Accident Damage – The hidden cost to your fleet.
Diminution in value claims, in a motor context, is the loss of value to your vehicle when you compare the value of the vehicle pre accident to post-accident value. This is often an uninsured loss and expense which is often borne by your business.
This is not a new head of damage which will be pursued in every case following a road traffic collision resulting in damage to a vehicle. This then begs the question in what circumstances is a diminution in value claim likely to succeed?
In Payton v Brooks  1 Lloyd’s Rep 241 the Court of Appeal held, in dismissing the appeal, that it was not so self-evident that a car known to have been in an accident would fetch a lower price in the market.
Although the Claimant’s diminution in value claim failed on the facts in this case it did leave open the door for future cases where a Claimant could prove that despite his best efforts to mitigate the damage caused by the defendant’s negligence, the value of his vehicle as a saleable asset had been reduced.
In the unreported case of Hussain v Dhawan (2008) the claimant’s people carrier had been damaged in a road traffic accident for which the defendant was liable. The only issue which needed to be resolved was the claim for diminution in the value of the vehicle. The vehicle had sustained non-structural damage, requiring a bumper and door to be replaced and two panels to be blended and painted. The cost of the repair was met by the defendant.
The Claimant’s expert found that the repairs were carried out satisfactorily but that due to the repairs there had been a diminution of about 10 per cent in the trade value of the vehicle. The claimant argued that he was entitled to damages in respect of the diminution in the trade value of the vehicle as assessed by his expert.
The Court in finding for the Defendant held that the purpose of claiming damages was to put a litigant back into the position in which he had started. Where a litigant had been provided with a fully and properly repaired vehicle, that provision returned him to the position in which he had started.
The Court also went on to say that the facts of the instant case were that of a normal vehicle that had sustained normal damage. That damage might have affected the condition of the vehicle but it was not such as to take its value out of the normal range of vehicle prices. If the damage sustained had been to the structure or integrity of the vehicle then the question of diminution would have arisen. There was nothing disclosed in the instant case that took it outside the norm where something had to be considered over and above the normally accepted level of repair work that had been carried out on the vehicle.
When looking at the Court of Appeal judgment and the unreported decision in the County Court it is arguable that where the accident damage leads to a diminution in value so that the resale value the vehicle is outside of the normal range of equivalently priced vehicles then a diminution claim can succeed.
In November 2012 a BT Mercedes Benz Sprinter van was involved in a road traffic collision with a third party. The third party was liable for the accident. The BT vehicle was new. Proceedings were issued and a claim for diminution was included in the Particulars of Special Damage. The third party’s insurer settled the diminution aspect of the claim at roughly two thirds of the claimed value.
Although the amounts involved in an individual claim may not significant, but if you multiple the loss per claim by the number of accidents a year in your fleet then this quickly adds up to a noticeable loss to your business. When you also add in executive vehicles, where the diminution in value will be greater, then is this a loss which your business can afford not to recover?
If you are interested in discovering more about how BT Law Limited can help you in any area of your business, please contact us now.
Telephone: 0113 382 9915.