Restitution
front page

What's new?

Archive front page

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2007

2006

2008

2009

Today the HL gave judgment in Dimond v Lovell, available at

<http://www.publications.parliament.uk/pa/ld199900/ldjudgmt/ jd000511/ dimond-1.htm>

The plaintiff's car was damaged by the defendant's negligence. The plaintiff hired a replacement car under an agreement ("accident hire") by which she did not have to pay but rather the hire company would recover the contract price from the defendant, by suing in the plaintiff's name. It was held that the agreement between plaintiff and hire company was unenforceable under the Consumer Credit Act 1974. In those circumstances, the plaintiff (ie the hire company suing in the plaintiff's name) was said not to be unjustly enriched:

"The real difficulty, as it seems to me, is that to treat Mrs. Dimond as having been unjustly enriched would be inconsistent with the purpose of section 61(1). Parliament intended that if a consumer credit agreement was improperly executed, then subject to the enforcement powers of the court, the debtor should not have to pay. This meant that Parliament contemplated that he might be enriched and I do not see how it is open to the court to say that this consequence is unjust and should be reversed by a remedy at common law: compare Orakpo v. Manson Investments Ltd. [1978] A.C. 95."

The Hunt v. Severs principle (which allows a plaintiff to recover damages measured by the value of care gratuitously provided by eg a family member, to be held on trust for that other) could not apply here:

"The House treated the two cases mentioned by Lord Reid in Parry v. Cleaver [1970] A.C.1, 14 ("the fruits of insurance which the plaintiff himself has provided" and "the fruits of the benevolence of third parties") as "apparent exceptions to the rule against double recovery" founded on the special considerations of policy which Lord Reid had explained: see Lord Bridge of Harwich, at p. 358. The House declined to create another exception for the case in which, as in Donnelly v. Joyce [1974] Q.B. 454, the plaintiff claims compensation for the reasonable cost of necessary services which have in fact been provided voluntarily by a third party. It decided that in such a case damages cannot be recovered for the plaintiff's own benefit. He can sue only if he claims as trustee for the person who provided the services: see p. 363.

This case is of course far away from the gratuitous provision of services (usually by a relative) which was considered suitable for recovery as trustee in Hunt v. Severs [1994] 2 A.C. 350. If Mrs. Dimond is allowed to sue Mr. Lovell as trustee for 1st Automotive, the effect will be to confer legal rights upon 1st Automotive by virtue of an agreement which the Act of 1974 has declared to be unenforceable. This would be contrary to the intention of the Act. The only way, therefore, in which Mrs. Dimond could recover damages for the notional cost of hiring a car which she has actually had for free is if your Lordships were willing to create another exception to the rule against double recovery. I can see no basis for doing so. The policy of the Act of 1974 is to penalise 1st Automotive for not entering into a properly executed agreement. A consequence is often to confer a benefit upon the debtor, but that is a consequence rather than the primary purpose. There is no reason of policy why the law should insist that Mrs. Dimond should be able to retain that benefit and make a double recovery rather than that it should reduce the liability of Mr. Lovell's insurers."

Obiter, but (as I count the heads) by a majority, it was said that even if the agreement had been enforceable, the plaintiff could have recovered only what a "normal" hirer would have charged, not the contractual rate set out in her agreement with the hire company (which is higher than normal because of the commercial risks involved). This point was of great importance to the accident hire trade because it would arise had the agreement been better drafted, and is the reason why there was an appeal to the HL over a sum of £346. In other words, this particular trade would now appear to be defunct.

L