Burkitt v Ultimate Car Rentals Australia P/L & Ors

District Court of NSW|2017-12-13|Before: Rentals Australia P, Mr J

Solicitors: Hicksons (Plaintiff) McGirr Lawyers Pty Ltd (Defendant) File Number(s): 2016/194972 Publication restriction: None

Table of Contents Nature of case [1] Parties and factual background [2] - [15] Issues calling for decision [16] - [18] Evidence overview [19] - [22] Credibility and reliability of testimony [23] - [33] The plaintiff - Dr Miles Burkitt [24] - [27] The second defendant - Mr Fotis Zervas [28] - [33] Facts [34] - [71] Applicable legal principles [72] - [88] Contract [73] - [74] Bailment [75] - [81] Australian Consumer Law provisions [82] - [84] Civil Liability Act 2002 - relevant provisions [85] - [88] Reasons for exclusion of listening device evidence [89] - [106] Issue 1 - Nature and terms of the respective bailments [108] - [124] Bailment between plaintiff and first and second defendants [109] - [112] First sub-bailment [113] - [117] Second sub-bailment [118] - [124] Issue 2 - Whether s 18 & s 238 of the ACL were breached [125] - [130] Issue 3 - Breach of duty of care [131] - [156] Breach by first and second defendants [133] - [155] Breach by third defendant [156] Issue 4 - Causation of the plaintiff's loss: s 5D of the CL Act [157] - [161] Issue 5 - Assessment of the plaintiff's damages [162] - [169] Damages payable by first and second defendants [163] - [167] Damages payable by third defendant [168] - [169] Issue 6 - Whether an apportionable claim arises [170] - [194] Interest [195] - [197] Disposition [198] Costs [199] - [200] Orders [201]

Nature of case

The plaintiff, Dr Miles Burkitt, brings this action claiming damages plus interest and costs, against three defendants, consequent upon the destruction and loss of his 2006 F430 Spider Ferrari motor vehicle. This claim is framed variously, in contract, bailment, misrepresentation, and negligence, The Civil Liability Act 2002 ("CL Act") and the Australian Consumer Law ("ACL"), apply to these proceedings.

Parties and factual background

On 2 May 2015, following some factual representations made to him by the second defendant Mr Fotis Zervas, who was the sole director of the first defendant, Ultimate Car Rentals Australia Ltd, and also following a resultant bailment agreement with those defendants, the plaintiff handed those defendants the possession of his Ferrari and Lamborghini Murcielago motor vehicles.
So far as concerned the plaintiff's Ferrari vehicle, his objective in respect of the bailment was that, for a fee payable to him, the first defendant would hire out that vehicle in the course of its car rental business.
Shortly after that bailment commenced, the first defendant transported the plaintiff's Ferrari vehicle to Melbourne, in Victoria, for the vehicle to be hired out there by the first and second defendants in the course of that business, which the plaintiff was given to understand, was partly located both in Sydney and in Melbourne.
On 29 June 2015, after the occurrence of other events that will be the subject of findings of fact, whilst the plaintiff's Ferrari vehicle remained in Melbourne, and after some agreed mechanical repairs were carried out to it, the third defendant, Mr Michael Amro, who owned a panel and paint shop known as Universal Kustoms, became a subsequent sub-bailee in relation to the plaintiff's Ferrari vehicle. The vehicle became irreparably damaged whilst in his possession.
The first and second defendants are jointly represented. They contest the plaintiff's claim in all its elements. The third defendant, although duly served with the statement of claim, has not filed a defence, and has not participated in the proceedings.
The initial bailment of the plaintiff's vehicles to the first and second defendants was pursuant to a verbal rental agreement which was to be reduced to writing but that step became delayed. Nothing turns on that delay.
In preparation for hiring out the plaintiff's Ferrari vehicle, the first and second defendants arranged for some agreed mechanical repairs to be carried out on the vehicle by a third party sub-bailee, Zagame Automotive Group Pty Ltd. The plaintiff had agreed to that sub-bailment, and he paid for the repairs carried out by that company.
After Zagame Automotive Group Pty Ltd completed its work on the vehicle, the first and second defendants then further sub-bailed the vehicle to a panel beater for the purpose of effecting paintwork adjustments to the body of the vehicle in order to make the vehicle ready for hiring.
Unbeknown to the plaintiff, that further sub-bailment of the vehicle was to the third defendant's panel shop, known as Universal Kustoms. At the time of that further sub-bailment, the plaintiff had no knowledge of, or dealings with, either Universal Kustoms, or with Mr Amro, although he knew a sub-bailment of that kind was to occur.
On the night of Monday 29 June 2015, at some time between 5.00pm and 10.00pm, the third defendant, in company with a sixteen year old female acquaintance, drove the plaintiff's vehicle out of his panel shop. The third defendant's use of the plaintiff's vehicle at that time was for a purpose which was plainly outside the terms of any bailment arrangements that existed between the parties.
In the course of those events, at about 10.50pm that night, the third defendant lost control of the vehicle whilst driving it, and caused a heavy impact collision with some trees, following which, the vehicle was written off as being damaged beyond repair.
The compelling inference arising from those circumstances is that the subject collision occurred due to the negligence of the third defendant. Absent a defence filed by the third defendant, on proof of loss, the plaintiff should therefore have judgment entered in his favour against the third defendant in a sum to be assessed in these proceedings.
After the fact of the subject collision became known, the plaintiff and the second defendant, who was at all relevant times acting on behalf of the first defendant as its sole director, signed a vehicle management agreement which, by mutual consent of the plaintiff and the first and second defendants, was backdated to 2 May 2015.
It is common ground that the backdated agreement reflected, at least in part, the terms of the initial bailment agreement between the plaintiff and the first and second defendants. The plaintiff claimed the agreement included a term as to insurance. The vehicle was not insured whilst in the possession and control of the first and second defendants.

Issues calling for decision

The issues calling for decision in these proceedings may be conveniently identified as being the determination of: 1. The nature and the terms of the respective bailments that were created between the relevant parties and actors; 2. Whether, in contravention of s 18 and s 238 of the ACL, the first and second defendants made representations to the plaintiff that were in any relevant way misleading, or were likely to mislead or to deceive the plaintiff; 3. The nature and the extent of the duty of care owed to the plaintiff in respect of the vehicle by the first, second and third defendants, and whether the first, second and third defendants were relevantly in breach of a duty of care owed to the plaintiff in respect of his vehicle; 4. Whether, within the meaning of s 5D of the CL Act, the relevant actions or inactions of the first and second defendants were the cause of the plaintiff's claimed loss; 5. The assessment of the plaintiff's entitlement to damages for the loss of his vehicle; 6. Whether, in the event that the first and the second defendants are found to be liable to the plaintiff, within the operation of Part 4 of the CL Act, the liability of the first and second defendants should be reduced to reflect a fair and just apportionment of the responsibility to the plaintiff for his loss, as between the first and second defendants, and the third defendant, Mr Amro.
The determination of those issues requires the consideration of the terms of the vehicle management agreement between the plaintiff and the first and second defendants, and also findings on a number of related disputed matters of fact.
Insofar as oral evidence was adduced by the first and second defendants to seek to vary or explain the contractual arrangements in terms that differ from the terms of the agreement with the plaintiff that were reduced to writing, a consideration along those lines requires caution and circumspection. This is on account of matters to do with fallible memory, as was explained in Watson v Foxman (1995) 49 NSWLR 215, at pp 318 - 319. The reliability and credibility of testimony were matters in contest in this case.

Evidence overview

The only oral evidence on factual matters was called from the plaintiff and the second defendant, Mr Fotis Zervas. The plaintiff's documentary evidence was presented in a Court Book which comprised Exhibit "A".
The plaintiff's evidence in chief was in the form of two affidavits, respectively sworn on 31 May 2017 and 29 September 2017. These comprised Tabs 9 and 10 of Volume 2 of Exhibit "A". The plaintiff was extensively cross-examined.
In the plaintiff's case, further affidavit evidence was tendered as to service of process on the third defendant. It is not necessary to analyse that evidence. Service on the third defendant has been satisfactorily effected pursuant to interlocutory orders made on an earlier occasion.
The case of the first and second defendants relied upon an affidavit of Mr Zervas, the second defendant, sworn on 31 July 2017. Mr Zervas also gave oral evidence in the case for the first and second defendants. Those defendants also relied upon documentary evidence comprising a series of email exchanges between the parties (Exhibits "1" to "5"), and a vehicle valuation report dated 15 August 2017 retrospective to August 2015: Exhibit "A", Tab 16.

Credibility and reliability of testimony

In the paragraphs that follow, I identify my conclusions on the credibility and the reliability of the testimony of the two witnesses who gave oral evidence.

The plaintiff - Dr Miles Burkitt

The evidence of Dr Burkitt was at times vague as to detail. His evidence was interspersed with numerous added qualifications to the effect that he could not recall the specifics of the events about which he was being questioned: T17.32; T17.39; T17.48; T18.4; T18.9; T18.35; T18.38; T19.3; T19.11; T19.29; T19.33; T19.42; T19.45; T21.16; T21.20; T24.20; T25.10; T25.19; T25.22; T25.44; T26.18; T29.35; T30.44; T32.2; T32.27; T33.19; T33.32; T33.35; T35.24; T36.3; T39.24; T42.30; T43.50; T44.9; T44.17; T46.39; T51.38; T53.21; T94.14; T94.45; T96.2.
At other times in his evidence, Dr Burkitt gave nonchalant answers as to the detail, or the lack of detail in relation to some relevant discussions and correspondence, so as to suggest he had not paid full attention to such matters. An example was his evidence (at T44.43), when he said, in relation to a relevant non-party entity named in a document: "Well I'm a doctor you know, we never read documents, we just pay the money".
Dr Burkitt could not recall the actual year in which he had acquired the subject Ferrari: T17.32. Before handing over his two vehicles to the first and second defendants, he had, by admitted oversight on his part, allowed the insurance policies on those vehicles to lapse: T18.28. On 2 May 2015, at the time he handed over the vehicles to the first and second defendants, he had taken the risk of driving each vehicle, whilst uninsured, to the respective handovers to the first and second defendants.
Despite the instances of Dr Burkitt's lack of recall as identified at paragraph [24] above, I nevertheless consider that he gave reliable evidence that, at the time of the first bailment which was with the first and second defendants, he was concerned, and insistent about, and had obtained reassurance from the first and second defendants, in the form of oral confirmation by the second defendant, that his vehicles would be fully covered by comprehensive insurance arranged by those defendants whilst bailed, including insurance cover for any occasions when the vehicles were not hired out, and were otherwise available for him to drive as the owner: T28.30; T57.25 - T57.37.

The second defendant - Mr Fotis Zervas

The evidence of Mr Zervas was at times vague. His evidence also contained numerous qualifications that he could not recall specific matters: T66.3; T66.12; T66.49; T67.13; T68.14; T106.37.
It was plain that at the time the plaintiff's vehicle was damaged, Mr Zervas had not been in command of the status of his agreement with the plaintiff in that he thought there had been a signed vehicle management agreement when that was not the fact: T69.16. Those circumstances led to the vehicle management agreement being uncontroversially backdated following the accident: T69.8 - T69.13; T69.37. On the evidence, I am satisfied that document did not contain all of the terms upon which the plaintiff and the first and second defendants had based their agreement.
I formed the impression that Mr Zervas had reconstructed his evidence in a way that sought to avoid liability to the plaintiff by seeking to deflect responsibility for the damage to Mr Andrew Triantafyllos, who was not a party to these proceedings. Mr Triantafyllos was closely associated with the first and second defendants, and unbeknown to the plaintiff, he apparently conducted another car rental business in Melbourne: T81.10; T105.34; T106.3 - T106.31; T107.12 - T107.35.
Significant parts of Mr Zervas' evidence were based on assumptions as to a purported transaction that he had assumed to have taken place between the plaintiff and Mr Triantafyllos: T108.49; T109.19. Absent confirmatory evidence being called from Mr Triantafyllos, I do not accept the evidence of the second defendant in that regard.
Mr Zervas acknowledged that the way in which his company, the first defendant, transacted its business at the time of his agreement with the plaintiff, included an element of confusion in the arrangements because his company was active in both Sydney and in Melbourne: T69.7.
I do not accept Mr Zervas' evidence (at T70.3), to the effect that he took possession of the plaintiff's vehicle as a convenient drop-off in Sydney, for a Melbourne entity known as Dream Drives Melbourne, a business that was, unbeknown to the plaintiff at the time, apparently operated by Mr Triantafyllos. I considered the evidence of Mr Zervas on that topic was an attempt on his part to obfuscate the facts in order to seek to avoid liability to the plaintiff for damage to the plaintiff's vehicle.

Facts

The plaintiff had owned the vehicle in question for 2 - 3 years before the events giving rise to this claim. Before the transaction in question in this case, he also owned a Lamborghini Murcielago, which had been hired out for rental purposes. In March or April 2015, he decided to also make his 2006 Ferrari available for the same purpose.
In early April 2015, after conducting some research, the plaintiff selected and approached the first defendant company to discuss renting out his Ferrari for profit.
On 15 April 2015, the plaintiff attended the first defendant's Sydney showroom. Whilst there he met with the second defendant who inspected the vehicle and suggested a need for some repairs. At that time, the second defendant recommended the vehicle be transferred to the first defendant's Melbourne premises.
In the course of that decision, the second defendant arranged a three-way telephone discussion between himself, the plaintiff, and Mr Triantafyllos, who was in Melbourne. I am satisfied from the circumstances that the plaintiff reasonably believed from those events, that Mr Triantafyllos was part of the first defendant's business, but located in Melbourne.
At about 4.06pm on 21 April 2015, the plaintiff received an email from an employee of the first defendant attaching the terms of a proposed rental agreement and a blank vehicle management agreement. In that email, the first defendant provided the plaintiff with an estimate of the rental incomes that two other Ferrari Spider F430 vehicles had produced in the first defendant's business, namely $105,000 in one instance, and between $110,000 to $115,000 in another instance, between 2013 and 2014.
At about 5.48pm on 21 April 2015, the first defendant emailed a blank vehicle management agreement to the plaintiff which set out the first defendant's proposed terms and conditions: Exhibit "A", Vol 3, Tab 19, pp 185 - 193.
The basis upon which the vehicle was ultimately bailed to the first and second defendants was that it would be covered by insurance, including for fire, theft, or loss due to any other cause.
On 2 May 2015, when the plaintiff delivered the vehicle whilst uninsured, to the first defendant's Sydney premises. At that time, he asked for, and the second defendant agreed, to adjust the terms of the vehicle management agreement to the plaintiff's requirements, including as to insurance, and the plaintiff accepted the second defendant's assurances that this would be the case.
It is common ground between the plaintiff and the first and second defendants that the vehicle management agreement that was filled out on 1 July 2015 but backdated to 2 May 2015, reflected the agreement of the parties as at 2 May 2015: Exhibit "A", Vol 2, Tab 21, pp 196 - 197.
By that agreement, the first and second defendants agreed to safely and securely house the vehicle, and to maintain it in a pristine condition to ensure it was always in a rentable condition in the first defendant's fleet of vehicles, and that on termination of the agreement, it would be returned to the plaintiff in the same condition, fair wear and tear excepted.
The agreement also provided for the plaintiff to receive a minimum payment of $2500 per month for an initial 6 months, and to then continue month to month, until the agreement was terminated by either party, in writing, or seven days notice to the other party.
That agreement was never terminated in writing by either party to the agreement before the vehicle was damaged and written off.
Returning then to the movement of the vehicle, on behalf of the first defendant, the second defendant had recommended to the plaintiff, and the plaintiff ultimately accepted, that the vehicle be bailed to the first defendant's Melbourne branch, with the contact person being Mr Andrew Triantafyllos, and with the second defendant to be the person having responsibility for the care of the vehicle. I am satisfied that at that time, the second defendant made the representation that Mr Triantafyllos was a staff member of the first defendant's business.
I do not accept the assertion by the second defendant that he had told the plaintiff that the vehicle was going to be placed with Mr Triantafyllos in a separate Melbourne-based business from that which was conducted by the first and second defendants.
The plaintiff's impression that Mr Triantafyllos was part of the first defendant's business also reasonably arose from an email that had been sent to him from an employee of the first defendant. In that email, Mr Triantafyllos was identified as a contact person: Exhibit "A", Vol 3, Tab 24, p 200. Furthermore, Mr Triantafyllos' business card that was provided to the plaintiff by the second defendant was in identical terms to the second defendant's business card except as to the name. Those events gave the plaintiff the clear impression that Mr Triantafyllos was a part of the first defendant's business: Exhibit "A", Vol 2, Tab 9, pp 41 - 42, par 20 - par 22.
I find that at that time, based on representations from the second defendant, that Mr Triantafyllos was a person who was in the business conducted by the first and second defendants in Melbourne.
On 2 May 2015, in a three-way conversation that took place on a loudspeaker telephone between the plaintiff, the second defendant and Mr Triantafyllos, it was agreed between them that the vehicle would be sent to Melbourne, where some preliminary mechanical and paintwork repairs were to be carried out on the vehicle.
It was on that basis that the plaintiff then left both of his vehicles with the first and second defendants. I accept that this occurred on the second defendant's assurance that the vehicles would be fully covered by insurance on the terms already outlined, with that insurance to commence on the next day: Exhibit "A", Tab 1, Vol 2, pp 41 - 42.
I accept that the plaintiff then handed over the car keys of his Ferrari vehicle to the second defendant on the second defendant's representation that a formal vehicle management agreement would be forthcoming from those defendants, confirming the terms discussed: Exhibit "A", Vol 2, Tab 9, p 42. That document did not materialise until after the plaintiff's vehicle became damaged, and then written off on 29 June 2015.
The plaintiff stated, and I accept, that in those events, at no time was he given to understand he was terminating any vehicle management agreement with the first defendant and engaging in a separate agreement with a company known as Dream Drives Melbourne Pty Ltd, or any other person or entity, including the company known as Fleetcorp Pty Limited: Exhibit "A", Vol 2, Tab 9, pp 42 - 43.
On about 10 June 2015, Mr Triantafyllos rang the plaintiff and another three-way telephone conversation occurred in which a Mr Joe Di Lecee of Zagame Auto Group joined the conversation. In that conversation, the plaintiff accepted Mr Di Lecee's quote for mechanical repairs to the vehicle in the amount of $26,845.50: Exhibit "A", Vol 2, Tab 9, pp 43 - 44.
On 20 June 2015, the plaintiff and his wife travelled to the first defendant's premises in Melbourne where they met with the second defendant and with Mr Triantafyllos. At that time, those premises were undergoing renovations. The plaintiff said, and I accept that there was no signage evident at those premises, indicating the existence of a business known as Dream Drives Melbourne Pty Ltd. At that time, in response to the plaintiff's inquiry, the second defendant reassured the plaintiff his vehicle was fully covered by insurance: Exhibit "A", Vol 2, Tab 9, pp 42 - 43.
I do not accept that on 20 June 2015, or at any other time, the plaintiff ought to have realised that his vehicle was in the possession of either Mr Triantafyllos in his own capacity, or in his capacity as operator of Dream Drives Melbourne Pty Ltd.
On 20 June 2015, the second defendant, Mr Triantafyllos, and the plaintiff, and the plaintiff's wife drove to the premises of Zagamo Automotive Group Pty Ltd to inspect that facility. At that time the second defendant warranted to the plaintiff that once the mechanical repairs were completed Mr Triantafyllos would drive the vehicle to a paint shop which was not identified by name: Exhibit "A", Vol 2, Tab 9, p 45.
Subsequently, the plaintiff's vehicle was delivered to the third defendant, Mr Michael Amro, at his paint shop known as Universal Kustoms.
The plaintiff's 23 June 2015 email to the second defendant and Mr Triantafyllos, which in my view confirmed his impression that those persons were both part of the first defendant's business, was not answered in any way that rebutted the plaintiff's impression to that effect: Exhibit "A", Vol 3, Tab 25, p 207.
In that email the plaintiff was still seeking, among other things, details of company registration, a backdated agreement, and clear documentation of insurance for adverse events. Those matters were not responsively attended to by either the first or the second defendants prior to the vehicle being damaged.
Following those events, the plaintiff then returned to Sydney, on 23 June 2015, he sent an email to the first and second defendants, copied to Mr Triantafyllos, confirming his understanding of the terms of the vehicle management agreement he had with the first and second defendants, and requested a copy: Exhibit "A", Vol 3, Tab 25, p 207.
On the same day, the plaintiff paid Zagame Automotive Group for the agreed cost of the repairs to the vehicle in accordance with an account rendered to him for that purpose in the amount of $26,845.50: Exhibit "A", Vol 3, Tab 26, pp 208 - 211.
On 29 June 2015, at some time between about 5.00pm and 10.00pm, the third defendant, Mr Amro, drove the plaintiff's vehicle out of the paint shop premises of Universal Kustoms. He was accompanied by a 16 year old female passenger. At about 10.50pm that evening, the vehicle was driven into collision with two trees, incurring irreparable damage that required the vehicle to be written off: Exhibit "A", Vol 2, Tab 9, p 45.
In the late afternoon of 30 June 2015, the second defendant called the plaintiff to inform him of the accident, and reassured him not to worry as the vehicle was covered by insurance: Exhibit "A", Vol 2, Tab 9, p 45.
In fact the plaintiff's vehicle had not been insured by either the first or second defendants. That fact is confirmed by an email sent by the first and second defendants to the plaintiff at 4.30pm on 1 July 2015. That email concluded with the following statement made by those defendants: "4. Once I have arranged for the additional insurance to our corporate policy, I will provide you with the insurance documents for your own piece (sic) of mind."
The first and second defendants were never in a position to demonstrate that the plaintiff's vehicle had been insured. The foreshadowed insurance documents never materialised, despite requests from the plaintiff to that effect.
In that 1 July 2015 email, the reference to "our corporate policy" in my view serves to rebut the second defendant's suggestion that the vehicle had been handed over to a separate business run by Mr Triantafyllos. In my view, nothing turns on the fact that email had been copied to Mr Triantafyllos, at "Ezycarz".
In the described circumstances, the plaintiff had become justifiably suspicious as to the truth of what he had been told and what he was being told by the second defendant concerning his vehicle.
A meeting was arranged to take place at the plaintiff's home at 8.30pm on 1 July 2015. In that meeting, the second defendant, the plaintiff and his wife were present. The plaintiff secretly recorded on his iPad part of the conversation with the second defendant.
Whilst that recording was not admitted into evidence in these proceedings, it is sufficient to say that I prefer the plaintiff's account of what took place at that time rather than what I consider to have been the second defendant's obfuscatory explanations.
The plaintiff has been unable to obtain the satisfaction he seeks from any of the defendants for the loss of his vehicle. Therefore, he has brought these proceedings claiming damages for his claimed losses.

Applicable legal principles

In the paragraphs that follow I set out the relevant legal principles that must guide the analysis in this case. Apart from questions as to who bears the onus of proof on matters of breach, damage and loss, no material distinction arises between the plaintiff's claims framed in contract and bailment. That bailment agreement was a contract.

Contract

The terms of the contractual agreement between the parties should be read so as to give business efficacy to the transaction and its relevant components, which in this case, indicates that the relevant interpretative consideration to be undertaken is that of what a reasonable person in the position of the other party would have understood the contract to mean in the context in which it was intended to apply: Toll (FBCT) Pty Ltd v Alphapharm Pty Ltd & Ors [2004] HCA 52; (2004) 219 CLR 165, at p 179.
In undertaking a construction of the agreement between the parties, a literal, technical or overly syntactic or semantically based analysis that would yield an absurd result is to be avoided in favour of a more purposive construction that would be consistent with business common sense: Antaios Compania Naviera SA v Salen Rederierna AB (The Antaios) [1985] AC 191, at p 201.

Bailment

A relationship of bailment results from the voluntary taking of possession by a person of the goods of another: Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; The Pioneer Container [1984] 2 AC 324, at 341 - 342; WD & HO Wills (Australia) Ltd v State Rail Authority of NSW (1998) 43 NSWLR 338, at 353 - 354; Palmer on Bailment, 3rd Ed (2009) Thomson Reuters, par 1-012.
The custodian of the goods (which includes a bailee) must safeguard the goods with reasonable care, and redeliver them, reasonable wear and tear excepted, in the condition in which they are bailed: Moorhouse v Angus & Robertson (No1) Pty Limited [1981] 1 NSWLR 700, at 708.
A bailee with duties analogous to those of a bailee for reward is liable if the goods bailed are damaged in the bailee's possession unless the bailee shows the damage complained of occurred without neglect or default of the bailee or the delegates of that bailee: Cambridge v Anastopolous [2012] NSWCA 405, at [13]; Tozer Kemsley & Milbourn (Australasia) Pty Ltd v Collier's Interstate Transport Service Ltd [1956] HCA 5; (1956) 94 CLR 384, at 397 - 398; Pitt Son & Badgery Ltd v Proulefco SA [1984] HCA 6; (1984) 153 CLR 644, at 646, 649.
Absent a specific agreement to the contrary, a bailee's duty of care does not ordinarily include an obligation to insure the goods bailed or to warn the bailor the goods are not insured: All Covers and Accessories v Sidiwal [2012] VSC 48, at [30] and following.
An employee acting in the course of employment or an agent acting for the purposes of a principal may take possession of goods and thereby become a bailee: Ultzen v Nichols (1984) 1 QB 92; Morris v CW Martin & Sons Ltd [1966] 1 QB 716, at 725. Such circumstances create a sub-bailment.
A bailee for reward is liable for damage occasioned to bailed goods if such goods are damaged in the bailee's possession unless the bailee can show such damage occurred without any neglect or default on the bailee's part, or on the part of any servants to whom that bailee delegated the relevant duty: Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220, at 233 - 234; 240 - 241.
If a bailee transfers actual possession of bailed goods to a third party for a limited period or specific purpose, and the ensuing sub-bailment is expressly authorised by the principal bailor, the intermediate bailee must take reasonable care in the selection of the sub-bailee, and remains liable for harm resulting from a breach of duty on the part of the sub-bailee: Palmer on Bailment, 3rd Ed (2009) Thomson Reuters, par 23-052; East West Corporation v DKBSAF 1912 A/S [2003] QB 1509, at [29], [57], [58].

Australian Consumer Law provisions

In the course of trade or commerce, representations that are misleading, or likely to either mislead or to deceive, are representations that are made in contravention of s 18 of the ACL. Where a party to a transaction is knowingly concerned in making such contravening representations, that party is therefore taken to have aided, abetted, counselled or procured the contravention or induced contraventions, thereby making that party liable for such representations: s 238 of the ACL.
Section 18 of the ACL relevantly provides: "18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. (2) Nothing in Part 3 1 (which is about unfair practices) limits by implication subsection (1)."
Section 238 of the ACL relevantly provides: "238 Compensation orders etc. arising out of other proceedings (1) If a court finds, in a proceeding instituted under a provision of Chapter 4 or this Chapter (other than this section), that a person (the injured person) who is a party to the proceeding has suffered, or is likely to suffer, loss or damage because of the conduct of another person that: (a) was engaged in a contravention of a provision of Chapter 2, 3 or 4; or (b) constitutes applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared under section 250 to be an unfair term; the court may make such order or orders as it thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct. (2) The order must be an order that the court considers will: (a) compensate the injured person in whole or in part for the loss or damage; or (b) prevent or reduce the loss or damage."

Civil Liability Act 2002 - Relevant provisions

Section 5B of the CL Act provides: "5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless: (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things): (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm."
Section 5C of the CL Act provides: "5C Other principles In proceedings relating to liability for negligence: (a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and (b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and (c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk."
Section 5D of the CL Act relevantly provides: "5D General principles (1) A determination that negligence caused particular harm comprises the following elements: (a) that the negligence was a necessary condition of the occurrence of the harm (factual causation), and (b) that it is appropriate for the scope of the negligent person's liability to extend to the harm so caused (scope of liability). …"
The relevant provisions of Part 4 of the CL Act will be considered in the context of determining the claim by the first and second defendants for proportionate liability with the third defendant.

Reasons for exclusion of listening device evidence

At the hearing the plaintiff sought to rely upon a recording of a private conversation that took place between himself and the second defendant, where that recording was obtained by him using a listening device.
After argument, the tender of that recording was rejected for reasons that were sufficiently identified in the course of argument: T90 - T103. At that time it was indicated that the full further reasons for that rejection would be included in the final judgment: T103.29. Those further reasons now follow.
Section 7(1) of the Surveillance Devices Act 2007 ("SD Act") provides: 7 Prohibition on installation, use and maintenance of listening devices (1) A person must not knowingly install, use or cause to be used or maintain a listening device: (a) to overhear, record, monitor or listen to a private conversation to which the person is not a party, or (b) to record a private conversation to which the person is a party. Maximum penalty: 500 penalty units (in the case of a corporation) or 100 penalty units or 5 years imprisonment, or both (in any other case).
The term listening device is non-exhaustively defined in s 4 of the SD Act to mean: "… any device capable of being used to overhear, record, monitor or listen to a conversation or words spoken to or by any person in conversation, but does not include a hearing aid or similar device used by a person with impaired hearing to overcome the impairment and permit that person to hear only sounds ordinarily audible to the human ear."
The definition of listening device includes "instrument, apparatus and equipment": s 4 of the SD Act.
The term private conversation is defined in s 4 of the SD Act to mean: "…any words spoken by one person to another person or to other persons in circumstances that may reasonably be taken to indicate that any of those persons desires the words to be listened to only: (a) by themselves, or (b) by themselves and by some other person who has the consent, express or implied, of all of those persons to do so, but does not include a conversation made in any circumstances in which the parties to it ought reasonably to expect that it might be overheard by someone else."
Section 7(3)(b) of the SD Act provides an exception to s 7(1) where: "(3) … (b) a principal party to the conversation consents to the listening device being so used and the recording of the conversation: (i) is reasonably necessary for the protection of the lawful interests of that principal party, or (ii) is not made for the purpose of communicating or publishing the conversation, or a report of the conversation, to persons who are not parties to the conversation."
A principal party is defined in s 4 of the SD Act to mean "a person by or to whom words are spoken in the course of the conversation."
Accordingly, for a party to successfully invoke the exception contained within s 7(3)(b) of the SD Act, the Court is required to arrive at a state of satisfaction that the recording was for the purpose of protecting a "lawful interest" and that it was "reasonably necessary" for the protection of that interest.
The plaintiff's interest in making the recording was in this instance the desire to make a reliable record of a conversation which he expected might be contentious. At the time, he did not have an interest that was "legally enforceable". In my view, the described circumstances fell short of the plaintiff having a lawful interest: DW v R [2014] NSWCCA 28, at [30]; [32] - [33].
In my view there was no reasonable necessity for the plaintiff to make the recording of the conversation. He was a sophisticated person and a medical practitioner. He could have taken notes and I infer that he was accustomed to do so. Although he might have anticipated a possible civil dispute in the circumstances, where disputed versions of events might arise, as referred to in DW v R [2014] NSWCCA 28, at [34], I see no reason why the plaintiff had to resort to a secret recording made on a listening device where taking notes would have been sufficient.
In my view, the recording was obtained unlawfully. In those circumstances, where the plaintiff had a relevant recollection of events, I considered that the interests of admitting the evidence obtained unlawfully outweighed any benefits to be gained to the administration of justice by admitting such evidence: s 138 of the Evidence Act 1995.
Although the evidence in the recorded conversation might be probative, it was not of overriding importance where the plaintiff could give oral evidence of his account of the relevant conversation without significant difficulty: s 138(3) of the Evidence Act 1995.
Another relevant consideration to be taken into account is the interests of justice in modern litigation which, at some point, requires that parties in dispute place their cards on the table to avoid trial by ambush, especially where the resort to litigation involves the use of public resources: Nowlan v Marsland Transport Pty Ltd [2001] NSWCA 346; White v Overland [2001] FCA 1333, at [4]. That is a matter to which UCPR r 31.10(1) applies.
The terms of UCPR r 31.10 provide as follows: "31.10 Plans, photographs, audio-visual recordings and models (1) At least 7 days before the commencement of a hearing, a party who intends to tender any plan, photograph, audio-visual recording or model at the hearing must give the other parties an opportunity to inspect it and to agree to its admission without proof. (2) A party who fails to comply with subrule (1) may not tender the plan, photograph, audio-visual recording or model in evidence except: (a) in the case of a prescribed item - where the court is satisfied that the party had a legitimate forensic purpose for not giving the other parties an opportunity to inspect the item, or (b) in any other case - by leave of the court. (3) ... (4) In this rule: audio-visual recording includes a sound recording or a record of moving images (or both) whether stored on film, audio or video tape, digitally, electronically or by any other means. prescribed item means a photograph or audio-visual recording that was made or obtained in connection with the relevant proceedings, by or at the request of a party, for the purpose of testing the credibility of a witness at the hearing."
In this case, where the evidence in chief was in the form of affidavits, in the interests of minimising issues and ensuring the efficient use of court time for the hearing, the recording, including a transcript of it, by the plaintiff could have served that material on the first and second defendants as evidence in reply.
If to the contrary of that view, the plaintiff wished to argue that the recording was a "prescribed item", then in accordance with the practice that has evolved in this Court, the appropriate procedure would have been for the plaintiff's legal representatives to make an ex-parte application to the List Judge, for leave to be excused from the need to comply with UCPR r 31.10(1).
That said, in my view, the recording in question is not a prescribed item because it was not obtained in connection with these proceedings nor was it obtained for the purpose of testing the credibility of a witness at the hearing: UCPR r 31.10(4). There were no proceedings relevantly on foot or contemplated at the time the recording was made. Instead, it was obtained for record purposes. At that time, the plaintiff's interest was in making an insurance claim. Litigation was not a foregone conclusion at that time. Accordingly, the tender of the recording made by the use of a listening device was rejected.
I now turn to the consideration of the issues calling for decision.

Issue 1 - Nature and terms of the respective bailments

In the paragraphs that now follow I set out my findings on the nature and the terms of the respective bailments.

Bailment between plaintiff and first and second defendants

The arrangement that existed between the plaintiff and the first and second defendants was a contract that plainly comprised a bailment for reward. That bailment was not relevantly limited by any contractual term that might have otherwise applied to exclude the first and second defendants from any liability to the plaintiff that might foreseeably and ordinarily arise from a relationship of bailment.
I accept the evidence of the plaintiff to that effect, he was insistent that at all times during the currency of the bailment, that his vehicle would be covered by a policy of comprehensive insurance to be arranged by the first and second defendants in the event of accidental loss or damage.
I am satisfied that at the time of the initial bailment to the first and second defendants, the plaintiff was particularly concerned to ensure that as a term of the bailment, the subject vehicle was comprehensively insured against accidental loss and damage whilst the first and second defendants had charge of it, including on any occasions when the plaintiff might want to have use of the vehicle on days when the first and second defendants had not otherwise hired the vehicle out to paying customers.
I find that the abovementioned contractual term of the bailment regarding insurance, was in addition to any duty of care the first and second defendants owed to the plaintiff under the general law in relation to their possession of the plaintiff's vehicle.

First sub-bailment

The first sub-bailment of the plaintiff's vehicle was between the first and second defendants to Zagame Automotive Group Pty Ltd. That sub-bailment occurred with the specific concurrence of the plaintiff.
The plaintiff's concurrence to that first sub-bailment did not in any way serve to waive, abrogate or release the first and second defendants from the obligation of ensuring that the vehicle was comprehensively insured whilst it was in the possession of either the first and second defendants, or Zagame Automotive Group Pty Ltd in the subsequent sub-bailment. In that regard, this obligation of the first and second defendants to arrange insurance was an ongoing one.
Furthermore, that first sub-bailment did not absolve the first and second defendants from the duty to take reasonable care with regard to the plaintiff's Ferrari vehicle, and with regard to its use by bailees and sub-bailees. This included the duty to take reasonable steps aimed at ensuring that the vehicle would not be misused, that is, used outside the purpose and terms of the sub-bailment.
I find that the awareness of the first and second defendants as to the plaintiff's requirement for comprehensive insurance cover for the vehicle put the first and second defendants on notice that they were required to take care to ensure the vehicle would not only be the subject of continuous insurance for the duration of the principal bailment to them, and to any sub-bailment arranged by them, but also, that reasonable care would be taken by those defendants to ensure that the use of the vehicle in any contemplated sub-bailment, would be specifically limited to the terms of any such sub-bailment.
In this instance, the relevant sub-bailment involved carrying out the contemplated repairs. In those circumstances the duty of the first and second defendants extended to making it known to the sub-bailee that the plaintiff's vehicle should not be used for any other purpose.

Second sub-bailment

The second sub-bailment of the plaintiff's vehicle was between Zagame Automotive Group Pty Ltd and the third defendant, Mr Michael Amro.
The general nature of that sub-bailment was that the plaintiff had agreed with the first and second defendants that the paintwork on the vehicle needed remedial attention from a panel beater to bring it up to a standard that was suitable for placement on the rental market.
In that specific regard, it was the plaintiff's general stipulation that the first and second defendants were to engage a reputable paint shop in relation to that contemplated sub-bailment to a panel beater. That arrangement was not a specific reference to either the third defendant Mr Amro, or to his business, which he conducted under the name Universal Kustoms.
Whilst the plaintiff had a general understanding that, after the vehicle had been the subject of mechanical repairs carried out by Zagame Automotive Group Pty Ltd pursuant to the first sub-bailment, there would be a further sub-bailment to a reputable panel or paint shop for repairs and adjustments to the paint and body work of the vehicle, the plaintiff did not have any specific knowledge of which paint or panel shop would be selected as the second sub-bailee.
I find that the plaintiff left the negotiation and the terms of the second sub-bailment to be worked out by the first and the second defendants in conjunction with Zagame Automotive Group Pty Ltd, without further reference to him, except as to his ultimate responsibility to bear the cost of such repairs.
There is no evidence that the terms of the initial bailment of the plaintiff's vehicle to the first and second defendants concerning the requirement that the vehicle be insured, were in fact replicated in the subsequent sub-bailment between those defendants and the third defendant. That said, the second sub-bailment did not absolve the first and second defendants from the continuing obligation of maintaining the insurance cover on the vehicle as was required by the agreement they had with the plaintiff.
Similarly, there is no evidence that when the first and second defendants in conjunction with their agent Zagame Automotive Group Pty Ltd, arranged the further sub-bailment of the vehicle with the third defendant, that they had stipulated or limited the third defendant's use of the vehicle to movements that were necessary to be carried out within the paint shop, and not otherwise. In my view, such a limitation on use should be implied from the circumstances.

Issue 2 - Whether s 18 and s 238 of the ACL were breached

I find that the bailment of the plaintiff's vehicle to the first and second defendants, and the statements in the form of representations made orally to the plaintiff on behalf of the first defendant by the second defendant, to the effect that the vehicle was or would be covered by insurance, comprised conduct in the course of trade or commerce: s 18(1) of the ACL.
I find that the cited statements as to the existence of insurance cover for the vehicle were untrue in circumstances where the first and second defendants knew that such statements were untrue. I accept that the plaintiff had repeatedly asked the first and second defendants for proof of the existence of that insurance, and those defendants continued to be unable to do so.
In my opinion, in that regard, the cited statements by the first and the second defendants concerning insurance, comprised conduct that was misleading, deceptive and likely to mislead or deceive: s 18(1) of the ACL.
I find that those misleading and deceptive statements constituted material inducements that led the plaintiff to rely on them and to enter into the bailment contract with the first and second defendants.
I find that at that time, the first and second defendants knew that the represented insurance cover did not exist, and could not have been effected within the business model that was maintained by those defendants.
This raises the question of whether such statements were a relevant cause of the plaintiff's claimed losses. I will return to that issue after considering whether there has been a relevant breach of duty of care.

Issue 3 - Breach of duty of care

There can be no controversy that the duty of care owed by all defendants to the plaintiff with respect to his motor vehicle was to take reasonable care against the risk of harm or damage that might foreseeably occur to that vehicle whilst it was in their possession.
In my view, that duty of care was coalescent across all of the causes of action claimed by the plaintiff, irrespective of whether or not the possession of the plaintiff's vehicle was as a result of a bailment, or in contract, or according to the general law of negligence, as governed by the CL Act.

Breach by first and second defendants

Before considering whether or not the first and second defendants were in breach of the duty of care they owed to the plaintiff, it is necessary that I record some relevant findings.
I consider that in the context of the vehicle hiring arrangements, the plaintiff was a sophisticated person who was anxious to ensure that full comprehensive insurance was in place in respect of his vehicle, and he was repeatedly reassured by the first and second defendants, that his vehicle was relevantly insured. I find that the plaintiff bailed his vehicle on the representation that the vehicle would be comprehensively insured.
I find that the plaintiff handed over possession of his vehicle to the first and second defendants on the implied condition that they would take reasonable care whilst the vehicle was in their responsibility, care and possession.
I find that implied condition also involved the requirement that the first and second defendants take reasonable care to ensure, in accordance with the plaintiff's requirements, that the vehicle was comprehensively insured by way of insurance cover that was to be arranged and kept in place by the first and second defendants for so long as the subject bailment arrangements continued to subsist between the parties.
The plaintiff claimed, and I accept, that when he handed possession of his vehicle to the first and second defendants, and also when he became aware that they would be delivering the vehicle to Zagame Automotive Group Pty Ltd for repairs, he specifically communicated to the first and second defendants his required condition that the vehicle was to be kept fully or comprehensively insured.
I find that the second defendant, on behalf of the first defendant, acknowledged the plaintiff's requirement in that regard, both at the time when the vehicle was handed over in Sydney, and again later, when the vehicle was in the workshop of Zagame Automotive Group Pty Ltd in Melbourne, prior to the vehicle being damaged in the subject collision.
I reject the evidence advanced on behalf of the first and second defendants to the effect that the Sydney premises of the first defendant company was merely the drop-off point or Sydney agent for the business run by Mr Triantafyllos, namely Dream Drives Melbourne.
I find that the first and second defendants could not have fulfilled the requirement that the vehicle be taken to a reputable paint shop when it was taken to the third defendant's premises because they took no steps to ascertain the identity of the third defendant, or the reputation of his business.

Fulfilment of pre-conditions required by s 5B(1) of the CL Act

In the bailment arrangements undertaken between the plaintiff and the first and second defendants, there was a foreseeable risk of damage occurring to the plaintiff's vehicle, irrespective of whether the vehicle was being driven whilst hired, or whether it was being stored. This was an insurable risk: s 5B(1)(a) of the CL Act.
As it was the intention of the parties that the plaintiff's vehicle would be driven, and that it would be transported from place to place, the risk of damage was not one that could reasonably be considered to be insignificant: s 5B(1)(b) of the CL Act.
In the circumstances, a reasonable person in the position of the defendants, faced with the plaintiff's requirement for the vehicle to be the subject of insurance cover, would have taken the obvious precaution of arranging for the vehicle to be insured, and at the same time, taking care to establish that the insurance cover would remain in place in respect of the further sub-bailments that were contemplated in the arrangements: s 5B(1)(c) of the CL Act.

Fulfilment of pre-conditions required by s 5B(2) and s 5C of the CL Act

The precaution of arranging insurance for the vehicle was something that a reasonable person in the position of the first and second defendants would have taken because the probability of the vehicle being damaged whilst it was being driven, was not low or insignificant: s 5B(2)(a) of the CL Act.
Damage to the plaintiff's vehicle, if it occurred, was likely to involve significant expense, which would equate to serious harm because of the likely cost of repairs: s 5B(2)(b) of the CL Act.
Any consequential burden on the first and second defendants in taking the precaution of effecting insurance for the vehicle was negligible, and it would have been a cost factor ordinarily incorporated into the commercial arrangements that were transacted between the parties: s 5B(2)(c) of the CL Act.
The bailment arrangement was an unremarkable commercial arrangement that ordinarily attracted a duty of care. There was no social utility to be gained by not effecting the insurance the plaintiff required in that transaction: s 5B(2)(d) of the CL Act.
Other statutory principles for assessment of negligence, such as considerations of similar risks, do not relevantly arise in this instance: s 5C(a) of the CL Act. The consideration of the factor of insurance in the context of s 5C(b) and (c) of the CL Act does not arise in this case because the required task of arranging insurance was part of the contractual agreement between the plaintiff and the first and second defendants.
I find that the failure of the first and second defendants to arrange the insurance cover as required by the plaintiff amounted to a negligent breach of duty of care by those defendants, as well as being a breach of the contractual terms of the bailment.
Contrary to the agreement between the parties, the first and second defendants failed to effect the required insurance. Accordingly, the plaintiff must succeed in his claim against the first and second defendants in respect of the breach of the subject bailment contract.
The analysis of the liability of the first and second defendants does not stop at that point. This is because the obligation of those defendants to take reasonable care extended to enquiring about, arranging and ensuring, that the vehicle was covered by insurance whilst in the possession of Zagame Automotive Group Pty Ltd or in any further sub-bailments.
That duty also included the obligation to take reasonable care when arranging the contemplated further sub-bailment to require that when the vehicle was being used or moved, this would only occur for contemplated repair and testing purposes, and not for the extraneous purpose of joy-riding as was undertaken by the third defendant.
As the vehicle was in the primary care of the first and second defendants as a result of the first bailment, and in view of it being incumbent upon those defendants to ensure that the plaintiff's requirements for comprehensive insurance of his vehicle also extended to and was in place in respect of any further sub-bailments of the vehicle for the purposes contemplated by the initial agreement.
A further instance of breach by the first and second defendants was the failure to fulfil the plaintiff's reasonable requirement that the vehicle be placed with a reputable repairer. Those defendants knew nothing of the reputation of the third defendant's business, and could not have fulfilled that obligation. Hence they were in breach of that condition of their agreement with the plaintiff.
For the reasons outlined between paragraphs [109] to [112], the failure of the first and second defendants to secure and ensure implementation of the agreed arrangements comprised breaches of the duty of care owed to the plaintiff, which amounted to negligence on their part.

Breach of duty of care by third defendant

The actions of the third defendant in losing control of the vehicle and causing the vehicle to leave the roadway and collide with trees, of itself bespeaks negligence on his part: s 5B and s 5C of the CL Act.

Issue 4 - Causation of the plaintiff's loss: s 5D of the CL Act

I find that absent the misleading representations made by the second defendant on behalf of the first defendant, to the effect that the plaintiff's vehicle would be insured, it would have been improbable and most unlikely that the plaintiff would have handed over possession of his vehicle to the first and second defendants, or authorised further sub-bailments of the vehicle to repairers, including the third defendant's panel shop. But for those representations, the plaintiff's losses would not have occurred: s 5D(1)(a) of the CL Act.
I find that in circumstances where the plaintiff's vehicle was sub-bailed for the sole purpose of effecting bodywork and paintwork adjustments, it was most unlikely in those circumstances, if the limited terms of that sub-bailment had been adhered to, that the vehicle would have been used outside of normal business hours, and outside the confines of the panel shop, such as in the events leading to the collision. But for those latter circumstances, the plaintiff's loss would not have occurred: s 5D(1)(a) of the CL Act.
Therefore, the loss suffered by the plaintiff due to the conduct of the first and second defendants and the third defendant, were relevantly caused by those defendants in different ways. This entitles the plaintiff to compensation from each defendant under the general law, as affected by the CL Act, and also pursuant to s 238 of the ACL.
I find that but for that misleading and deceptive representation by the second defendant on behalf of the first defendant, the plaintiff's claimed loss would not have occurred as the plaintiff would not have parted with possession of his vehicle if there was no insurance arrangement in accordance with his requirements: s 5D(1)(a) of the CL Act; Strong v Woolworths Ltd [2012] HCA 5, (2012) 246 CLR 182.
As the arrangement between the plaintiff and the first and second defendants was a commercial one, there is no sound reason for restricting the scope of the liability of the first and second defendants in that regard: s 5D(1)(b) of the CL Act. A similar conclusion arises with regard to the sub-bailment to the third defendant.

Issue 5 - Assessment of the plaintiff's damages

The damages claims against the respective defendants must be assessed separately.

Damages payable by first and second defendants

There is consensus between the plaintiff and the first and second defendants, that in the event the plaintiff's claim succeeds against them, he is entitled to damages of $200,000 for the loss of his vehicle calculated by reference to its pre-accident value of $235,000 less $35,000 for the value of the wreck: MFI "10", par 4. The same conclusion arises with regard to the third defendant.
In addition to that calculation of loss, the plaintiff claims loss of rental income from the vehicle at the minimum rate of $2500 per month: Exhibit "A", Vol 3, Tab 21, p 197. The plaintiff makes that claim against the first and second defendants for a period of 24 months, in the amount of $60,000: MFI "9", par 1.13(ii). That 24 month period is in excess of the initial 6month rental period that was agreed, subject to a continued rental on a month to month basis: Exhibit "A", Vol 3, Tab 21, p 197.
I consider that a reasonable rental period for assessment of monthly loss of income is 24 months as claimed.
In contrast the position of the first and second defendants on that aspect of the plaintiff's claim is that the bailment was terminated on delivery of the vehicle to the business of Mr Triantafyllos in Melbourne. Absent confirmatory evidence from Mr Triantafyllos I have not accepted that proposition.
I find that the plaintiff has established his claim for assessment of damages against the first and second defendants in the amount of $260,000.

Damages payable by the third defendant

The third defendant was not privy to the contractual arrangements between the plaintiff and the first and second defendants concerning the agreement for monthly rental income form the plaintiff's vehicle. In those circumstances, the plaintiff's claim against the third defendant must be limited to the value of the vehicle in the amount of $235,000 less $35,000 for the value of the wreck, in the assessed sum of $200.000.
In that result, the third defendant's liability to the plaintiff in damages must be for a different amount to that payable by the first and second defendants. The amounts payable by the respective defendants are also dependent upon considerations of proportionable liability.

Issue 6 - Whether an apportionable claim arises

The first and second defendants argued that a claim in bailment is a claim in tort, and this therefore gives rise to a consideration as to whether there is an apportionable claim for the purposes of s 34 and s 35 of Part 4 of the CL Act.
Section 34 of that Act provides as follows: 34 Application of Part (1) This Part applies to the following claims (apportionable claims): (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law. (1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). (2) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. (3) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1). (3A) This Part does not apply to a claim in an action for damages arising from a breach of statutory warranty under Part 2C of the Home Building Act 1989 and brought by a person having the benefit of the statutory warranty. (4) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died. (5) (Repealed)
For s 34(1) of the CL Act to apply, there must be a single apportionable claim even if the claim is based on one cause of action. In this context, the reference to a claim should be read as being a reference to damages.
It follows from the analysis set out in paragraphs [162] to [169] above that in this case, there are different claims assessable against the two lots of defendants, and those claims have resulted in different damages assessments.
On first analysis, on a proper construction of s 34(1A) of the of the CL Act, the result of the different monetary awards of damages to be assessed against different defendants suggests that is not a single apportionable claim for the purpose of assessing proportionate liability between the two lots of defendants. However, a purposive construction of Part 4 is required. The key to that approach is to be found in s 35(1) of the CL Act. The effect is that damages claims must be considered in light of their different elements.
Section 35 of the CL Act, provides as follows: 35 Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.
Applying the required purposive construction, in my view, the only claim that is apportionable in this instance comprises the common element of assessed damages between all defendants, namely the amount of $200,000, being the value of the vehicle after the salvage has been offset.
The loss of rental income does not form part of the claim against the third defendant and it cannot be considered as part of an apportionment of liability.
I now turn to the consideration of whether there was concurrent wrongdoing on the part of the respective defendants.
The first and second defendants argued that if they are found to be liable to the plaintiff in damages, then the third defendant should be seen to be a concurrent wrongdoer. This is said to arise because, by his actions, the third defendant was the person who had driven the plaintiff's vehicle into a tree, causing it to be written off.
Consequently, the first and second defendants argued that any liability on their part to the plaintiff in damages ought to be reduced to reflect a fair and just apportionment of responsibility between themselves and the third defendant.
On the basis of my liability findings, all three defendants must be seen to be concurrent wrongdoers: Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10, at [18], [20], [21]. This is because each of them, by their actions and inactions, independently of each other, caused the vehicle to be damaged: s 34(2) of the CL Act. As the plaintiff's claim is for damage to property, and for consequential economic loss, Part 4 of the CL Act applies to this case: s 34(2) of the CL Act.
In respect of each lot of defendants, the relevant conduct comprised a different species of activity that on its face, at first analysis seemed to be separate in time.
However, the failure of the first and second defendants to effect any insurance of the plaintiff's vehicle, was in breach of their agreement to do so, and that breach continued up until the time of the breach by the third defendant. Such failure was quite separate and distinct from the third defendant's actions which comprised negligent driving. However, those separate activities, which had a concurrent effect at the time of the damage, have led the plaintiff to suffer the common element of loss comprising $200,000.
The respective failures common between the first and second defendants were first in time. These failures comprised both the misleading and deceptive conduct of the second defendant on behalf of the first defendant, and the subsequent failure of those defendants to arrange vehicle insurance to ensure that the risk of accidental damage to the plaintiff's vehicle applied in any further contemplated sub-bailments. The relevant failure of the third defendant was the failure to maintain control of the plaintiff's vehicle whilst it was being driven, and that failure occurred after the failure of the first two defendants.
Although each such failure was an independent cause of the plaintiff's loss, this does not mean that the respective wrongdoings were not concurrent: s 34(2) of the CL Act.
In my assessment, the plaintiff would not have parted with the possession of his vehicle if he had known that it would not be covered by insurance arranged according to his agreement with the first and second defendants. In those circumstances, the third defendant would not have acquired possession of the vehicle so as to enable him to have the opportunity to drive it into collision with trees, yet he did drive it into the trees, thus causing damage: s 5D(1)(a) of the CL Act.
Accordingly, by independent causation pathways, all defendants relevantly caused, and are relevantly responsible for, the damage to the plaintiff's vehicle.
In this case, the task of weighing up the respective contributions of the first and second defendants on the one hand, and of the third defendant on the other, cannot proceed in the form of a precise mathematical analysis. Instead it must be undertaken according to a broad assessment that is just and equitable according to the respective causative potency of the acts and neglects of the parties found to be liable: Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34, at [10].
The balancing factors seem to me to be, on the one hand, the combined effect of a misleading representation as to the existence of insurance, and the continuing breach by the first and second defendants in failing to arrange insurance. Such breaches continued right up until the time the damage to the plaintiff's vehicle was incurred. On the other hand, the breach by the third defendant occurred more opportunistically, on the day of the collision, as an incident of negligent driving where that driving was unauthorised.
In aligning those breaches for examination of respective blameworthiness, it seems to me that both sets of acts and neglects involve equal degrees of culpability.
The sequence of events commencing with the third defendant's unauthorised use of the vehicle outside the terms of the bailment, and the failure of the third defendant to maintain control of the vehicle, are just as egregious as the continued effect of the misleading, deceptive and untrue representation as to the existence of insurance, and the continuing failure of the first and second defendants to effect insurance as agreed.
In those circumstances, giving proper interpretative effect to the purpose of Part 4 of the CL Act, which provides a mechanism whereby concurrent wrongdoers can be made to share responsibility for damage without the need to resort to costly cross-claims, I consider it fair, just and equitable that the first and second defendants each bear 50 per cent of that portion of damages which comprises the common element assessed at $200,000, namely $100,000 each.
Insofar as the first and second defendants are concerned, the plaintiff is therefore entitled to a judgment against them in the amount of $160,000.
Insofar as the third defendant is concerned, the plaintiff is therefore entitled to a judgment against him in the amount of $100,000

Interest

The damages findings against the various defendants in this case require differential calculations of interest because of the differing assessments involving the claims against the first and second defendants and the claim against the third defendant.
As to the liability of the first and second defendants for pre-judgment interest, Appendix 1 identifies the pre-judgment interest on a judgment sum of $160,000 to be $23,620.94 (50 per cent of $38,271.92 plus $4,484.38).
As to the liability of the third defendant for pre-judgment interest, Appendix 2 identifies the pre-judgment interest on a judgment sum of $100,000 to be $19,135.36 (50 per cent of $38,271.92).

Disposition

The plaintiff has established his entitlement to a judgment against the first and second defendants in the sum of $160,000, plus pre-judgment interest, calculated pursuant to s 100 of the Civil Procedure Act 2005, in the total amount of $183,620.94. He has also established his entitlement to damages against the third defendant in the amount of $100,000 plus pre-judgment interest, calculated pursuant to s 100 of the Civil Procedure Act 2005, in the total amount of $119,135.96.

Costs

As the plaintiff has succeeded in obtaining a judgment in his favour against each defendant, he should have an order that the defendants should pay his costs of the proceedings on the ordinary basis, unless a party can show an entitlement to some other costs order, for which there should be liberty to apply.
I consider that the different levels of costs as between the first and second defendants on the one hand, and the third defendant on the other, should be determined on an equal basis. There should be liberty to apply if a party seeks a different costs order.

Orders

I make the following orders: 1. Verdict and judgment for the plaintiff against the first and second defendants, including interest pursuant to s 100 of the Civil Procedure Act 2005, in the total sum of $183,620.94; 2. Verdict and judgment for the plaintiff against the third defendant, including interest pursuant to s 100 of the Civil Procedure Act 2005, in the total sum of $119,135.96; 3. The respective defendants are to pay the plaintiff's costs of the proceedings on the ordinary basis, equally as between the first and second defendants, and the third defendant, unless a party can show an entitlement to costs on some other basis; 4. Liberty to apply on 7 days' notice if further or other orders are required; 5. The exhibits may be returned.

Appendix 1 Start Date End Date Days Rate Amount per day Total 29.06.2015 30.06.2015 2 6.5% $35.6164 $71.23 01.07.2015 31.12.2015 184 6% $32.8767 $6,049.32 01.01.2016 30.06.2016 182 6% $32.7869 $5,967.21 01.07.2016 31.12.2016 184 5.75% $31.4208 $5,781.42 01.01.2017 30.06.2017 181 5.5% $30.1370 $5,454.79 01.07.2017 31.12.2017 159 5.5% $30.1370 $4,791.78 07.12.2017 02.11.2018 337 5.5% $30.1370 $10,156.17 Total 1229 $38,271.92

Appendix 2 Start Date End Date Days Rate Amount per day Total 01.07.2017 06.12.2017 159 5.5% $9.0411 $1,437.53 07.12.2017 02.11.2018 337 5.5% $9.0411 $3,046.85 Total 496 $4,484.38

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 November 2018

At a glance

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Judgment (38 paragraphs)

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Cases Cited (18)

Cited By (2)