The principle of law as far as the grant of compensation is well settled. Compensation for damages suffered, especially pecuniary damages suffered by a claimant is normally “actual damages”. What is the actual damage suffered by the present claimant is the first question. Necessarily, the answer would be the actual value of spares for repairs, labour charges and other expenses like surveyor’s fee, towing expenses etc,. In Reshma Kumari v. Madan Mohan [, (2009) 13 SCC 422], Apex Court referring to Livingstone v. Rawyards Coal Co. held that grant of compensation involving an accident is within the realm of law of torts. It is based on the principle of restitutio in integrum. The said principle provides that a person entitled to damages should, as nearly as possible, get that sum of money which would put him in the same position as he would have been if he had not sustained the wrong.
On Damages (18th Edition) by Mc Gregor, the learned author after referring to observation of Greer L.J. in The London Corporation [(1935) P.70 CA at 77], has stated as under:
“The normal measure of damages is the amount by which the value of the goods damaged has been diminished. This, in the ship collision cases, has invariably been taken as the reasonable cost of repair.”
The commentary further proceeds as follows:
“In the case of goods, other than ships the cost of repair has now become established as, prima facie, the correct measure of the claimant’s loss. This has been accepted in a number of cases at first instance, (London Transport Executive v Court (1954) C.L.Y. 888 and London Transport Executive v. Foy Morgan (1955) C.L.Y. 743.) and is confirmed by Darbishire v. Warran [(1963) 1 W.L.R. 1067 CA] where it was said by Harman L.J. that “it has come to be settled that in general the measure of damage is the cost of repairing the damaged article”.[(1963) 1 W.L.R. 1067 CA at 1071] Moreover if, despite the repairs, the market value of the goods is less than before, the claimant should be entitled to such diminution in value in addition to the cost of repair. Thus in Payton v. Brooks [(1974) R.T.R. 169 CA] Roskill L.J. said:
“There are many cases… where the cost of repairs is a prima facie method of ascertaining the diminution in value. It is not, however, the only method of ascertaining the loss. In a case where the evidence justifies a finding that there has been, on top of the cost of repairs, some diminution in market value… I can see no reason why the plaintiff should be deprived of recovery under that head of damages also. [1974) R.T.R. 169 CA at 176].”
Thus in The Georgiana v. The Anglican [(1873) 21 W.R. 280] the claimant was held entitled to recover, in addition to the cost of partial repairs to a yacht which did not make her as strong and seaworthy as formerly, the amount by which the value of the partially repaired yacht was less than before the damage occurred. [Cooper v. Kirby (Harboro) (1972) C.L.Y. 810].
The cost of repair is, however, appropriate only if in the circumstances it is reasonable for the claimant to effect the repair; it might be cheaper to buy a replacement on the market and sell the damaged item for what it will fetch. (Thatcher v. Littlejohn (1978) R.T.R. 369 CA]. The cost of repair is expected to reflect the diminution in the value of the ship, or other chattel, so that, if it can be shown that the diminution in value is below, possibly well below, the cost of repair, then it may be inappropriate to award the cost of repair.”
The learned author also referred to Aerospace Publishing Ltd. v. Thames Water Utilities Ltd. [(2007) 110 Con. L.R.1 CA]. That was a case in which damage was caused on account of flooding. It was observed that while computing damages, the test is whether it is reasonable or not for the person whose item of personal property had been damaged to decide whether it should be repaired or not. If it is repaired, the cost of repair is recoverable and if not, only the diminution value is to be awarded.
The question of reasonableness of repairing has arisen in a common case of damaged motor car. In Darbishire v. Warran [(1963) 1 W.L.R.1067 CA], it was observed that if it can be proved that the cost of repair greatly exceeds the value in the market of a damaged vehicle, the repairs would be uneconomic. The court of appeal held that in such circumstances the claimant, in having the car repaired at a cost exceeding its market value instead of trying to replace it with a comparable car at the market price, had failed to mitigate his loss and was entitled to recover, not the cost of repair but only the lower market value. The relevant question is whether he had acted reasonably as between himself and the defendant in view of his duty of mitigation.
Therefore, the only factor that requires to be considered is with regard to the reasonableness of the compensation.