of use by NTUC Income were voluntary, as they were not paid under the policy. The payment of $600 transport allowance was made under the NTUC Income Agreement no A12451. The payments also fell outside the two established exceptions to the rule against double recovery. Moreover, as they were not insurance payments, no right of subrogation accrued.

[9] Counsel for the respondent, Mr Madan Assomull, maintains that the claims were made under the policy. Even if they were not, they are recoverable since the payments were res inter alios acta. There was no danger of double recovery and, in any event, the payments come within the exceptions to the rule against double recovery.

[10] Having considered the further written submissions, I remain of the view that the respondent’s evidence is on the balance of probabilities the correct version. His affidavit evidence that he sent his damaged vehicle to NTUC Income’s quality workshop pursuant to endorsement M4 cannot be right in the light of other countervailing evidence. The fact that the words “own damage” were indicated on the survey report is not conclusive one way or the other. Neither would the use of the word “excess” in the proceedings nor any misunderstanding on the part of NTUC Income in construing the respondent’s instructions make a difference to his original instructions. The evidence is that the respondent had submitted a form to make a claim against the third party and his instruction had not changed. His intention all along was to claim against the third party. How NTUC Income handled the damage claim would be of no concern to him so long as the outcome was consistent with the respondent not being the driver at fault and his NCD was not affected.

[12] The object of an award of damages is to place the injured party as nearly as possible in the same financial position as he would have been in but for the accident. The basic rule is that the respondent cannot recover more by way of damages than the amount of his actual loss. If a collateral benefit compensates for the same loss, it must be taken into account in determining the actual level of compensation required through an award of damages. The consideration here is about the deduction of compensating advantages or benefits which a plaintiff enjoyed as a result of the breach. It is not about mitigation which is to relieve the defendant from liability for those consequences which the plaintiff avoided or might reasonably have avoided. Beazley JA in Anthanasopoulos v Moseley (2001) 52 NSWLR 262 said at 269, [40]: “Mitigation, of its very nature, is not a matter which goes either to the question of entitlement to damages, which is the matter in issue here, or to extinguishment of loss.” There are two well-established exceptions to this general rule of deduction. Insurance payments and charitable gifts are deemed non-deductible. I shall consider in this appeal whether on the facts of this case, the respondent would be overcompensated by an award of damages and whether the categories of exceptions to the principle against double recovery are closed.

[15] In this case, the respondent had authorised his insurer to take proceedings to recover damages from the appellants. The respondent has also acknowledged that he is obliged to reimburse NTUC Income to the extent of his successful recovery of the moneys from the appellants. The fact that the respondent did not pay for the repairs upfront is not determinative. There is no suggestion that the outlay by NTUC Income was unlawful. For the repair expenses advanced by NTUC Income, the respondent agreed that he is at least liable to repay NTUC Income $450 of the repair bill. There is also section B of the NTUC Income Agreement no A12451 which I have earlier set out in full. The fact remains that the respondent has to account to NTUC Income for the damages he receives under the judgment. In such a situation, an award of damages for loss of use and the excess would not represent a windfall or unjust benefit since the respondent is under a legal obligation to pay it over to NTUC Income. As there is no danger of overcompensating the respondent, the principle of double recovery is thus not offended. On the evidence, there is no question of the respondent recovering his loss twice over.

[16] The rationale for that conclusion is succinctly explained by Diplock LJ in Browning v The War Office [1963] 1 QB 750 at 770:

[17] In Harlow & Jones, Ltd v Panex (International), Ltd [1967] 2 Lloyd’s Rep 509, Roskill J had to consider whether the seller could claim storage charges where there was an agreement between the sellers and suppliers that the suppliers would only claim against the sellers if the latter could reclaim against the buyers. Roskill J saw nothing legally wrong with such a commercial arrangement nor did he see that it gave rise to a defence to the buyer that it would not otherwise possess.

[18] The dicta of Diplock LJ and Roskill J were adopted by Steyn J in Cosemar SA v Marimarna Shipping Co Ltd [1990] 2 Lloyd’s Rep 323. In that case, shipowners agreed to repay voyage expenses paid by the cargo owners to the extent that they were recovered by the shipowners from the charterers in London arbitration. The shipowners there said that the agreement with cargo owners was res inter alios acta and charterers could not use that as an excuse not to pay the voyage expenses. Steyn J agreed with the shipowners. He held at 328 that:

[20] In Giles v Thompson [1994] 1 AC 142, the plaintiff’s car had been damaged and she obtained a replacement hire car. Under the hire agreement, the plaintiff was not required to pay the hire charges until such time as damages had been recovered from the party at fault. It was a term of the hiring agreement that the plaintiff would permit the hiring company’s solicitors to conduct the litigation against the party at fault. The issue there was whether the hiring agreement was champertous and therefore unlawful. The hiring agreement was found not to be champertous. Lord Mustill, with whom the other Law Lords agreed, dealt with the question whether, given the terms of the hiring agreement, the plaintiff had suffered any loss for which she could recover. Lord Mustill held that there was a real loss to the motorist. There was a real liability for which the plaintiff was responsible under the hiring agreement, although suspended pending recovery from the party at fault.

[21] The appellants say the payments for excess and loss of use were gratuitous. Moreover, they are collateral benefits that are outside the two recognised exceptions and therefore should be taken into account to deduct damages recoverable. The appellants relied on Dimond v Lovell for the proposition that the law only recognised two exceptions to the principle as to deductibility.

[22] Having reached the conclusion that the respondent would not be overcompensated by the award of damages, the issue of gratuitous benefits does not arise for determination in the present case. However, in the event a different view is taken on the conclusion that I have reached, I shall say something about the appellants’ submission on gratuitous payments in the light of the various authorities brought to my attention by Mr Loh. In the final analysis, even with this factual difference, the outcome is the same.

[23] There are two cases where the benefits were provided gratuitously by a third party. In Anthanasopoulos v Moseley, the use of the substitute car was for free. In Burdis v Livsey [2003] QB 36, repairs were carried out free of charge. I would state that there is no relevant distinction between a financial benefit and a benefit in the form of a replacement vehicle.

[24] The question of a free substitute car that was mentioned in passing by Lord Mustill in Giles v Thompson was the very matter in issue in Anthanasopoulos v Moseley. Lord Mustill, after coming to the conclusion reached by him, said at 166:

[26] In arriving at her decision, Beazley JA, with whom the other two judges agreed, sought to reconcile the cases mentioned by Lord Mustill. Her Honour pointed out that the factual difference in Cosemar was that third party funding was conditional upon the shipowners paying the voyage expenses if they recovered from the charterers whereas the cases before her involved gratuitous payments. In her view, the factual difference did not affect the application of the res inter alios acta principle, which goes towards the question of entitlement to damages or to the extinguishment of loss. I agree that if the principle applies, it does not matter whether the replacement vehicle is free or not. The finding in Cosemar and Harlow & Jones v Panex was that the arrangement under discussion was res inter alios acta.

[27] As the common law recognises that damages are recoverable for damage to non-profit earning property, the fact that the substitute car is provided gratuitously does not affect the entitlement to the damages in question. In The Mediana [1900] AC 113, a lightship owned by Mersey Docks and Harbour Board was damaged by the steamship Mediana. During the period of repair, the Board used a stand-by lightship owned by it and maintained for the purpose of being a replacement ship in the case of any such emergency. The Board was not put to extra expense. The Lord Chancellor explained the operation of the principle at 117:

[28] In The Susquehanna [1926] AC 655, Viscount Dunedin held that the owners were entitled to general damages for the loss of use of the vessel, notwithstanding they had suffered no pecuniary loss. The claim was for general, not special, damages. Lord Hobhouse in Dimond v Lovell ([19] supra) at 406 accepted that where the chattel is non-income earning (as was Mrs Dimond’s car) “there may still be scope for awarding general damages for loss of use”.

[29] On the relevance of the fact that the replacement car by NRMA was gratuitous, Ipp A-JA agreed with Beazley JA that the provision of the replacement car was collateral and res inter alios acta. He reasoned that the advantages gained by the plaintiff were the result of benevolence and benefits of benevolence are not to be taken into account to reduce damages.

[30] In Dimond v Lovell, the car hire company, 1st Automotive Ltd, argued that the fact the lessee had been fortunate enough to obtain a hire car for nothing was res inter alios acta, and hence not to be taken into account when determining the measure of damages. It had been said in Parry v Cleaver [1970] AC 1 that damages should not be reduced to take into account benefits received by a claimant “from the benevolence of his friends or relations or of the public at large”; and that benefits from insurance taken out and paid for by the claimant should also be disregarded (per Lord Reid at 14). Similarly, in Donnelly v Joyce [1974] QB 454 and McAll v Brooks [1984] RTR 99, a near universal theory was propounded to the effect that benefits provided by a third party were to be ignored when assessing the right measures of damages.

[31] The House of Lords in Hunt v Severs [1994] 2 AC 350 had rejected the broad applicability of the res inter alios acta rule, and had treated the instances described by Lord Reid as exceptions to the rule against double recovery (at 358 per Lord Bridge of Harwich). In that case, the House had accepted that the gratuitous provision of services could be recovered by the claimant acting as trustee, but Lord Hoffmann in Dimond v Lovell said that any such device in the present case would be to undermine the provisions of the UK Consumer Credit Act 1974 which had rendered the agreement unenforceable.

[33] The Court of Appeal in The Mara followed Lord Reid in Parry v Cleaver and held that there was no universal principle as to deductibility of collateral benefits at common law. Whilst various benefits accruing to an injured victim have been taken into account, others have not, and it would seem that the common law has treated this matter as one depending on justice, reasonableness and public policy. This nebulous test has been admitted by the House of Lords in Hussain v New Taplow Paper Mills Ltd [1988] AC 514 and followed in The Mara. The Court of Appeal in The Mara held that it is possible to look at the arrangement between the plaintiff and the third party to see if by its true nature, it is one which is res inter alios acta; and if not, whether it is one which goes towards the mitigation of damages.

[34] I would not consider the payments of the repair bill and taxi allowance, even if they were made gratuitously, something akin to the respondent receiving collateral compensation that meets the same loss as his award of damages, and which therefore results in double compensation. By its terms, the taxi allowance was not provided to relieve the liability of the appellants to compensate the respondent. The intention may have been to encourage the respondent to use an approved workshop for the repairs. The courtesy car or taxi allowance are nothing more than incentives. I would adopt the reasoning of Ipp A-JA which I had mentioned earlier.

[35] I now consider the situation where repairs are carried out for free. The existence of damage is an essential part of the cause of action in any claim for damages. The respondent’s car was undeniably damaged and as a matter of principle, the appellants have to satisfy the respondent for this loss. In Burdis v Livsey ([23] supra), the loss suffered was damage to property. The fact that repairs were carried out free of charge did not avoid this underlying loss. Applying the reasoning of the English Court of Appeal in Burdis v Livsey, the respondent in my view should be able to recover the $450 paid in advance by NTUC Income.

[36] In Burdis v Livsey, the English Court of Appeal upheld the plaintiff’s claim for damages for repairs despite the fact that she did not pay for the repairs and was under no legal obligation to do so as the credit repair agreement was unenforceable. The plaintiff’s car was damaged in a road accident caused by the defendant’s negligence. Rather than pay for repairs and wait for recompense from the defendant’s insurers, the plaintiff entered into a credit repair agreement with Accident Assistance Limited (“AAL”). Under this agreement, AAL paid for the repairs upfront and took responsibility for securing ultimate payment (plus interest) from the defendant’s insurer. In the event that the defendant or his insurer failed to pay AAL’s bill, the plaintiff would ultimately be liable, although in practice AAL would not enforce such payment. The repairs were effected and AAL presented the defendant’s insurers with a bill for £2,981.19. The insurers refused to pay. The credit repair agreement was contrary to the UK Consumer Credit Act 1974 and the county court judge declared the agreement unenforceable so much so that the plaintiff need not pay AAL for the repairs. The defendant was nonetheless ordered to pay the plaintiff’s damages.

[38] The appellate court held that Jones v Stroud District Council [1986] 1 WLR 1141 is still good law as it concerned direct losses. In that case, Neill LJ said at 1150–1151:

Jones v Stroud was followed in The Shravan [1999] 4 SLR 197.