Case Update: Armstead v Royal & Sun Alliance Insurance Company Ltd (2024) UKSC 6

In tort, it is a well-established principle that a person owes a duty of care not to cause any physical damage to another person’s property. Breach of that duty can make a person liable for the loss of value suffered by the property owner.

In the recent case of Armstead v Royal & Sun Alliance Insurance Company Ltd (2024) UKSC 6, the Claimant was in a road traffic accident while driving a hire car. There was an obligation on the Claimant to return the car to the hire company in the same condition to which it was in at the start of her hire. The agreement between the Claimant and the hire company made the Claimant liable to an amount equal to the daily rental rate for up to 30 days in respect of damages for loss of use.

When the hire company sought to recover the fees for the loss of use from the Claimant for the 12 days the car was being repaired, the Claimant sought to recover the money from the negligent driver’s insurer.

At the Court of Appeal, the claim for loss of use while the car was being repaired was rejected on the basis that it was a pure economic loss and therefore not recoverable from the negligent driver.

A pure economic loss is a financial loss suffered by a person which does not relate to any physical injury to a person or property.

The road accident was not deemed to be the Claimant’s fault and as such, the Supreme Court held that the Claimant was entitled to recover damages from the negligent driver’s insurer to cover her liability to pay the hire company for the loss of use of the car whilst it was being repaired.

It was held that this loss was not irrecoverable as pure economic loss because it arose from the damage to property in the Claimant’s possession. The fact that this loss for physical damage to property arose under a contract (that between the Claimant and the hire company), is not a barrier to recover the loss, provided it was consequential on the physical damage which was caused to the property.

If you’ve had damage caused to your property as a result of a third party’s actions and you would like further information about how that person could be liable for your losses, contact our Commercial Litigation Team.