Highways England claims post-Cardiff

In late autumn, the Designated Civil Judge in the County Court at Cardiff handed down his judgment on two consolidated cases which those dealing with Highways England (HE) claims had been waiting on for many months. The decision broadly ends any technical challenges to HE’s right to claim but fails to assist with the equally difficult question of quantum.

Background

HE “owns” the roads and adjacent street furniture across most of the UK’s road network. When damaged in an accident, the negligent driver, or the MIB, if applicable, will usually face a claim for the cost of repairs. 

So why have such claims become so bitterly contested in recent years?

The problem many insurers and the MIB have had with such claims is that neither could be satisfied (a) that HE had suffered a loss at all/had a right to claim, or (b) that the sums claimed were ‘reasonable’. 

A loss suffered/right to claim

Each of the dozen or so areas of the UK road network has an appointed maintenance contractor that receives a lump sum payment of hundreds of millions of pounds over several years for undertaking ALL maintenance and repair works costing less than £10,000, with larger projects being invoiced outside the lump sum scheme.  

That arrangement, however, ignored the fact that some damage would be caused by negligent drivers, who should be required to pay. HE and its contractors therefore put in place arrangements which allowed for the contractor, in the name of HE, to claim sub-£10,000 repair costs from the negligent drivers, or MIB, on top of the lump sum. This included an agreement that if the contractor failed with such a claim, the invoice created for the purposes of that claim would not be paid by HE; the contractor being deemed paid by the lump sum. 

Insurers queried the impact of HE not having to pay the claim invoice.

Is the sum claimed reasonable?

With the contractor having agreed a lump sum for ALL sub-£10,000 repairs, there is no schedule of prices for such work; as there doesn’t need to be. So, insurers and the MIB asked how the figure claimed in the ‘claim invoice’ was reached and how could they be sure that it was reasonable?  

The Cardiff cases

As sub-£10,000 cases proceed in the small claims track - with limited interrogation – insurers demanded court help. In an attempt to assist, the DCJ for South Wales, His Honour Judge Harrison, pulled dozens of cases before him in 2019 and picked three - which became two - ‘test cases’ to interrogate fully. The conjoined hearing of HE v Tesco Underwriting Ltd and HE v Jonathan Martyn Booth sought to determine:

1. Was the agreement between HE and its contractor legitimate? Indeed, does HE suffer any loss when it claims for the ‘claim invoice’ when the contractor has already been paid by the lump sum and will not be paid if the claim fails?
2. If HE’s claim is legitimate, how much can HE claim?

The first question effectively disappeared during the hearing as all parties accepted that the right to claim followed the well-established diminution principles reasserted in Coles v Hetherton. HE can claim for the reduction in value of its chattels, irrespective of how much it pays for those losses, how it pays or indeed whether it pays.

In answering the second, the judge felt that no more was required than to reiterate Coles – that what can be claimed is what is reasonable but by doing little more than that, he failed to appreciate the differences between Coles and HE claims and so failed to assist those still dealing with the latter.

Coles claims v HE claims

Coles re-asserted the diminution principle but it also gave implicit but important instruction on evidence by stating that a claimant pursuing a vehicle repair claim must only show that the value of the claim is ‘reasonable’. In our view this was fair in Coles as the judge knew that vehicle repair claims are underpinned by expert evidence in almost every case. 

Moreover, Coles was aimed at the motor insurance industry and the court recognised that, beyond expert evidence, ‘insurers having the requisite experience to judge whether the repair costs for the type of damage suffered appeared acceptable’. With its comment that ‘Only if the sum claimed appears to be clearly excessive will the court be justified in investigating’ the Court of Appeal in Coles was saying that if, despite an engineer assessing the repairs needed and an experienced insurer having reviewed the claim it still seemed high, then we can look again. 

The same cannot be said about HE claims. An expert does not assess repairs needed or cost thereof and insurers do not have the knowledge and experience they have of vehicle repair claims.

Comment

HE will inevitably quote the Cardiff cases going forward and say to insurers that these claims are to be ‘considered’ in the same way as Coles, i.e. that the sum claimed is ‘reasonable’ and not ‘clearly excessive’ and so should be paid in full. But reasonableness is surely not self-proving. As these claims continue to be dealt with chiefly on the small claims track, insurers face the same evidential difficulties as they did pre-Cardiff. Any contest to these claims begins with putting HE on notice that reasonableness is not accepted or implicit and by then obtaining your own expert opinion on the claim presented.