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[2022] VSC 454
General information, not legal advice.
Supreme Court of Victoria
2022-08-11
BEACH JA
Original judgment source is linked above.
APPEAL - Magistrates' Court - Appeal to Supreme Court on question of law - Damages - Damage to motor vehicle - Consequential loss - Mitigation - Where appellant incurred costs of hiring replacement vehicle - Whether costs incurred were reasonable - Whether open to the magistrate to conclude that the appellant had not acted reasonably in minimising loss - Whether magistrate erred in applying principles relating to mitigation of damages - Reasons for decision - Whether reasons adequate.
1 On 18 August 2019, the appellant's motor vehicle was damaged in a collision with a vehicle driven by the respondent. On 13 December 2019, the appellant commenced a proceeding in the Magistrates' Court claiming damages for the loss of use of his damaged vehicle in the sum of $2,026.31.
2 On 14 August 2020, the proceeding was the subject of an arbitration conducted by Foster M.[1] At the hearing of the arbitration there was no dispute about the respondent's liability to pay damages to the appellant. The appellant's case was that he had hired a replacement vehicle, for use while his damaged car was being assessed, from a company called Right2Drive, for a period of 15 days between 19 August and 2 September 2019, for which they had charged the amount claimed in the proceeding ($2,026.31), and that this amount was thus recoverable from the respondent.
3 The respondent's case was that: first, the appellant's claim fell to be determined by reference to the market rate for hiring a replacement vehicle, and that the amount claimed was in excess of the market rate; and secondly, that in hiring the replacement vehicle from Right2Drive, the appellant had failed to mitigate his loss.
4 On 21 August 2020, Foster M gave judgment for the appellant on his claim in the sum of $634.95. His Honour then ordered the appellant to pay the respondent's costs, fixed in the amount of $2,475.20. In giving judgment in the amount of $634.95, the magistrate upheld the respondent's submission that the appellant had 'not acted reasonably in minimising [his] loss',[2] and assessed the appellant's damages by reference to the amount the appellant was charged in respect of the hiring of another replacement vehicle after 2 September 2019.
5 Pursuant to s 109 of the Magistrates' Court Act 1989, the appellant appeals to this Court from the orders made by the magistrate. As provided by s 109, the appeal is on a question of law. The first three of the appellant's grounds of appeal assert that the magistrate erred in reaching his conclusion on the issue of mitigation of damages, and in his ultimate assessment of the appellant's damages. The fourth ground asserts that his Honour failed to provide adequate reasons in relation to these conclusions.
6 The appellant gave evidence at the hearing of the arbitration. He also called Havva Goztepe, a legal team leader employed by Right2Drive and Onyx Car Rentals. The respondent did not call any witnesses. The balance of the evidence at the hearing consisted of documents tendered during the course of the hearing.
7 In his evidence-in-chief, the appellant adopted the following summary given by his counsel in opening his case:
So Mr Lu was involved in a collision where his vehicle was stationery and sustained damage to the rear. He says oil was leaking and the car was smashed. It needed to be collected by a tow truck. It could not be driven. He called his insurance company Allianz and he made a claim with Allianz. They informed him that he would - they would need to do an assessment and that they would organise a replacement car for him through Right2Drive. They said they would give him a similar car. They would organise for him and they said that payment would be taken care of.
He said he believes he was not expected to pay anyway because he had comprehensive insurance with Allianz. They organised this vehicle for him. It was provided and he signed the documents which the court has confirmed they hold, being a rental agreement and also an authority to act, Right2Drive. And they were signed digitally on an iPad or similar device.
Now Mr Lu needed a car because at the time he lived in Blackburn South and he needed to drive five to six days per week to his job in Croydon. He works for a Colorbond roofing manufacturer.
...
The hire went for the 15 days and at the end of the period and the conclusion of the hire, the hire stopped because Allianz organised the assessment and they said the car was too damaged and they would pay him money for his car instead, instead of fixing it.
He still needed a car after that. So he got a car from a company called Ace and he said it was a very old car that he had for a while and then after that he also borrowed a friend's car because the friend at the time had just bought a new car so at that time had - he said, he called it an extra car. And that took him to where he was paid from his insurance company, Allianz.
8 During the course of the appellant's evidence-in-chief, the magistrate was told that the 'all-inclusive rate including excess reduction and the other fees and charges' for the daily hiring of the vehicle from Right2Drive was $128.85 per day. Additionally there was a one-off delivery collection fee of $85 plus GST.
9 In cross-examination the appellant gave evidence that after the Right2Drive car was returned, he still needed a replacement vehicle. After conducting an internet search, he rented a vehicle from Ace for 60 days at a cost of approximately $2,500 (inclusive of insurance). On the issues of how the appellant came to rent a replacement vehicle from Ace and whether he made any enquiries before renting a vehicle from Right2Drive, the appellant was asked and answered the following questions:
Yes and where did you - how did you find Ace?---Um from the application. That's rental.com. Because they - - -
From, so I beg your pardon, from rental.com?---Yeah. It can - - -
And that's - - -?---Sorry.
Sorry?---Because they can compare which rental company is much cheaper and um more um convenience for me yep.
Right and so what you did was that you went on the internet, is that right?---Yes correct.
And you looked up, did you say rent-a-cars or rental.com or some similar site?---Ah rental.com yep.
Rental.com, and you were able to find a car at around about let's say $42 a day, something like that including insurance?---Yes.
And did that car - did that work for you? Was it sufficiently large and did it accommodate you? Were you able to do - to get to work and all that sort of thing using that car?---Yep (indistinct) - - -
Before you took the car from Right2Drive?---Yes.
Did you go on the internet then and see what was available? ---Ah you mean before the Right2Drive?
Yes?---Ah no because my insurance company they say they will organise for me.
Right?---Yep.
So you didn't go on to the internet because as I understand your evidence, your insurance company organised for you? ---Yes.
Right2Drive?---Yes.
And did you know how much Right2Drive were going to charge you for- - -?---No I don't.
Sorry, just let me finish for a sec?---Sorry.
How much they were going to charge you for the car that they were going to provide which was, as I understand it, a Holden Astra?---M'mm, I don't know how much they were charging me.
Well when you - you said I think through my learned friend through Mr Lowry, that you may have signed something on an iPad or similar when you took the car out from Right2Drive, is that right?---Yep yes correct.
Is the way that worked that someone came to your home with the car, that's the Astra?---M'mm, Astra - - -
And then, and then presented you with an iPad and invited you to sign a document that appeared on the face of the iPad?---Ah actually I pick a car and ah I went to the Right2Drive and pick the car and ah I signed the name, follow the policy, the rental, the rental policy like once car get damage what should I do and then once I, the car shut down what should I do, that's it, they didn't mention about the money.
10 A little later in cross-examination, the appellant was asked and answered the following:
Is there a reason why you would sign the document and not enquire about how much you were being charged?---Um because I check with the staff and he say they were - actually I went ah I ask about the ah should I do anything or something, and then the staff just tell me they ah contact with my ah insurance company directly and then I just have to know the policy about the rental car, that's it.
...
Did you think, Mr Lu, that this car from Right2Drive was the car that your insurance company were going to be paying for as part of your insurance claim with Allianz?---Ah, I don't know who will pay for it.
...
Right. So did you understand that by signing that you were entering into an agreement to pay Right2Drive for the rental car?---Ah, I don't - I - didn't know how to pay for it because I put the insurance in.
...
All right. I don't want to put words into your mouth, but that sounds to me what you're saying, but you didn't really - can I suggest to you you didn't really care much about those figures, how much you were being charged. Is that right?---Ah, can you repeat that again? Sorry.
Yes. You didn't really care much. You didn't really - it wasn't of concern to you - - -?---Yep.
- - - what the charges were at that time?---Yes, correct.
And that was because, as I understand it, you thought that you were getting a car as part of your insurance policy; is that right?---Yes, correct.
With Allianz?---Yes, Allianz.
Right. So you didn't realise, at the time, that that was going to be an amount that the other driver's insurance company would be asked to pay?---Yes.
Do you agree with me you didn't realise that at the time?---Yeah, I didn't realise it at that time.
Right. And is that the reason that you didn't bother to check on any other available hire car services that might have been available or even cheaper on - - -?---Yeah, I didn't - - -
- - - the internet? You didn't bother because this is coming from your insurance company; is that right?---Yes, correct.
11 While the appellant had adopted his counsel's description of the car he obtained from Ace as being 'very old', he agreed in cross-examination that the car was adequate for getting to work and that there was 'nothing wrong with it'.
12 Ms Goztepe gave evidence that Right2Drive charged $128.85 per day for the appellant to hire its vehicle, a Holden Astra hatch, for the 15 days from 19 August to 2 September 2019. She also gave evidence about the hiring of comparable vehicles from AVIS ($158 for a Hyundai i30 and $161 for a Toyota Corolla), Europcar ($163.13 for a KIA Cerato, and $163.64 for a Mitsubishi Lancer), Hertz ($197 for a Toyota Corolla) and Thrifty ($153 for a Toyota Corolla).
13 The appellant tendered the rental agreement between the appellant and Right2Drive; and an 'Advice, Agreement and Authority to Act' signed by the appellant; Right2Drive's tax invoice in the sum of $2,026.31; and documents supporting the daily hire rates given by Ms Goztepe in evidence. The defendant tendered a bundle of Hertz tax invoices and a summary of the information obtained from them.
14 The respondent addressed first. He submitted that the appellant had not acted reasonably when he 'took no step to determine what was the reasonable market value of a replacement vehicle for the cost of it before entering into the contract ... with Right2Drive'. The respondent submitted that:
The fact that that conduct was unreasonable is corroborated by what happened at the end of the 15 day period because what Mr Lu then did was he then acted reasonably. What he did do is he went onto the internet to try and work out where he could get a vehicle from and at what rate which he regarded as being affordable by him perhaps or at least reasonable. It turns out that it's a rate, just in round terms, we don't need to worry about the cents for the purpose of the exercise but something in the order of $42 a day inclusive of insurance, as he's described it.
15 On the issue of market rate, the respondent submitted that the appropriate rate was $96.79 per day for 15 days - totalling $1,451.85.
16 In response, the appellant submitted that there was nothing unreasonable in accepting the advice of his insurer that he should go to Right2Drive to obtain a replacement vehicle, and that the amount claimed should be awarded in full. In the course of the appellant's final address, the magistrate noted that the respondent had conceded that $1,451.85 was payable; and on a claim for $2,026, the parties were 'fighting over $600'. The respondent did not cavil with this statement before the magistrate.
17 The magistrate commenced his reasons by setting out the matters he said that the appellant was required to establish, being: the appellant's need for a replacement vehicle for the 15 days between 19 August and 2 September 2019, and the daily market rate for the vehicle. His Honour observed that the daily market rate claimed by the appellant was $128.85; whereas the respondent asserted that the proper daily market rate that ought to be allowed was $96.79.[3] Notwithstanding the positions taken by the parties before the magistrate, his Honour said that, '[t]o these two alternatives posed by the parties must be added a third, namely the rate upon which [the appellant] actually hired a further vehicle from Ace Rentals' - which his Honour calculated at $42.33 per day.[4] His Honour then said:
The situation concerning this further hire from Ace Rentals was as follows:
(a) Upon the accident occurring on 18 August 2019, the Plaintiff [appellant] liaised with his insurer, Allianz, who informed the Plaintiff that an assessment of the vehicle would have to occur.
(b) The Plaintiff gave evidence that he had comprehensive insurance and it was his belief that this entitled him to a hire car vehicle pursuant to that insurance.
(c) Someone from Allianz, advised the Plaintiff to contact Right2Drive.
(d) This the Plaintiff did.
(e) The Plaintiff went to the Right2Drive depot and signed hire documentation but did not ever turn his mind to the actual costs of the Right2Drive hire car because he was informed[5] that 'payment would be taken care of' and that the hire car would be at no cost to him.
(f) A few days before 2 September 2019 the Plaintiff was contacted by Allianz and was informed (if not directed) that he now had to return the hire car to Right2Drive.
(g) Upon returning the vehicle on 2 September 2019, the Plaintiff still had a need for a vehicle, because neither Allianz, nor the Defendant, had paid out the claim.
(h) The Plaintiff's claim was not, according to the Plaintiff, paid out for 5 months.
(i) Therefore, the Plaintiff immediately undertook a google search to find a cheap hire car suitable for his needs. He was, without any difficulty, able to source and hire a vehicle from Ace Rentals at the rates specified above. The Plaintiff gave evidence that this vehicle from Ace Rentals was suitable to his needs of getting to and from work at a Colourbond factory in Croydon.
(j) After 60 days of hiring an alternate vehicle from Ace Rentals and expending the sum of $2,540.00, the Plaintiff then returned that vehicle as he was able to use a friends vehicle for the remaining period until his claim was paid out.[6]
18 After dealing with the delivery charge that was a component of the total amount charged by Right2Drive, the magistrate then said:
To put this dispute into context, the claim for general damages for the loss of use of the vehicle is either:
(a) $1,932.75 (as claimed by the Plaintiff [appellant] - being a daily market rate claimed by the Plaintiff at $128.85 per day); or
(b) $1,451.85 (as claimed by the Defendant [respondent] - being the daily market rate asserted by the Defendant at $96.79 per day); or
(c) $634.95 (as shown by the evidence - being the daily market rate paid by the Plaintiff to Ace Rentals after having undertaken his own investigations at $42.33 per day); or
(d) a different amount somewhere between those amounts in '(a)' and '(b)' and '(c)' above.[7]
I interpolate that, in this Court, the appellant submitted that the magistrate erred in going beyond the bases asserted by the parties during the course of the arbitration. That is, while it was proper for his Honour to consider alternatives (a) and (b), the appellant contended that his Honour should not have contemplated options (c) and (d) in the light of the way the case was conducted before him.
19 The magistrate then identified the evidence tendered on the issue of the proper market rate. His Honour said:
In promoting the preferred view of what the proper market rate should be:
(a) the Plaintiff [appellant] tendered online extracts from other 'mainstream' hire car companies (such as Thrifty, Europcar and Avis) as to what the advertised daily market rate was for vehicles of a similar type to that hired to the Plaintiff. These advertised prices tended to exceed the daily rate charged by the Right2Drive to the Plaintiff, which in turn tended to support the contention that the Right2Drive amount reflected a proper market rate;
(b) as previously mentioned, the Defendant [respondent] tendered invoices from Hertz during the relevant period of the claim. In particular those invoices arose in respect of vehicles hired from the region east of Melbourne which is where the Plaintiff lives. These actual invoiced prices tended to be well under the daily rate charged by the Right2Drive to the Plaintiff, which in turn tended to support the contention that the Right2Drive amount did not reflect a proper market rate; and
(c) the evidence revealed what happens when a person, such as the Plaintiff, actually turns their mind rates when hiring a vehicle.[8]
20 Next, the magistrate noted that while documents relevant to hiring rates had been tendered, witnesses who might have given evidence as to whether those rates properly reflected what might be charged for a 15 day hiring had not been called. His Honour expressed the view that, while 'third party advertising material' could be tendered to show the basis upon which Right2Drive set its rates at any given time, this did not mean that 'the same third party advertising material [could] be tendered for the purpose of establishing the forensic truth of what other mainstream hire car providers [were] charging in the market'.[9] His Honour then said:
(a) the advertised rate might be substantially different depending upon the hire location inserted into the search engine;
(b) the advertised rate might not be able to be acted upon if a car is unavailable from a particular depot;
(c) the advertised rate might have fluctuated substantially depending on the availability of hire cars at the specified search location - so that a search a day earlier or a day later might bring a substantially different result (which is relevant when the claim is for longer than 1 day);
(d) the advertised rate might be substantially different for a 2 day hire, a 7 day hire, a 14 day hire or a 30 day hire; or
(e) the advertised rate might be erroneous.[10]
His Honour then said these were matters upon which a party might legitimately seek to cross-examine but that, in any event, he was 'not called upon to determine ... in this proceeding'.[11] Again, I interpolate that, in this Court, the appellant submitted that the magistrate erred in not determining whether the rate charged by Right2Drive was reasonable.
21 After identifying that there was a 'relatively minor difference in the quantum positions of the parties',[12] the magistrate then made some observations about the existence of markets as follows:
A market exists amongst the mainstream hire car providers. This market may have an upper and a lower end (even within similar categories of vehicles). Prices may fluctuate based on the location (convenient to the hirer) from which the vehicle is sourced. That location might also have an excess or a deficiency in vehicles for hire which may impact on prices charges for those vehicles according to the usual economic laws of supply and demand. But crucially the market is restrained by what people are prepared to pay for a vehicle which, in turn, is governed by what prices are being offered by other competitors in the mainstream hire car provider.
All things being equal, a reasonable person is likely to want to pay the least possible amount for exactly the same product.
That market is different from the market of credit hire car providers such as Right2Drive. This market is not restrained by what people are prepared to pay for a vehicle because the hirer is invariably informed from the outset (as in the present case) that they will have no liability and that all money to be paid for the vehicle will be paid for by the "at fault" driver or his insurer.
However credit hire car providers do play an important role insofar as some hirer's, (but not the Plaintiff in the present case), would be unable to hire a replacement vehicle by virtue of their financial circumstances without an entity such as Right2Drive.[13]
22 Next, the magistrate referred to the judgment of Bell J in Fallon v Johnston,[14] in which a number of relevant authorities were summarised, including Lagden v O'Connor,[15] Karacominakis v Big Country Developments Pty Ltd,[16] Portbury Development Co Pty Ltd v Ottedin Investments Pty Ltd[17] and Hardie Finance Corporation Pty Ltd v Ahern [No 3].[18] His Honour's reference to Fallon included Bell J's adoption of the summary of principles relating to mitigation of damages set out by Garde J in Portbury as follows:
This statement of the law highlights a number of important principles that guide the assessment of loss in cases where mitigation is in issue:
(a) there is in fact no duty to mitigate loss - rather, damages are reduced to the extent that the plaintiff has not acted reasonably;
(b) the onus of proof is on the defendant to show that the plaintiff has not acted reasonably in minimising loss arising from the defendant's breach of contract;
(c) the defendant must prove the extent of the plaintiff's failure to minimise loss, ie, the amount of the plaintiff's loss that was occasioned by the plaintiff's failure to act reasonably;
(d) a high standard of conduct is not required of the plaintiff, because the defendant is a wrongdoer; and
(e) a plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct, so long as it was reasonable for the plaintiff to act in the way that he did.[19]
23 Having analysed the authorities, the magistrate (in a passage in his Honour's reasons which was central to his ultimate conclusions) said:
(a) damages are reduced in the present proceeding to the extent that the plaintiff has not acted reasonably;
(b) the defendant has met the onus of proof in establishing that the plaintiff has not acted reasonably in minimising loss arising from the motor vehicle accident, in that:
(i) the Plaintiff was directed by Allianz to Right2Drive for a free hire car - the hire car was 'free' in the sense that Plaintiff was informed that 'payment would be taken care of';
(ii) the Plaintiff gave no evidence of any contemporaneous consideration of his ability or inability to hire a vehicle at a competitive rate, from what might be described as a mainstream provider. That consideration only took place after 2 September 2019 when the Plaintiff undertook his own internet search and found a car from Ace Rentals at $42.33 per day;
(iii) the Plaintiff paid no attention whatsoever to the rate being charged to him when he signed the Right2Drive hire agreement on 19 August 2019; and
(iv) the Defendant established on the evidence that a reasonable person in the position of the Plaintiff might take at least some cursory steps to compare what is out there in the market (and by market, I mean a hire car provider which has a depot conveniently close to the Plaintiff's home or workplace) and would then be more likely than not to take the lowest price available on a vehicle which is commensurate to the Plaintiff's damaged vehicle. Not only 'might' a person do this, the evidence showed that the Plaintiff did do this. But only after 2 September 2019;
(c) the evidence establishes the extent of the Plaintiff's failure to minimise loss, (i.e. the amount of the Plaintiff's loss that was occasioned by the Plaintiff's failure to act reasonably) is the difference between the cost that would have been incurred if Plaintiff had have hired the vehicle from Ace Rentals from the outset, compared to the cost of the vehicle hired from Right2Drive;
(d) in measuring the loss suffered by this impecunious Plaintiff, this Court will recognise that, because of his lack of financial means, the timely provision of a replacement vehicle for the Plaintiff might cost more than it does in the case of his more affluent neighbour. In this case, it was not suggested the Plaintiff was impecunious. In fact, the evidence reveals that the Plaintiff incurred a further cost of $2,540.00 to hire a vehicle from Ace Rentals. Normally, where Right2Drive has provided an impecunious Plaintiff with credit, by incurring the expense of providing a car without receiving immediate payment, and then incurred the administrative expense involved in pursuing the Defendant's insurers for payment, I would usually allow a small increased margin to account for these matters. But I would not do so on this occasion because the Plaintiff was not impecunious. The Plaintiff did not engage Right2Drive because he was impecunious. The Plaintiff engaged Right2Drive because he was directed to go to Right2Drive by Allianz and was eventually directed by Allianz to return the vehicle to Right2Drive despite still having a need for a vehicle;
(e) a high standard of conduct is not required of the Plaintiff, because the Defendant is a wrongdoer, but in this case it is clear that the Plaintiff has not turned his mind at all to hiring a vehicle at a cost effective rate which is what a reasonable person would do; and
(f) the Plaintiff in the present case is not being held to have acted unreasonably simply because the Defendant was able to suggest other and more beneficial conduct. Rather, the Plaintiff has simply not turned his mind whatsoever to the matter of hire car rates. I do not accept the proposition that the Plaintiff acts reasonably simply by accepting a free vehicle offered to him following an accident. Whilst it is understandable that the Plaintiff has acted in the way that he did, in my view, it was not reasonable.[20]
To be clear, I consider that the Plaintiff has acted unreasonably:
(a) not because he has hired a vehicle from Right2Drive; but
(b) because he has hired a vehicle from Right2Drive without having any appreciation or consideration of his ability or inability to hire a vehicle at a competitive rate.
If it were otherwise, then it would seem that any rate then charged by Right2Drive for such a hire would be reasonable.
As:
(a) the onus of proof, according to Portbury Development Company Pty Ltd v Ottedin Investments Pty Ltd, is on the defendant to show that the plaintiff has not acted reasonably in minimising loss arising from the defendant's breach of contract; and
(b) the defendant according to Portbury Development Company Pty Ltd v Ottedin Investments Pty Ltd must prove the extent of the plaintiff's failure to minimise loss, (i.e. the amount of the plaintiff's loss that was occasioned by the plaintiff's failure to act reasonably);
then holding that a Plaintiff acts reasonably simply by hiring a vehicle from Right2Drive without any regard to the hire rate imposed by Right2Drive, would seem to mean that a Defendant could not thereafter contend that any rate charged by Right2Drive was above and beyond a market rate.
If I am wrong in this assessment, that is a matter to be authoritatively determined in another place.
I do not accept that the mere rendering of an invoice by Right2Drive to the Plaintiff for the sum of $2,026.31 (which might happened to fall under the highest advertised rate for a 1-day hire of a vehicle from a mainstream provider from a Melbourne depot location) establishes the proper market rate as was submitted to me by counsel for the Plaintiff. It may well be prima facie evidence as alluded to in Chong v Berry (2007) NSWLC 33, but it is nothing more than that.
Because damages are compensatory, the Plaintiff cannot recover more damages than would be payable if the Plaintiff had acted reasonably to minimise his loss.
For the reason stated above, I would allow the Plaintiff the sum of $634.95 - being a daily market rate established on the evidence of the Plaintiff at $42.43 per day.[23]
25 The appellant's notice of appeal[24] identifies four questions of law. Questions 1 and 2 are in the following form:
26 The third question of law identified in the notice of appeal is expressed to be additional, or alternative, to questions 1 and 2. Question 3 asks whether the magistrate erred by 'drawing ... improper inferences' at Reasons [37], [38] and [41]. Question 4 asks whether the magistrate erred by failing to provide adequate reasons for:
4.1 finding that [the appellant] should have considered or made enquiries to gain an appreciation of his ability or inability to hire a vehicle at a competitive rate, having accepted the uncontroverted evidence that his actions were based on advice and directions from his insurer;
4.2 preferring the rate evidence in respect of a vehicle from Ace Rentals that [the appellant] was able to source after the period for which [the appellant's] compensable loss was claimed; and or
4.3 giving no consideration to the mainstream rates for the hire of vehicles for the relevant period.
27 In oral argument, senior counsel for the appellant identified the primarily relevant question of law as being question 2 in the notice of appeal. He submitted that there had been a failure of 'basic method called for by the common law by the magistrate in reaching [his] conclusion as to the quantum of damages', and that question 2 'provide[d] the vehicle for the argument concerning the misdirection by the magistrate as to the proper approach to quantum'.
28 The notice of appeal contains four rather prolix grounds of appeal which are not particularly well expressed. While the grounds of appeal are intended to relate to the questions of law, it appears that they were drawn on the basis that the magistrate's decision was a discretionary decision of the kind referred to in House v The King.[25] As senior counsel for the appellant conceded during the hearing, the magistrate's decision was not a discretionary decision, and the references to House in the appellant's written submissions were inapposite. That said, no application was made by the appellant to amend further his grounds of appeal.
29 Notwithstanding the unsatisfactory form of the grounds of appeal, it is tolerably clear that the grounds contain at least the following complaints:
30 The appellant contended that it was not open to the magistrate to find that the respondent had discharged his onus of showing that the appellant had acted unreasonably in hiring the replacement vehicle from Right2Drive. In support of that contention, he submitted that the magistrate erred in law in relying upon the 'legal irrelevance' of the circumstances surrounding the appellant's hiring of the subsequent replacement vehicle from Ace Rentals. He submitted that the issue of reasonableness was a question to be judged at the time the appellant undertook the conduct in mitigation of hiring the initial replacement vehicle from Right2Drive. He also submitted that the magistrate's reasons disclosed that his Honour misdirected himself on the issue of unreasonableness - the onus of establishing which lay on the respondent.
31 In the course of his submissions, the appellant was critical of a number of aspects of the magistrate's reasons. These included, the magistrate's failure to determine whether or not the amount charged by Right2Drive for the initial replacement vehicle was reasonable;[26] and the magistrates conclusion that 'the proper market rate established on the evidence' was $42.43:[27] this being the lowest rate about which there was any evidence; a rate dealing with the hiring of a vehicle for 60 days during a subsequent period to the hiring of the initial replacement vehicle; and a rate which was not relied upon by the respondent before the magistrate.
32 Additionally, the appellant attacked the magistrate's conclusion that the appellant had acted unreasonably, not because he had hired a car from Right2Drive, but because he had hired the vehicle 'without having any appreciation or consideration of his ability or inability to hire a vehicle at a competitive rate'.[28] It was submitted that, in the absence of some finding that the Right2Drive hire rate was unreasonable, this finding was not open on the evidence. Ultimately, the appellant submitted that the magistrate's reasons disclosed a 'failure to understand the nature of the onus lying upon [the respondent]'.
33 The respondent commenced his submissions by complaining that the appellant's submissions in this Court did not 'go to' any question of law purportedly identified in the appellant's notice of appeal. The respondent emphasised that the right of appeal given by s 109 of the Magistrates' Court Act is an appeal in the strictest sense. He also emphasised the need for an appellant exercising such a right to formulate with precision the question or questions of law upon which an appeal of the present kind is brought. In doing so, he relied particularly on the judgment of Tadgell JA[29] in Wong v Carter[30] wherein his Honour said:
An appeal to the Supreme Court is not authorised by the Magistrates' Court Act unless it is brought on a question of law which is involved in the final order from which the appeal is brought. The existence of a question of law is not only a precondition to the right of appeal but also the subject of the appeal itself ... . It follows that a decision merely on a question of fact, even though it be involved in a decision of the Magistrates' Court, cannot of itself justify the bringing of an appeal.[31]
34 In advancing the contention above, the respondent submitted that, more fundamentally, the appellant had not identified any relevant question of law in his notice of appeal or at all. This was submitted to be fatal to the applicant's appeal, as the absence of a question of law meant that the precondition referred to by Tadgell JA in Wong was not satisfied.
35 The respondent also relied upon the judgment of Kaye J in Fiorelli Properties Pty Ltd v Professional Fencemakers Pty Ltd.[32] In that case, Kaye J rejected a submission made on appeal which had not been made to the magistrate. For present purposes, it is not necessary to identify the submission that his Honour rejected. It is sufficient to note his Honour's reasons for rejecting the submission as follows:
The difficulty with that submission is that it does not identify an error of law made by the Magistrate. Rather, at best, it points to a different conclusion, at which the Magistrate might (or, the appellant submits, would) have arrived, if the appellant had made the claim in equity, on which it now seeks to rely. The appeal, which is brought pursuant to s 109, is an appeal in the strictest sense, and it is not, in any form, a re-hearing. It is necessary for the appellant to be able to identify a relevant error of law, made by the Magistrate, before it is entitled to relief from this Court. By its alternative submission, the appellant does not point to any error of law made by the Magistrate. Rather, as I have stated, the proposition, on which it seeks to rely, is that the Magistrate would have been obliged to find in its favour, if the appellant had made the claim, based in equity, on which it now seeks to rely.[33]
36 The respondent contended that the argument advanced by the appellant in this Court that, a plaintiff acts reasonably in mitigating his or her loss by hiring a vehicle at a rate which is within a range of rates that are reasonable (notwithstanding that some rates within the range are higher or lower than the rate at which that plaintiff actually hires a vehicle), was not pleaded nor relied upon in the hearing before the magistrate. It was thus submitted that, in accordance with Kaye J's judgment in Fiorelli Properties, this argument could not be raised by the appellant in this appeal. The respondent also submitted that no Australian authority, including the High Court's decision in Arsalan v Rixon[34] supported any such principle.[35]
37 In summary, the respondent made submissions supporting the reasoning of the magistrate. He contended that the magistrate correctly summarised the relevant legal principles before making the findings of fact with which the appellant disagrees. The respondent submitted that the magistrate's findings of fact could not be challenged in this Court on an appeal under s 109 of the Magistrates' Court Act. He also submitted that there is no basis for saying that the magistrate had misdirected himself or that he had misapplied the relevant legal principles. Each of the magistrate's findings of fact were open on the evidence, and thus he submitted that no relevant question of law arises in this proceeding. He submitted that the magistrate's conclusion were in conformity with all relevant authority, including a number of judgments of the House of Lords and the English Court of Appeal.[36]
38 The central issue in this appeal is whether it was open to the magistrate to find that the respondent had discharged his onus of showing that the appellant had 'acted unreasonably ... because he ... hired a vehicle from Right2Drive without having any appreciation or consideration of his ability or inability to hire a vehicle at a competitive rate'.[37] At the risk of repetition, the facts underlying this finding, as stated by the magistrate in his reasons were:
(a) Upon the accident occurring on 18 August 2019, the Plaintiff [appellant] liaised with his insurer, Allianz, who informed the Plaintiff that an assessment of the vehicle would have to occur.
(b) The Plaintiff gave evidence that he had comprehensive insurance and it was his belief that this entitled him to a hire car vehicle pursuant to that insurance.
(c) Someone from Allianz, advised the Plaintiff to contact Right2Drive.
(d) This the Plaintiff did.
39 These underlying facts (founded upon the evidence given at the arbitration) are, of course, not capable of being challenged in this appeal. However, while the underlying facts found by the magistrate are not capable of being challenged, his Honour's ultimate conclusion that the appellant acted unreasonably because he hired the Right2Drive vehicle without having the appreciation or consideration referred to by the magistrate can be overturned on this appeal if that conclusion was not open.
40 In S v Crimes Compensation Tribunal,[40] Phillips JA said that ordinarily a determination of fact will not give rise to an error of law 'unless it is shown that the fact-finding tribunal arrived at a finding that was simply not open to it'.[41] As Cavanough J noted in State of Victoria v Subramanian,[42] Phillips JA extended this language to cover not only a finding of fact derived from the acceptance of direct evidence to that effect, but also 'an inference of fact drawn by the Tribunal from other facts found by it'. Phillips JA went on to say:
In what I have said I have spoken of whether a particular finding (including an inference) was open to the fact-finding tribunal. Sometimes the question is posed as whether there was any evidence to support the finding which is under challenge, but that expression is perhaps ambiguous when it comes to inferences. It may question whether there were the primary facts from which the inference might be drawn or, there being no doubt about the primary facts, it may question whether the inference could be drawn from those facts. In this area the relevant question in relation to a fact is always whether the finding (including an inference) was open and so I think that that is the better formulation.[43]
41 A little later in S v Crimes Compensation Tribunal, when considering the appropriateness of the use of the expression 'reasonably open', Phillips JA said:
The word 'reasonably' is used in this context, I suggest, just to emphasise that, when judging what was open and what was not open below, we are speaking of rational tribunals acting according to law, not irrational ones acting arbitrarily. The danger of using the word 'reasonably' lies in its being taken to suggest that a finding of fact may be overturned on an appeal which is limited to a question of law, simply because that finding is regarded as 'unreasonable'. That is not the law as I understand it, at least in Australia. A finding of fact will be overturned on an appeal on a question of law only if that finding was not open.[44]
42 As the magistrate accepted, the onus of proof was on the respondent to show that the appellant had not acted reasonably in minimising his loss; a 'high standard of conduct' was not to be required of the appellant, in circumstances where the respondent was a wrongdoer; and the appellant was not to be held to have acted unreasonably simply because the respondent could suggest other and more beneficial conduct which the appellant could have engaged in.[45] Applying these principles, and notwithstanding the significant amount of detail in the magistrate's reasons, it was not open to his Honour to conclude that the appellant acted unreasonably in hiring a replacement vehicle from Right2Drive without having the appreciation or consideration referred to by the magistrate at Reasons [39(b)].[46]
43 It was, with respect, simply not open to the magistrate to conclude that the appellant acted unreasonably when all he did was take the advice of his insurer (even if the identity of the actual person who gave the advice was, as the magistrate observed, 'not clear'[47]) that Right2Drive was a suitable organisation to obtain a replacement car, in circumstances where the appellant's insurance policy entitled him to a hire car for which 'payment would be taken care of ... at no cost to him'.[48]
44 A further difficulty with the magistrate's conclusion that the appellant's conduct was unreasonable in the way described by his Honour at Reasons [39(b)] is exemplified by his Honour's statement at Reasons [31(f)] that, while it was 'understandable that [the appellant] ... acted in the way that he did, ... it was not reasonable'. On the underlying facts as found by the magistrate, the only conclusion open was that the appellant's conduct was entirely understandable. Similarly, the only conclusion subsequently open to the magistrate was that the respondent had not proved that the appellant's conduct was unreasonable. It is also significant to note that at no stage during his cross-examination of the appellant did the respondent's counsel who appeared at the hearing of the arbitration[49] ever suggest to the appellant that the appellant's conduct was in any way unreasonable.
45 Having concluded that the magistrate's finding that the appellant acted unreasonably because he hired a vehicle from Right2Drive, without having any appreciation or consideration of his ability or inability to hire a vehicle at a competitive rate,[50] was not open, it is not necessary for me to deal with the appellant's complaint about the inadequacy of the magistrate's reasons. For completeness, I would however observe that, despite the level of detail given by his Honour in his reasons, no reason was given by him for his finding that a reasonable person, having been told by his insurer to contact Right2Drive in circumstances where 'payment would be taken care of and that the hire car would be at no cost to him', would then turn his mind to hiring a vehicle at a cost effective rate;[51] or for his conclusion that while it was 'understandable' that the appellant acted in the way that he did, it was not reasonable.[52] Had it been necessary, I would have concluded that, to this extent, the magistrate's reasons were inadequate.
46 What I have said so far is sufficient to show that the appellant's appeal must be allowed. In so concluding, I have rejected the respondent's submissions that the notice of appeal did not specify with sufficient precision (or at all) a relevant question of law, or that the appellant's arguments were not open to be considered under the grounds of appeal contained in the notice. Question 2 of the notice of appeal adequately identified the question of law on which the appeal was brought. While the grounds of appeal are prolix and not well expressed, they were sufficient to identify the errors of law for which the appellant contended at the hearing of this appeal. To the extent that the respondent submitted otherwise and/or to the extent that he submitted that there was some denial of procedural fairness in permitting the appellant to advance the arguments advanced in this Court, I reject those submissions.[53]
47 To the extent that the respondent submitted that, in this Court, the appellant raised arguments which were not raised before the magistrate and/or not part of the arbitration, I reject those submissions. The present case is not a case like that identified by Kaye J in Fiorelli Properties.[54] On a fair reading of the appellant's claim and the transcript of the proceeding before the magistrate, there is no basis for concluding that the appellant has somehow changed his position in this Court. To the contrary, it should be observed that it is the respondent who has changed his position to the extent that, before the magistrate the respondent accepted that the appellant's claim assessed in the amount of $1,451.85; whereas in this Court he sought to defend the magistrate's assessment by reference to a rate abandoned by him during the hearing before the magistrate.
48 That said, it is not necessary for me to pause here and analyse whether there was any error of law made by the magistrate in determining the arbitration outside the parameters on which it was fought by the parties, without giving the parties (or at least the appellant) any notice that such a course might be taken by his Honour.
49 For the reasons given above, the appeal must be allowed. The orders made by the magistrate on 21 August 2020 should be set aside, and the matter should be remitted to the Magistrates' Court for the purpose of determining whether or not the respondent has proved that the Right2Drive figure of $2,026.31 was unreasonable - and, if so, what lesser sum the appellant is entitled to by way of damages for the hiring of a replacement vehicle during the period from 19 August to 2 September 2019.
[1] See ss 102 and 103 of the Magistrates' Court Act 1989.
[2] Lu v Ballantyne (Unreported, Magistrates' Court of Victoria, Foster M, 21 August 2020) ('Reasons'), [31].
[6] Reasons [7] (footnote in original).
[14] [2018] VSC 273 ('Fallon').
[16] [2000] NSWCA 313 ('Karacominakis')
[17] [2014] VSC 57 ('Portbury').
[19] Portbury [2014] VSC 57, [158].
[20] Reasons [31] (footnote omitted).
[24] The final version of which was an amended notice of appeal dated 8 March 2021.
[26] Reasons [10]-[21], and in particular [21].
[27] Ibid [5], [9], [43] and [45].
[29] With whom Winneke P and Chernov JA agreed.
[30] [2000] VSCA 53 ('Wong').
[32] [2011] VSC 661; (2011) 34 VR 257 ('Fiorelli Properties').
[34] [2021] HCA 40; (2021) 96 ALJR 1 ('Arsalan').
[35] For completeness, I note that it appeared to be suggested at various points in the respondent's submissions that Arsalan (being a judgment of the High Court given after the hearing of the arbitration in this proceeding) could not be relied upon on this appeal because this appeal must be determined on the law as it existed at the time of the magistrate's decision. Any such submission could not, however, withstand this Court's analysis in Carter v Reid [1992] VicRp 22; [1992] 1 VR 351 ('Carter'), a decision referred to by Kaye J in Fiorelli Properties at 268 [43]) - noting that in Carter, the Court applied a Full Court decision delivered subsequent to the decision appealed from, but did not apply subsequent legislation, the purpose of which was to overcome the effect of that decision. But cf Yehia v Williams [2022] VSC 197, [5].
[36] See, eg, Watson Norie Ltd v Shaw [1967] 1 Lloyd's Rep 515; Stevens v Equity Syndicate Management Ltd [2015] EWCA Civ 93; [2015] 4 All ER 458; Dimond v Lovell [2002] 1 AC 384; Lagden v O'Connor [2003] EWCA Civ 927; [2004] 1 AC 1067.
[39] Reasons [7] (footnote in original).
[42] [2008] VSC 9; (2008) 19 VR 335, 347-8 [32] ('Subramanian').
[43] S v Crimes Compensation Tribunal [1998] 1 VR 83, 90 (emphasis added).
[44] Ibid 91 (emphasis added). See also Karakatsanis v Racing Victoria Ltd [2013] VSCA 305; (2013) 42 VR 176, 189 [40].
[45] Reasons [30]-[31], wherein the magistrate set out relevant passages of Karacominakis and Portbury, as they were set out in Fallon. See also Arsalan [2021] HCA 40; (2021) 96 ALJR 1, 10 [36], where the High Court said that 'Once a plaintiff has proved heads of damage of physical inconvenience and loss of amenity of use, it will usually be difficult for a defendant to prove that the plaintiff acted unreasonably by seeking to hire a replacement vehicle'.
[46] See Subramanian [2008] VSC 9; (2008) 19 VR 335, 347-8 [32].
[49] Not counsel who appeared in this Court.
[53] In any event, so as to ensure that there was no denial of procedural fairness to the respondent, I gave him the opportunity of filing an additional written submission after the conclusion of the oral hearing, so as to address any matters that had not been adequately addressed by him during the hearing of the appeal. The respondent availed himself of that opportunity by filing a further written submission on 2 August 2022.
[54] [2011] VSC 661; (2011) 34 VR 257, 268 [43].
Lu
Ballantyne [2022] VSC 454
(1936) 55 CLR 499
(2011) 34 VR 257
(2021) 96 ALJR 1
(2008) 19 VR 335
(2013) 42 VR 176