Brown & Davis Ltd v Galbraith
[1972] 3 Aller 31(Judgment by: Sachs LJ)
Brown & Davis Ltd v
Galbraith
Judges:
Sachs JBuckley J
Cairns LJJ
Case References:
Charnock v Liverpool Corpn - [1968] 3 All ER 473
Cooter & Green Ltd v Tyrrell - [1962] 2 Lloyd's Rep 377
Davis (Godfrey) Ltd v Culling - [1962] 2 Lloyd's Rep 349
Reigate v Union Manufacturing Co (Ramsbottom) Ltd - [1918] 1 KB 592
Judgment date: 26 April 1972
Judgment by:
Sachs LJ
Any decision in this type of case must necessarily depend on the facts established in evidence. In general however, in those everyday transactions, there must be thousands each week, when, on a car owner bringing his damaged car to a repairer for repairs, which in practice will be paid for by the insurers, and the insurers are then brought into the negotiations, the resulting arrangements produce an agreement which in law is properly termed a tripartite agreement. I prefer that term to 'two separate agreements' although in the present case, as indeed in most cases, it makes no difference which terminology is used.
That tripartite agreement is one to which there are three parties, the owner, the repairer and the insurers, and each can acquire rights and each can come under obligations. As in practice there is on such occasions hardly ever any overall agreement in writing, it follows that the rights and obligations of each party have to be gathered from such documents as are put in evidence and from the implications to be drawn from the circumstances of the case as a whole. In the end one looks at the position as if the three parties were round a table and then applies the Reigate v Union Manufacturing Co (Ramsbottom) Ltd tests for any matter which does not appear from the documents before the court.
In the present case it was clear from the outset, almost as soon as the car came into the plaintiffs' hands, that the insurers were treating the main charge for the repairs as being something for which they would pay. That state of affairs is one which is very common and I only pause to add that there was no suggestion at the time or later that for any reason the insurers might repudiate liability to the insured, in which case a quite different position would result. This is, thus, one of those commonplace cases where the objective of getting the repairs done and paid for can be achieved in one of several ways, as mentioned by Donovan LJ in Cooter & Green Ltd v Tyrrell ([1962] 2 Lloyd's Rep 377 at 383). There further developed in the present case the very common situation where the insurers clearly intended to provide the money and take over the arrangements as to what was to be paid and how it was to be paid as regards the main sum involved. The insurance company were very much, as is general in these matters, masters of the situation. They had that control which was emphasised by Pearson LJ in Cooter & Green Ltd v Tyrrell ([1962] 2 Lloyd's Rep at 386). On the other hand there were some minor sums for which the owner only could be liable.
It is against that background that we have to look at the stock position that arises where any charge to be made by the repairers may fall into two categories: first, the main account, ie those sums which the insurers consider to be covered by their policy; and secondly, the minor account which is constituted by those items not so covered, such as an excess or towing charges. On the facts of the present case there had to be considered by the learned county court judge the question as to who, under this particular tripartite agreement, became liable, first, for the main account, secondly, for the minor account, and thirdly for any default in doing the repairs in a proper and workmanlike way and within a reasonable time. There is no appeal from his findings as regards either of the second two matters. Thus there is no challenge that as regards the minor account credit was given to the defendant, and liability for that account was accepted by him.
Turning then to the main account, it is apt to bear in mind, that in most circumstances when there is any issue as to which of two potentially liable persons becomes primarily liable, a vital factor to be taken into account is: 'To whom was credit given?' That is a factor which appears to me to have been taken into account by Pearson LJ in Godfrey Davis Ltd v Culling ([1962] 2 Lloyd's Rep 349 at 355). A person is normally held primarily liable if it is recognised that credit has been given to him and he has accepted it. The repairs in this case were only put in hand after there had been received by the plaintiffs the document of 21 July sent on behalf of the Vehicle & General Insurance Co Ltd which was quite obviously regarded as the order to go ahead; it was on that date, in my judgment, that the tripartite agreement came into effect. If it was not in law a tripartite agreement, then it would be my view that two parallel contracts come into effect.
As regards that date, we have the evidence, already referred to by Cairns LJ, coming from the plaintiffs themselves that:
'As far as we were concerned, we were dealing with the insurance assessor. The insurance company were going to meet the claim and the defendant to meet the excess and balance of towing.'
That passage in the cross-examination is of itself almost conclusive evidence as to who was being given credit and, having regard to the contents of the 21 July document, to the acceptance of liability. The giving of credit is moreover borne out by the way an invoice for a major account was rendered and the acceptance of liability by the subsequent correspondence as well as by that document of 21 July itself. Clearly the insurers undertook direct primary liability for the main account.
It is perhaps appropriate to refer to the great advantage repairers gain by this view being taken, it being well known that many repairs involve the payment of large sums well beyond the means of the owners. Emphasising that, I am in no way suggesting anything against the present defendant; it is well known that in this world as it exists today there are always to be found owners sufficiently slippery to get a car out of the hands of the repairers and then sell it. Whether or not they are then made bankrupt, they may well not even be worth making bankrupt, such a situation would involve great difficulties for repairers if the courts regarded the transaction in a different way. This aspect of the matter is fully covered in the two judgments of Pearson LJ in Cooter & Green Ltd v Tyrrell and Godfrey Davis Ltd v Culling ([1962] 2 Lloyd's Rep at 355), where the question of the good business sense of the transaction in relation to there being a direct contractual liability on the part of the insurers is pointed out.
Now I turn to the attempts made in the instant case to assert some form of secondary or collateral liability on the part of the owner. Agency for the owner on the part of the insurance company is a suggestion that was exploded in the authorities already cited and has not been revived in the instant case. Next, if it be suggested that there is some secondary liability by way of guarantee and indemnity I would only say that this would seem a slightly bizarre suggestion, for it would envisage a car owner being by necessary implication someone regarded as a guarantor that Lloyd's or a big insurance company would fulfil its obligations, or by a similar implication as giving an indemnity if they did not. That is wholly unrealistic and need not be further considered.
There only remains the question whether a collateral primary obligation can be inferred. On the present case, on the footing that contractual liability came into being on 21 July, that occurred at a time by which those documents which had come into existence, coupled with the activities of the insurance company's examining assessors and other factors, made it perfectly plain that the insurance company was accepting liability for the major account, and I can find nothing from which it should be implied that there was any necessary implication that the defendant had a similar liability. Everything points the other way.
It only remains to add one matter. The facts in the instant case appear to me to be clearly parallel to those in the Godfrey Davis case of 1962. To my mind, there is nothing in the Charnock case judgments which can be said to be intended to controvert the principles applied in either of the 1962 cases (Ie Cooter & Green Ltd v Tyrell ([1962] 2 Lloyd's Rep 377) and Geoffrey Davis Ltd v Culling [1962] 2 Lloyd's Rep 349). Moreover, if anything can be found that could be construed as contradicting those principles, it would be obiter and it would not be for us to follow it. For the reasons which I have just given, and those given by Buckley and Cairns LJJ with which I entirely agree, I too would allow the appeal.