• Can I Borrow the Car? I Promise I'll Be Careful ...
  • April 30, 2013
  • Law Firm: Proskauer Rose LLP - New York Office
  • Mark Hales has driven a lot of fast cars, both as a Formula One driver and in his subsequent career as a freelance auto racing journalist. You'd think he could drive a car without ruining the engine, or so thought David Piper, also a distinguished former racing driver. But when Hales borrowed an expensive car from Piper for a photo shoot, the result was a blown engine, and an action against Hale by Piper in the High Court of Justice, Queen's Bench Division, in the UK. In January 2013, Piper won a judgment against Hales for almost £48,000 in damages for the cost of repairs to the car.

    At the center of the dispute is a replica Porsche 917 owned by Piper and valued at £1,250,000. The Porsche 917 is a racing legend; it won the 24 Hours of Le Mans race in 1970 and 1971, and was famously driven by actor Steve McQueen in the 1971 film Le Mans. (The 917 in the film was also wrecked, but that was part of the script.)

    In 2009, when Hales approached Piper about using the replica 917, a ruined engine was not part of the plan. Hales proposed to stage a comparison race with another iconic car, a Ferrari 512S owned by Pink Floyd drummer and auto racing enthusiast (and yet another legend) Nick Mason. Hales would then write an article about the race for publisher Octane Media limited. Hales agreed to pay Piper £2,000 for the use of the Porche and the services of his mechanic, and Hales arranged insurance coverage through his publisher.

    It is uncontested that on the day of the event, Piper cautioned Hale not to over rev the engine of the notoriously finicky 917, as damage might result. According to Piper, the cause of the damage was driver error: Hales failed to follow his directions and the over revving caused the blown engine. According to Hales, the over revving was caused by a mechanical defect: a defective gearbox caused the 917 to jump out of gear, despite his exercise of reasonable care and skill.

    The publisher's insurance company blew off Piper's claim. Although the insurer agreed with Hales that the cause was mechanical defect, the company pointed to an express exclusion from the policy for damages from such a cause. When Piper raced to the courthouse to seek recourse against Hales personally, Hales raised additional defenses. He claimed that Piper orally agreed that he would not hold Hales liable for any damage that might result from the use of the car. Hales further contended that, as a matter of custom in the auto racing community, the owner of the automobile assumes the risk of damage to a vehicle from driver error.

    Following a trial, the court awarded the prize for credibility to Piper, and rejected all of Hales's arguments.

    Hales's claim that Piper orally agreed to waive liability was found "highly unlikely." The court pointed to the value of the car, the benefit of the transaction running to Hales rather than Piper, and the fact that Piper had asked for assurances as to Hales's insurance coverage. On the issue of causation, the court found Piper's evidence more credible, despite a record documenting two notorious incidents involving blown engines on Porsche 917's driven by world class champion race drivers. The court concluded that these incidents were simply other instances of driver error, not evidence supporting Hales's account of a mechanical problem with the 917 gearbox. The court also found insufficient evidence to support the existence of a custom in the racing community concerning the assumption of the risk of driver error. In order to give rise to an implied term, the court found, there must be a custom that is "invariable, certain and general," not merely a "trade practice."

    At the end of the day, Hales was held liable not just for Piper's damages. Under the "English rule" or "loser pays" system, Hales was obligated to pay Piper's legal fees amounting to another £63,000.

    Following the issuance of the judgment, Hales let it be known that he had previously sold everything he owned in order to pay his attorneys, and that the judgment would drive him to bankruptcy. An outpouring of support ensued in the racing and journalist community, and a fund was created to help Hales mount an appeal. Hales appears to have decided against taking an appeal, and the fund has turned to raising money to pay the judgment.

    Hales's plight proves that once again, Shakespeare was right: "Neither a borrower nor a lender be!" Perhaps the Bard should have added, if you do become a borrower, get your waiver of liability in writing.