In West Midlands Travel Ltd v Aviva Insurance
UK Ltd [2013] EWCA the Court of Appeal ruled that the conventional
‘standing charge’ basis used for quantifying the loss of use of a commercial
vehicle was not appropriate for fleet vehicles that can be replaced by others held in reserve. Under the traditional 'standing charge' approach, the damages include a notional sum for various overheads notionally associated
with the operation of the vehicle, including even the cost of running its staff
canteen!
West Midlands operated a large
number of buses. It was unable substantiate any actual loss of profit as it always
had a number of vehicles kept in reserve.
Rather than adopt the traditional kitchen sink approach, the court decided to base its award on an amount equivalent to the interest on the notional capital value of the vehicle
plus an allowance for depreciation. This reduced the loss of use claim by two
thirds!
My full case
commentary will be published in the Autumn edition of BPILS Quarterly Update.
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