Anthanasopoulos v Moseley [2001] NSWCA 266 | Case summary

Court of Appeal (NSW)|2001-06-04|Before: Handley JA, Beazley JA, Sully J

For the reasons given by me this question does not arise.

Question (2) 68 "Whether the learned Magistrate erred in concluding that the plaintiffs (in the Local Court proceedings) suffered any loss recoverable from the defendants."

Question (3) 69 "Whether the learned Magistrate erred in concluding that, if there was no right of subrogation on the part of NRMA, the subrogation issue was 'outside the scope of the case'."

'No'. 71 Accordingly, the summons should be dismissed with costs. 72 IPP AJA: I have had the benefit of reading the reasons for judgment to be published by Beazley JA. I agree with her Honour's reasons and conclusions. I wish merely to add some additional comments of my own. 73 The respondents established that, like many other persons in this country, they are dependent on their motor vehicles to satisfy their daily transport needs (which do not involve the earning of income or profit). All (save, as explained by Beazley JA, for Ms Van Miltenberg) were insured with NRMA. The policies of insurance in question excluded the provision of replacement vehicles in the event of the vehicles of the insured being damaged. Nevertheless, NRMA gratuitously provided replacement motor vehicles to the respondents. The respondents sought to recover the cost of hiring replacement vehicles and the learned magistrate upheld their claim. 74 The appellants argue that the magistrate erred as, according to them, the law of negligence does not recognise a claim for compensation for the expense of incurring hire charges for non-income producing vehicles. 75 Without reference to authority, this argument is unattractive. A legal system, having the result for which the appellants contend, would, as Lord Nicholls remarked in Dimond v Lovell [2000] 2 WLR 1121 at 1125, "be sadly deficient", as it would not "reflect the practicalities of the situation". As Beazley JA has demonstrated, however, our law does indeed respond to the community's need in this respect. 76 Her Honour has traced the line of cases since The Owners of No 7 Steam Sand Pump Dredger v The Owners SS "Greta Holme" [1897] AC 596 which establishes a plaintiff's right to damages for the loss of use of a non-income producing chattel. One of those cases, Admiralty Commissioners v SS Susquehanna [1926] AC 655, concerned damage to an oil tanker that would not have been chartered during the period that it was being repaired. The vessel "was not a ship of the kind which could secure commercial employment and earn consequent reward" (per Viscount Dunedin at 659). The House of Lords, following the Greta Holme, The Mediana [1900] AC 113 at 117-118 and Admiralty Commissioners v SS Chekiang [1926] AC 637, held that the claim was for general damage (and not special damage - see in particular at 667) and damages were payable. Lord Blanesburgh, in particular, made it plain that the decision was based not on some principle peculiar to Admiralty law but rested on the general principles of the common law. 77 Recently, in Dimond v Lovell, Lord Hobhouse at 1139 to 1140 accepted that where the chattel is non-income earning (as was Mrs Dimond's car) "there may still be scope for awarding general damages for loss of use". He, too, accepted that this followed from the general principles of the common law. 78 In the course of argument on appeal there was much discussion as to whether there was a relevant similarity between the respondents' claims for damages for loss of use of their vehicles and Griffiths v Kerkemeyer (1977) 139 CLR 161 claims by injured plaintiffs in personal injury actions. 79 It is now well-established that the true basis of claims that fall into the latter category is the need of the plaintiff for such services, not the actual financial loss suffered by the plaintiff: Van Gervan v Fenton (1992) 175 CLR 327; Grincelis v House (2001) 201 CLR 321 at 327 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. The fact that the services are provided gratuitously does not affect the characterisation of the damages in question. The gratuitous nature of the services merely points up the fact that damages in respect thereof are based on need and not on actual financial loss, and also raises the question whether such services are to be regarded as res inter alios acta. 80 In my opinion, the true basis of claims for damages for injury to a non-income producing chattel is also based on need. In the Greta Holme line of cases, the plaintiffs were held, generally, to be entitled to damages based on the cost (including the capital cost) of keeping and maintaining the damaged vessels while they were being repaired. Underlying the measure of damages so adopted is the owner's need to keep (or replace) the damaged chattel during the period while it is being repaired and cannot be used. 81 Accordingly, in my view, as claims for damages to a non-income producing chattel and claims of the Griffiths v Kerkemeyer category are both based on need, the latter category of cases provides additional support for the proposition that the respondents are entitled to damages against the appellants. 82 In Griffiths v Kerkemeyer Stephen J (at 179) observed that, in the area of the law he was then considering, there is no substantive significance in the distinction between special and general damages. His Honour said: "[I]f a plaintiff's accident-caused need is the loss to be compensated, the reasonable cost of satisfying that need being only a means of quantifying the damages to be awarded, the distinction between these two kinds of damages becomes unreal. Apart from the use of special damage to describe that which a plaintiff must suffer in torts not actionable per se if he is to have a remedy and to distinguish, in contract, between losses arising naturally from breach and other losses, the term seems to serve little other useful purpose."

In Kars v Kars (1996) 187 CLR 354 Dawson J at 359 reiterated these remarks. 83 Whatever the nomenclature to be attributed to the nature of damages represented by a plaintiff's need for services, the damages in question are not to be determined by reference to the actual cost to the plaintiff of having the care or services provided, or by reference to the income foregone by the provider of the services, but, generally, by reference to the market cost of providing them: Grincelis v House (2001) 201 CLR 321 at 327 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Van Gervan v Fenton (1992) 175 CLR 327. 84 Similarly, in my opinion, in the case of claims for damages for injury to a non-income producing chattel, there is also no substantive significance in the distinction between special and general damages. Where, by reason of need, the plaintiff is required to hire a replacement chattel, the damages are to be measured by reference to the market rate of hiring the replacement: cf The Greta Holme at 605 per Lord Herschell; Dimond v Lovell at 1140 per Lord Hobhouse. 85 I now turn to the relevance of the fact that the need of the respondent in each case was satisfied by the gratuitous provision of a replacement car by NRMA. 86 In The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569, Dixon CJ at 573 referred to advantages which accrue to an injured plaintiff as a result of benevolence. His Honour said that these advantages: "… are the product of a disposition in his favour intended for his enjoyment and not provided in relief of any liability in others fully to compensate him."

Therefore, such advantages are to be regarded as collateral to the damage suffered by a plaintiff. The same approach was adopted by Windeyer J at 597 to 598 in concluding that "the benefits of benevolence do not reduce damages recoverable" . In answering the question why this is so, Windeyer J stated at 598: "The most satisfying of the reasons that have been given for refusing to diminish damages because of voluntary gifts is that they are given for the benefit of the sufferer and not for the benefit of the wrongdoer."

Thus, the intent of the provider will be determinative: see also Griffiths v Kerkemeyer at 175 to 176 per Stephen J; Kars v Kars per Dawson J at 179; Redding v Lee (1983) 151 CLR 117 per Mason and Dawson JJ. 87 In Kars, in applying the principles laid down in Espagne, Dawson J said at 363: "There remains the problem whether such a test is capable of application where the benefit is in the form of gratuitous services provided by friend or relative who is the tortfeasor whose negligence caused the plaintiff's injuries which, in turn, gave rise to the need for the services. I can see no relevant distinction between a financial benefit and a benefit in the form of services …"

In my opinion, there is no relevant distinction between a financial benefit, a benefit in the form of services, and a benefit in the form of a replacement vehicle provided to the owner of a vehicle damaged by the negligence of another. 88 In the circumstances, I agree with Beazley JA that the provision of a replacement vehicle by NRMA was collateral and res inter alios acta. 89 Finally, I turn to the question of subrogation. I agree that, as the courtesy car programme was not part of the cover provided by the insurance policies in question, NRMA was not entitled to be subrogated to the rights of its insured. The magistrate held that as there was no right of subrogation on the part of NRMA, the subrogation issue was "outside the scope of the case". 90 I agree with Beazley JA that his Worship was correct in this respect. I would add however, that this consequence follows largely by reason of the omission on the part of the appellants in each case to raise subrogation as an issue at the trials of the four actions, the subject of this appeal. 91 Beazley JA has pointed out that, although the parties to each proceeding were the owners of the vehicles involved in the collisions, the cases were being prosecuted by NRMA, their insurer. NRMA was asserting that, pursuant to the doctrine of subrogation, it was entitled to recover the costs incurred in respect of the courtesy cars supplied by it. The involvement of NRMA in this way was not an issue that was raised, as an arguable defence, for consideration by the magistrate. 92 In Woodside Petroleum Development Pty Ltd v H & R - E & W Pty Ltd (1999) 20 WAR 380 I pointed out at 387 that: "Although no allegation as to the right of subrogation has to be made in the statement of claim, the defendant may raise the absence or inadequacy of that right in its defence; it is then for the insurer to justify its right to proceed in the name of the assured."

At the trial, it was perhaps open to the respondents to assert that, in reality, the cases were being brought by NRMA, and not the respondents themselves, and NRMA was not entitled to so prosecute the actions. I make no comment on the merits of such an argument, but merely point out that the issue, not having been raised at the trial, was an issue properly regarded by the magistrate as falling outside the scope of the case. ********

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Local Courts (Civil Claims) Act 1970(NSW)

CITATION : Anthanasopoulos v Moseley [2001] NSWCA 266 FILE NUMBER(S) : CA 40332/01 HEARING DATE(S) : 4 June 2001 JUDGMENT DATE : 27 August 2001

COUNSEL : Appellant: M Cashion SC/T M Thawley Respondent: R S McColl SC/K J Manion SOLICITORS : Appellant: Shaw McDonald Respondent: Smith Partners CATCHWORDS : Damages - Gratuitously provided benefit - Application of Griffiths v Kerkemeyer in cases of property damage - Subrogation LEGISLATION CITED : Local Courts (Civil Claims) Act 1970 (NSW), s 69 Griffiths v Kerkemeyer (1977) 139 CLR 161 Dimond v Lovell [2000] 2 WLR 1121 King v Victoria Insurance Co Ltd (1896) AC 250 Sydney Turf Club v Crawley [1971] 1 NSWLR 724 The Owners of No 7 Steam Sand Pump Dredger v The Owners of SS 'Greta Holme' ('The Greta Holme') [1897] AC 596 The Owners of Steamship 'Mediana' v The Owners, Master and Crew of Lightship 'Comet' ('The Mediana') [1900] AC 113 Mersey Docks & Harbour Board v Owners of the SS Marpessa ('The Marpessa') [1907] AC 241 Commissioners for Executing Office of Lord High Admiral of the United Kingdom v Owners of Steamship Chekiang [1926] AC 637 Commissioners of Executing Office of Lord High Admiral of the United Kingdom v Owners of Steamship Susquehanna [1926] AC 655 Cosemar SA v Marimarna Shipping Co Ltd [1990] 2 Lloyds Rep 323 CASES CITED: Browning v The War Office [1963] 1 QB 770 Harlow & Jones v Panex (International) Ltd [1967] 2 Lloyds Rep 509 Giles v Thompson [1994] 1 AC 142 Donnelly v Joyce [1974] QB 454 McAll v Brooks [1984] RTR 99 Hunt v Severs [1994] 2 AC 350 Kars v Kars (1996) 187 CLR 354 Van Gervan v Fenton (1992) 175 CLR 327 Grincelis v House (2000) 201 CLR 321 The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569 Redding v Lee (1983) 151 CLR 117 Woodside Petroleum Development Pty Limited v H&R - E&W Pty Limited (1999) 20 WAR 380 DECISION : Summons dismissed with costs

(ii) if not, whether the arrangement is one which, properly construed, extinguished or does not extinguish the loss. For example, it might be an arrangement reached which, properly regarded, is one which goes in mitigation of damages. 40 I do not see that this submission advances the appellants' case. In Cosemar the negligent defendant challenged the plaintiff's entitlement to certain damages, claiming there was no loss because a third party had funded the claimed expenses. The Court was required to deal with that issue and held that the third party funding was "irrelevant in law" - in other words, it was res inter alios acta. That is precisely the position here, except for the factual difference that in Cosemar the third party funding was conditional upon the plaintiff paying the charges if they were recovered from the defendants, whereas the present cases involve gratuitous payments. That factual difference does not affect the application of the principle. I must also say, that I do not see any relevance in the appellants' reference to mitigation. Mitigation, of its very nature, is not a matter which goes either to the question of entitlement to damages, which is the matter in issue here, or to extinguishment of loss. 41 The appellants next submitted that in Harlow & Jones v Panex, Roskill J concluded that an arrangement similar to that reached in Cosemar did not preclude the plaintiff from recovering the payment that had been made by the third party. Implicitly, so the argument was put by senior counsel for the appellants, Roskill J had concluded that the arrangement between the plaintiff and the third party was not res inter alios acta, that is, the arrangement could be looked at in fact to identify whether the plaintiff had truly extinguished the loss or whether the arrangement was one which contemplated repayment if the monies were recovered from the defendant. It was submitted that in the cases here there were no arrangements which required the respondents to pay to the NRMA the amount recovered, or any amount, for the hire of the courtesy car. Accordingly, the arrangement extinguished the loss. 42 In Harlow & Jones v Panex, the plaintiffs had an arrangement with the supplier of goods that the supplier would only claim storage charges for the goods the plaintiffs had contracted to sell to the defendants, if the plaintiffs recovered those charges from the defendants. The defendants had argued that such an arrangement barred the plaintiffs from recovering those costs. Roskill J said at 531: "For my part I am unable to see why. The plaintiffs have - and this was not contested - apart from any agreement with the Russian sellers, a perfectly good claim for these storage charges. Why the plaintiffs should not make an arrangement with their own sellers, 'We will claim these and hand the proceeds over to you if we recover provided you let us off it we do not', I am unable to see. Nor do I see why the existence of such an arrangement should afford the defendants a defence which they would not otherwise possess. It seems to me an eminently sensible commercial arrangement. I think the storage charges are recoverable. 43 With respect to the appellants' submission, this was a finding to the effect that the arrangement with the Russian sellers was res inter alio acta. 44 The respondents also filed further submissions. Again, no reference was made to the line of authorities referred to by the Court in argument. Rather, the Court's attention was directed to Giles v Thompson [1994] 1 AC 142, and in particular the judgment of Lord Mustill. In Giles v Thompson, the plaintiff's car had been damaged and she obtained a replacement hire vehicle. Under the hire agreement, the plaintiff was not required to pay the hire charges "until such time as damages … have been recovered from [the party at fault]". It was a term of the hiring agreement that the plaintiff permit the hiring company's solicitor to conduct the litigation against the party at fault. The initial issue which arose in that case was whether the hiring agreement was champertous and therefore unlawful. The agreement was found not to be champertous. Lord Mustill, with whom the other Law Lords agreed, then dealt with the question whether, given the terms of the hiring agreement, the plaintiff had suffered any loss for which she could recover. Lord Mustill held that there was a real liability for which the plaintiff was responsible under the hiring agreement, although suspended pending the recovery from the party at fault. He then raised the issue which was the subject of the respondent's further written submissions, stating at 166: "… I find it unnecessary to discuss the question, by no means easy, what the position would have been if the use of the substitute car really had been free; as, for example, if it had been lent by a kindly friend. To do so would require reconciliation of cases such as Harlow & Jones Ltd v Panex (International) Ltd [1967] 2 Lloyd's Rep 509, Donnelly v Joyce [1974] QB 454, McAll v Brooks [1984] R.T.R 99 and CosemarS.A v Marimarna Shipping Co Ltd [1990] 2 Lloyd's Rep 323." 45 The question raised by Lord Mustill is, of course, the very matter in issue here and senior counsel for the respondents relied on the four cases referred to by Lord Mustill as an avenue to establishing that the principles in Griffiths v Kerkemeyer apply. 46 I have already referred to Harlow & Jones v Panex and Cosemar. In Donnelly v Joyce, a case dealing with gratuitously provided services for personal injury, the court held, at 460, that the loss to the provider of such services was the plaintiff's loss for which there was an entitlement to recover. Megaw LJ, who delivered the decision of the English Court of Appeal, defined the loss as the existence of a need in the plaintiff for the service provided. He stated at 462: "Hence it does not matter, so far as the defendant's liability to the plaintiff is concerned, whether the needs have been supplied by the plaintiff out of his own pocket or by a charitable contribution to him from some other person whom we shall call the 'provider'; it does not matter, for that purpose, whether the plaintiff has a legal liability, absolute or conditional, to repay to the provider what he has received, because of the general law or because of some private agreement between himself and the provider; it does not matter whether he has a moral obligation, however ascertained or defined, so to do. The question of legal liability to reimburse the provider may be very relevant to the question of the legal right of the provider to recover from the plaintiff. That may depend on the nature of the liability imposed by the general law or the particular agreement. But it is not a matter which affects the right of the plaintiff against the wrongdoer." 47 In relation to the latter point, the court pointed out at 463: "The defendant is not a party to the contract. He knows nothing of its making. It is res inter alios acta." 48 The principle in Donnelly v Joyce was applied by the Court of Appeal in McAll v Brooks [1984] RTR 99, a case which involved property damage only. There the plaintiff held a policy of insurance negotiated by Lords Insurance Brokers Ltd. At the time of entry into the policy, the plaintiff accepted membership of a "motor club facility" offered by the broker at a small cost additional to the premium. The "benefit" conferred by membership was that if an insured's motor vehicle was off the road following an incident covered by the policy, a replacement car was made available. 49 The plaintiff had an accident and exercised his entitlement to have a replacement car. The hiring cost of the vehicle supplied under the scheme was 328 pounds, although the plaintiff was not liable to pay that amount. Lawton LJ said at 103: "… the plaintiff had a need for a replacement car. Lords Insurance Brokers satisfied that need. It is accepted that the charge of … 328 [pounds] was a reasonable charge having regard to all the circumstances. On the authority of Donnelly's case that need had to be paid for by the defendant as the wrongdoer. It follows, therefore, that there should have been, in my judgment, an award of … 328 [pounds] to the plaintiff to cover that, unless it can be said that in some way the need and the insurance broker's satisfying of it is tainted with illegality to which the plaintiff was a knowing party." 50 The question of illegality arose because of an argument that the scheme constituted an insurance business and was being carried on without approval as required by the relevant statute. Lawton LJ held that even if the scheme was tainted by illegality that did not affect the plaintiff's entitlement to recover from the defendant the "cost" of the replacement vehicle, because the plaintiff was unaware of any illegality. 51 Dillon LJ agreed, stating at 105: "The plaintiff in this case has suffered an injury which deprived him of his car for several weeks and put him in a position in which it was reasonably necessary that he should have the use of a hired car while his own was not there. That is the injury for which he is compensated by the award of damages and it is an injury to him and not to the car hire firm or the insurance brokers. What he does with his money is his business and no concern of the court." 52 Donnelly v Joyce was, of course, applied by the High Court in Griffiths v Kerkemeyer (see Stephen J at 173-5; Mason J at 192). 53 Dimond v Lovell involved a similar factual situation to Giles v Thompson. However, the hire agreement in Dimond v Lovell was held to be unenforceable under the Consumer Credit Act 1974 (UK). The plaintiff's claim for the cost of hire of the replacement vehicle was therefore held not to be recoverable. Lord Hoffman noted that in Hunt v Severs [1994] 2 AC 350, the House of Lords had rejected the broad res inter alios acta principle of Donnelly v Joyce. His Lordship stated at 1133-1134: "The House treated the two cases mentioned by Lord Reid in Parry v Cleaver [1970] Act 1, 14 ('the fruits of insurance which the plaintiff himself has provided' and 'the fruits of the benevolence of third parties') as 'apparent exceptions to the rule against double recovery' … The House declined to create another exception for the case in which, as in Donnelly v Joyce … the plaintiff claims compensation for the reasonable cost of necessary services which have in fact been provided voluntarily by a third party. It decided that in such a case damages cannot be recovered for the plaintiff's own benefit. He can sue only if he claims as trustee for the person who provided the services … This case is of course far away from the gratuitous provision of services (usually by a relative) which was considered suitable for recovery as trustee in Hunt v Severs … If Mrs Dimond is allowed to sue Mr Lovell as trustee for 1st Automotive, the effect will be to confer legal rights upon 1st Automotive by virtue of an agreement which the Act of 1974 has declared to be unenforceable. This would be contrary to the intention of the Act. The only way, therefore, in which Mrs Dimond could recover damages for the notional cost of hiring a car which she has actually had for free is if your Lordships were willing to create another exception to the rule against double recovery. I can see no basis for doing so. The policy of the Act of 1974 is to penalise 1st Automotive for not entering into a properly executed agreement. A consequence is often to confer a benefit upon the debtor, but that is a consequence rather than the primary purpose. There is no reason of policy why the law should insist that Mrs Dimond should be able to retain that benefit and make a double recovery rather than that it should reduce the liability of Mr Lovell's insurers." 54 However, Lord Hobhouse of Woodborough noted at 1139-1140 that questions of loss of use of a chattel due to another's negligence: "… have long ago received authorative answers in cases concerning ships: The Glenfinlas (Note) [1918] P. 363; The Kingsway [1918] P. 344; The London Corporation [1935] P. 70. These cases also distinguish between the cost of the damage to the chattel and consequential losses to the owner of the chattel such as loss of revenue. However even where the chattel is non profit earning (as was Mrs Dimond's car) there may still be scope for awarding general damages for loss of use: The Mediana [1900] AC 113; … Admiralty Commissioners v SS Chekiang [1926] AC 637; Admiralty Commissioners v SS Susquehanna [1926] AC 655." 55 The appellants had contended that Donnelly v Joyce upon which Griffiths v Kerkemeyer was based was no longer good law. This submission was based upon the decision of the House of Lords in Hunt v Severs where it was held that an injured person who receives damages for services gratuitously provided by a third party "should hold [those damages] on trust for the voluntary carer": per Lord Bridge of Harwich at 363. 56 The respondents submitted, however, that the four cases referred to by Lord Mustill in Giles v Thompson, including Donnelly v Joyce, "demonstrates that the principle reflected in Griffiths v Kerkemeyer is one of general application and is not confined to cases of personal injury". They relied upon the High Court's reiteration in Kars v Kars (1996) 187 CLR 354, that the principle in Griffiths v Kerkemeyer remained good law in Australia. To this must be added, of course, Van Gervan v Fenton (1992) 175 CLR 327 and Grincelis v House (2000) 201 CLR 321. 57 Further, the respondents pointed out that the High Court in Kars v Kars declined to follow Hunt v Severs, although the Court recognised that some aspects of the Griffiths v Kerkemeyer principle were unsatisfactory stating at 382: "In the end, a choice must be made as to the least unsatisfactory solution to the problem. The choice which we prefer reduces the anomalies and absurdities. It lays emphasis on the provision for the injured plaintiff's needs which is the foundation of recovery in such a case. It avoids an effective windfall to a compulsory statutory insurer, which would depend on its taking advantage of the fulfilment by a family member (who happens to be the tortfeasor) of obligations derived from duty and affection. It measures to the full the plaintiff's need for services. To the extent not already done, it requires their reflection in the premium costs of compulsory insurance levied on insureds as a whole. It reduces the risk of real injustice to a plaintiff should a court, discounting the damages for the plaintiff's needs to be fulfilled by the tortfeasor, fail adequately to take into account the vicissitudes of life which could throw the plaintiff back on others, including commercial care givers, for services no longer provided by the tortfeasor." 58 Some of those reasons are not, of course, directly applicable to the facts of the cases under consideration here. That is not, however, of particular significance as, notwithstanding that both parties tended to maintain the focus on the Griffiths v Kerkemeyer principle and the question of its application to cases of property damage, I consider that the better solution is derived from the long line of authority traceable to The Greta Holme, to the effect that injury to property which deprives a party of the use of the thing is compensable. It is irrelevant if a third party provides a substitute for the thing damaged and the principle res inter alios acta applies so as to make it irrelevant as to the basis upon which the third party provides the replacement. 59 The question of quantum is not in issue here and it is thus unnecessary for any comment to be made as to the principles which would govern the amount of damages in any given case.

Anthanasopoulos v Moseley

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