MCKNIGHT v MILLER

The hiring arrangements between Ms McKnight and Compass

1. Compass supplied Ms McKnight with a motor vehicle for the duration of the repair period. Initially, Compass supplied Ms McKnight with a Toyota Camry. When mechanical issues developed with the Toyota Camry, Compass supplied her with a Toyota Corolla.
2. Compass charged a daily rental fee of $95.88 plus a delivery fee of $93.50. All of those amounts were inclusive of GST. Compass' total charges under its hiring arrangements with Ms McKnight were $3,928.53. However, Compass did not require Ms McKnight to make any payment in respect of the charges.
3. Compass' total charges of $3,928.53 were based upon a hire period of 40 days. However, it was agreed between RAC on behalf of Ms Miller and Compass on behalf of Ms McKnight that the correct hire period was 39 days. Consequently, Compass' total charges, for the purposes of the proceedings, were $3,832.66. See [5] above.
4. Ms McKnight entered into separate written rental agreements with Compass in respect of the Toyota Camry and Toyota Corolla. The agreements were materially identical.
5. The provisions of each rental agreement were, relevantly, as follows:

(a) Subject to a document described as a 'Mandate and Authority to Act', Ms McKnight agreed with Compass that she was liable to pay all amounts payable under the agreement.

(b) The agreement was conditional upon Ms McKnight signing the Mandate and Authority to Act. The Mandate and Authority to Act formed part of the agreement.

(c) All fees and charges payable under the agreement would be 'recouped to the extent recoverable through the Mandate and Authority to Act'. Further, to the extent that fees and charges were not recoverable, Ms McKnight agreed and authorised 'all amounts payable under [the agreement] to be charged to the payment means of which details have been supplied'.

(d) The '[r]ates include premium roadside assistance at $3.30 per day'.

1. In the Mandate and Authority to Act the rental agreement was defined as 'the RA'.
2. The Mandate and Authority to Act provided, relevantly:

1. You have requested, and We have agreed to hire to You, the Hire Vehicle described in the RA upon the terms set out in the RA/Mandate, because Your own vehicle is unroadworthy or, in need of repair due to a road traffic accident ('the Accident') which You assert was the fault of a third party (referred to as 'the Third Party').

2. We will be entitled to payment for the applicable hire charge and related charges agreed in the RA, the total of which will be set out in the hire invoice issued when the hire vehicle is returned to us ('the Hire Charges').

3. You and We acknowledge that, as at the date of this hire the hire charge is unknown because the period of the loss of use of your car is yet to be determined. The hire period will be from the start date set out in the RA to the date the hire vehicle is returned to us ('the Hire Period'). An invoice for the cost of the hire will be issued after the vehicle is returned. You will be advised of the daily rental charge for the vehicle at the outset.

...

5. We will use our best endeavours, as your recovery agent, to recover the Hire Charges from the negligent Third Party or their insurer (the 'TPI'). In order to allow Us to recover the Hire Costs from the Third Party or the TPI (as applicable), You appoint Us as Your agent and representative with the authority to recover the Hire Charges from the Third Party or the TPI that We reasonably consider are likely to be recoverable from the Third Party or the TPI. This appointment includes authority to recover the Hire Charges by legal proceedings if necessary which will be issued in your name as plaintiff/applicant (referred to as 'Your Claim'). You acknowledge that We may appoint and give instructions to legal advisers on Your behalf in respect of Your Claim. Should we decide to instruct Legal advisers to recover the Hire Charges You agree to assist, and provide Us or the appointed legal advisors (as applicable) with all co‑operation reasonably required in connection with Your Claim, which may include You providing statements and documents and appearing in court as a witness. We will meet Your reasonable out‑of‑pocket expenses in complying with this clause.

...

6. If the Hire Charges are recovered from the Third Party or the TPI We reserve the right to accept this payment in satisfaction of the hire car charges invoice. Upon acceptance the balance due on the invoice, if any, will be waived and you will have no further liability to us for the Hire Charges

...

8. You authorise Us, or Our legal advisers, to:

(a) act on Your behalf in respect of the recovery of the Hire Costs including, if necessary, Your Claim;

(b) obtain all documents, reports and other material that might be requested by Our legal advisers in respect of Your Claim;

(c) receive any cheque in settlement or payment of Your Claim and, regardless of the payee, the same can be set off against any outstanding amounts or accounts owed or incurred by You to Us, or otherwise incurred by Us in respect of any reasonable action taken to recover Your Claim (but We must account to You for any surplus, if applicable);

(d) share Your personal details with third parties, strictly on a need‑to‑know basis, solely in connection with Your Claim. Unless you advise us otherwise we may use such information for surveys and the provision of follow up services relating to your accident. (emphasis omitted)

The magistrate's relevant findings and conclusion

1. Prior to the commencement of the Magistrates Court proceedings, RAC on behalf of Ms Miller had paid $1,901.85 to Compass, being RAC's assessment of the reasonable cost of hiring a replacement vehicle. The amount of $1,901.85 was calculated on the basis of a daily hire rate of $45.35 inclusive of GST for a hire period of 40 days plus a delivery fee of $88.
2. As we have mentioned, Ms McKnight ultimately claimed $1,930.81, being Compass' total charges for a hire period of 39 days ($3,832.66) less the amount paid by RAC on Ms Miller's behalf ($1,901.85).
3. In the Magistrates Court proceedings, Ms McKnight pleaded that she hired a replacement vehicle from Compass in mitigation of her loss. Ms Miller pleaded that Ms McKnight had failed to mitigate.
4. At the hearing before the magistrate, Ms McKnight gave evidence that she used her vehicle for ordinary work and domestic purposes. She was pregnant at the time of the collision and during the repair period. She resided in Alkimos and worked in Osborne Park, both of which are Perth suburbs that are some distance from the city centre. After the accident occurred Ms McKnight went to a medical practitioner close to her mother's house in Mindarie for an assessment of her sore back.
5. Ms McKnight gave evidence that a tow truck driver who attended the accident scene recommended Compass to her. She did not make enquiries with any other hire car companies about the hiring of a replacement vehicle. Her only enquiries were with Compass. Ms McKnight 'skimmed over' the rental agreements before signing them. Compass delivered the replacement vehicle to Ms McKnight's mother's home in Mindarie, so that Ms McKnight could drive her daughter and herself to her home in Alkimos.
6. The parties were agreed that the Toyota Corolla was 'broadly equivalent' to Ms McKnight's vehicle that was damaged by the collision. However, Ms Miller contended that the Toyota Camry was not broadly equivalent.
7. His Honour accepted Ms Miller's contention that the Toyota Camry was not 'broadly equivalent' to Ms McKnight's vehicle. His Honour said that Ms McKnight's vehicle was 'a small hatchback' and that 'it would not have been appropriate to have replaced that [vehicle] with a mid‑sized sedan such as a Toyota Camry' [106]. However, there was no difference in the cost of hiring the Toyota Camry as opposed to the Toyota Corolla [170].
8. At the commencement of his consideration of the evidence concerning the rates for the hiring of vehicles, the magistrate posed the question whether Ms McKnight had failed 'to mitigate her losses by incurring hire charges at an excessive cost' [117].
9. Ms McKnight argued that it was reasonable for her, as the innocent victim of a motor vehicle accident, to hire a vehicle from Compass, with the services that it provides, because of her particular concerns about her pregnancy and the distance she lived from the city centre [125].
10. His Honour said that Compass undoubtedly represented 'the most convenient method of dealing with' Ms McKnight's loss in that Compass delivered the vehicle to her and provided the vehicle at no cost until the vehicle was returned to it [129].
11. His Honour commented that '[o]n the face of it this is a claim by Ms McKnight for the recovery of hire charges', but 'in reality, it is a claim by Compass to recover the cost of supplying a hire vehicle on credit to [Ms McKnight]' [134]. His Honour elaborated [136] ‑ [141]:

The cost being considered here is a structured business model by Compass. So, the fact that, on every occasion, the supply of a vehicle by a credit hire company to a customer is reasonable to the customer does not make the charges rendered by the credit hire company reasonable.

How then are we to consider the inclusion of credit hire charges in the cost of hire? There can be only two ways.

One way would be for the credit hire company to strip bare its financial model by way of discovery and interrogatories for [Ms Miller] to determine how the cost of supplying the vehicle is broken down. In her submissions [Ms Miller] identifies these costs referring to them as 'additional benefits' a catchphrase from the English authorities on credit hire. By reference to the Compass documents [Ms Miller] argues:

3.4. By virtue of the Agreement, [Ms McKnight] was provided with a number of additional benefits (Additional Benefits), including:

3.4.1. the benefit of having the cost of hiring a car provided on credit;

3.4.2. the benefit of having Compass acting as a 'duly appointed agent to manage this claim on...' her behalf;

3.4.3. the benefit of having Compass liaise with repairers and monitor the repairs to her vehicle;

3.4.4. the benefit of a premium roadside assistance; and

3.4.5. the benefit of having Compass bringing legal proceedings by the appointment of '...legal advisers...' and also meeting her '...reasonable out‑of‑pocket expenses...' of doing so.

In my view this cannot be what the High Court [in Arsalan v Rixon] meant to be applied in every case. Not only would that mean that the credit hire company would have to divulge its confidential figures, to its competitors and the world, but it may have to do so in each litigated case to reflect the difference in vehicles supplied as well as a myriad of other costs.

The second approach is to look at the costs and, by comparison with the mainstream market, to try to determine what amount represents the credit hire component of the invoice. This can only be done by comparing rates across the market.

In my view this is the only practical method of meeting the High Court test. The fact that one rate is higher than another does not automatically lead to a conclusion that the claimant has failed to mitigate her losses, but it can be used as evidence to determine that very question. (original emphasis)

1. At the hearing before the magistrate, the parties adduced evidence about the rates charged in the mainstream market for the hiring of vehicles. The various rates were distilled and embodied in an aide memoire given to his Honour.
2. Ms McKnight called Sid Khoury as a witness. Mr Khoury is the Recoveries Team Manager at Compass. Mr Khoury explained that Compass' charges are based upon mainstream motor vehicle rental company rates. The Compass database of rates is called 'Rate Shop rates'.
3. Ms Miller called Ryan Hathaway, a Motor Claims Specialist at RAC, and John McShera, the General Manager ‑ Operations at Budget Car and Truck Rental, a mainstream motor vehicle rental company.
4. The rates distilled and embodied in the aide memoire included the rates set out in the tables below:

Inclusive of excess reduction to zero but not of roadside assistance package

Avis (lowest) Toyota Corolla $116.89 to Thrifty (highest) Kia Rio $148.86

Thrifty (lowest) Kia Rio $63.45 to Avis (highest) Kia Rio $86.42

Europcar (lowest) Kia Rio $59.19 to Avis Perth (highest) Toyota Corolla $71.79

RAC/Budget rates inclusive of GST except where shown

Inclusive of excess reduction to zero but not of roadside assistance package

Thrifty Beaconsfield (lowest) Toyota Yaris $38.00 to Europcar Fremantle (highest) Toyota Yaris $49.31

Budget Midland (lowest Toyota Corolla $41.45) to Europcar (highest Toyota Corolla $59.98)

1. His Honour observed that Ms McKnight's hire was for 'an indeterminate period which turned out to be 39 days'. His Honour said that consequently 'the appropriate method is to look at the total number of days and determine what it would have cost to hire a vehicle for that period' [147].
2. The magistrate commented that the aide memoire contained a series of rates. His Honour then said [148]:

I discount the single day and 7 days rates. I do consider the 28 days, 35 day and 40 day rates. The rates are sourced from a consistent group of hire car providers at various locations.

1. His Honour noted that the parties had argued about the appropriate location from which to source comparable hire charges [149]. His Honour said that, for Ms McKnight's convenience, a hire location closer to her home in Alkimos or her workplace in Osborne Park would be 'preferable'. His Honour then said that Mr McShera's evidence was that, apart from the Perth central business district and the Perth airport location, hire charges should be 'fairly consistent across the [Perth] metropolitan area' [150].
2. The magistrate was of the view that 'a party is only entitled to a roadside assistance package ... if that was an existing benefit to which they were entitled' [162].
3. His Honour noted by reference to the evidence that 'the trend of the rates suggests that the longer the hire the cheaper the rate' [163]. His Honour said that the rates for '39 days are to be preferred as they relate to the actual hire period' and that 'RAC calculated [its payment to Compass] based on the middle of the 40‑day rates' [164].
4. The magistrate found that 'the most reliable rates [came] from Mr McShera who was able to produce an actual hire document to substantiate his evidence' [165].
5. His Honour observed that '[i]n theory' a median price between Compass' Rate Shop rates and RAC/Budget rates was 'a fair way of determining the reasonable cost of hire'. His Honour added, however, that 'in practical terms it has been beset by problems'; in particular, '[c]omparing apples with apples has been difficult due to the complete variance between 28 days rates obtained from the Rates Shop and 35 and 40 days rates obtained by RAC/Budget' [167].
6. The magistrate made this finding [168] ‑ [169]:

I have concluded in relation to this claim that the 28 days rates must be discounted to reflect the apparent change in rates between 28 days and 35 days.

Applying a discount of 15% to reflect the decrease in daily rates for the longer period and the premium surcharge brings the figures from the 28 day hire into the range of the highest quote Mr Hathaway obtained ‑ $59.98 from Europcar.

1. His Honour concluded that Ms McKnight had 'failed to mitigate her loss by hiring a vehicle that included credit hire charges which took it outside the market for similar hire vehicles' [170].
2. The magistrate then said [171]:

I consider that the payment made by RAC on behalf of [Ms Miller] represented the median hire rate ‑ neither the highest nor the lowest ‑ and this sum was the subject of the payment to Compass prior to litigation. There is therefore nothing further to be claimed by Compass.

1. There was no dispute in the Magistrates Court proceedings about the reasonableness of Compass' delivery fee of $88. His Honour was of the view that a plaintiff is entitled to the reasonable cost of travel to and from a hire company and that the delivery fee of $88 seemed 'perfectly reasonable' [172].
2. As we have mentioned, the payment made by RAC to Compass (namely $1,901.85) was calculated on the basis of a daily hire rate of $45.35 inclusive of GST for a hire period of 40 days plus a delivery fee of $88. Also, as we have mentioned, Ms McKnight ultimately claimed $1,930.81 in the proceedings, being Compass' total charges for a hire period of 39 days less the amount paid by RAC to Compass.
3. His Honour dismissed Ms McKnight's claim with no order as to costs [173].

The primary appeal judge's relevant findings and conclusion

1. Ms McKnight relied upon nine grounds in her appeal to the District Court. Grounds 1 and 7 are of relevance for present purposes.
2. Ground 7 alleged, in essence, that the magistrate erred in finding that Ms McKnight was not entitled to recover the whole of Compass' charges. The ground described his Honour's alleged error as follows:

(a) failing to take into account Ms McKnight's personal circumstances as they existed on the date of the accident;

(b) unfairly scrutinising, with the benefit of hindsight, Ms McKnight's conduct when considering the steps she had taken to mitigate her loss; and

(c) applying an unreasonably high standard in arriving at the conclusion that Ms McKnight had acted unreasonably in hiring a vehicle from Compass, rather than hiring a vehicle from a business with lower rates, albeit in a location more than 50 km from her place of residence.

1. The primary appeal judge commented that [168] ‑ [169]:

(a) the magistrate was aware of Ms McKnight's particular circumstances, including her pregnancy and the distance she lived from the city centre; and

(b) the magistrate noted that in Ms McKnight's particular circumstances it made good sense for her to have hired a vehicle from Compass, who not only delivered the vehicle to her but also provided the vehicle at no cost until the vehicle was returned to it.

1. Next, the primary appeal judge said that the magistrate's approach, namely focussing primarily on attempting to determine what was a reasonable rate of hire, resulted in his Honour failing properly to determine the real issue, namely whether the amount actually claimed by Ms McKnight was unreasonable [170].
2. The primary appeal judge elaborated [171] ‑ [172]:

By adopting that approach, the learned Magistrate considered it was necessary to consider what the credit hire charge component of the rates was and to remove that component from consideration (learned Magistrate's reasons, [117] ‑ [141]). In so doing, his Honour considered that there were two ways of arriving at a rate absent credit hire charges. They were:

(a) for the credit hire companies to be forced to provide that information; or

(b) by reference to mainstream market rates, determine what the credit hire charges were.

Because of the commercial unfairness that the first option would cause to credit hire companies and the onerous consequences that that might produce, the learned Magistrate concluded that for practical reasons the latter option was preferable.

1. The primary appeal judge then said that the magistrate 'focussed on determining what a reasonable rate was and in so doing failed to take into account [Ms McKnight's] personal circumstances' [173].
2. The primary appeal judge accepted that 'the process employed by the ... Magistrate was to ascertain, absent credit hire charges, what a reasonable rate was at the time', but said that the magistrate was also required to consider:

(a) the objective circumstances in which Ms McKnight found herself; and

(b) the reasonableness of any steps taken by Ms McKnight to mitigate her loss, including taking into account Ms McKnight's particular factual circumstances [174].

1. The primary appeal judge emphasised that Ms McKnight's objective circumstances could not be ignored when considering the ultimate question, namely 'whether what Compass charged was unreasonable in all of the circumstances' [175].
2. The primary appeal judge was satisfied that the magistrate had erred 'by failing to take into account [Ms McKnight's] particular circumstances' [176] and, accordingly, found that ground 7 had been made out.
3. Ground 1 alleged, in essence, that:

(a) the magistrate erred in identifying a 'reasonable' day rate between the day rates identified by Ms Miller and the day rates identified by Ms McKnight; and

(b) having concluded that he could not decide which of the day rates he could rely upon, his Honour should have concluded that Ms Miller had failed to prove that Ms McKnight had not mitigated her loss to the extent of Compass' day rates.

1. The primary appeal judge said in relation to ground 1 that it was 'clear that the learned Magistrate was of the view that since the amount paid by RAC to Compass was the median rate, it was therefore reasonable' [69]. Next, the primary appeal judge said that the issue, however, was not what was a reasonable amount, but rather whether what Ms McKnight claimed was unreasonable [70].
2. The primary appeal judge noted that the rental agreements between Ms McKnight and Compass included credit hire charges for additional benefits and that the charges for those benefits were not quantified [32]. The primary appeal judge also noted that Ms Miller conceded in the appeal that 'in circumstances where [Ms McKnight] adduced no evidence as to what proportion of the rates comprised the credit hire cost, it was not possible to separate [that cost] out from the total rates' [181]. Ms Miller therefore submitted that the method adopted by the magistrate, namely to compare mainstream market rates with those charged by Compass, was the 'more appropriate approach' [182].
3. The primary appeal judge concluded in relation to ground 1 [73] ‑ [74]:

When the learned Magistrate's full reasons are read as a whole, bearing in mind:

(a) the need to take account of [Ms McKnight's] objective circumstances, including considering [Ms McKnight's] full personal circumstances (Fallon v Johnston [41] (Bell J); Hardie Finance Corporation Pty Ltd v Ahern [No 3] [770]) (set out at [24] to [30] above and the importance of which is further considered in relation [to] Ground 7 below at [169] ‑ [178]); and

(b) that the learned Magistrate acknowledged the difficulty with ascertaining the acceptable range of reasonable rates,

there was no proper basis for the learned Magistrate to conclude that [Ms Miller] had proved on the balance of probabilities that [Ms McKnight], by hiring a vehicle the costs of which included credit hire charges, ... had therefore breached her duty to mitigate her damages.

On the available evidence, a conclusion that what RAC had paid represented the median rate, could not of itself lead to the conclusion that the amount charged by Compass, albeit it may have been high or even the highest rates evidenced, was nonetheless unreasonable.

1. The primary appeal judge was satisfied that Ms McKnight had made out ground 1 and, for that reason alone, the appeal must succeed [75].
2. We note, for completeness, that the primary appeal judge held that grounds 3, 4, 5, 6, 8 and 9 of Ms McKnight's grounds in her appeal to the District Court should be dismissed.
3. However, the primary appeal judge was satisfied that ground 2 had been made out. Ground 2 alleged, in essence, that the magistrate erred in discounting the daily rate by 15% 'to reflect a notional decrease in daily rates from 28 days and a premium surcharge for airport or Perth CBD delivery and pick‑up'. See the magistrate's finding at [168] ‑ [169] which we have reproduced at [41] above. The primary appeal judge was satisfied that, on the evidence before the magistrate, 'there was no proper basis to apply a discount of 15% to the rates' [101].
4. The primary appeal judge concluded that error had been demonstrated in relation to grounds 1, 2 and 7 and consequently Ms McKnight's appeal should be allowed [205]. The primary appeal judge set aside the magistrate's order dismissing Ms McKnight's claim and substituted an order that there be judgment for Ms McKnight in the sum of $1,930.81 [206].

Senior counsel for Ms Miller's submissions in the appeal to this court

1. Senior counsel for Ms Miller submitted that in Arsalan v Rixon[1] the High Court held that a plaintiff may recover the reasonable costs incurred in hiring, for the repair period, a substitute vehicle that is broadly equivalent to the plaintiff's damaged vehicle. Another issue, not decided by the High Court and expressly left open, is whether a plaintiff may recover the additional costs associated with the hire of a substitute vehicle on credit [4], [33].
2. It was submitted that the cost of obtaining a replacement vehicle, during the repair period, is not a category of loss to which special rules apply. Arsalan involved the application of ordinary and generally applicable principles governing tortious loss. The High Court determined that a plaintiff is usually able to recover the reasonable cost incurred in hiring a substitute vehicle during the repair period that is broadly equivalent to the damaged vehicle because the plaintiff's loss ordinarily includes both physical inconvenience and the loss of amenity or enjoyment arising from the inability to use the damaged vehicle. The plaintiff avoids those losses by hiring a broadly equivalent vehicle. If the plaintiff seeks to avoid the physical inconvenience and the loss of amenity or enjoyment by hiring a broadly equivalent vehicle, the defendant bears the onus of establishing that the cost incurred by the plaintiff was unreasonable.
3. Senior counsel argued that Arsalan is authority for the proposition that the relevant consequential loss is the physical inconvenience and the loss of amenity arising from the plaintiff's inability to use the damaged vehicle. That loss may be avoided 'by the straightforward hire of a replacement vehicle and no more'. The cost of hiring the vehicle then becomes the measure of the plaintiff's loss and is recoverable as a head of damage in its own right.
4. It was submitted that a plaintiff who incurs additional cost in obtaining additional benefits that are not in mitigation of the relevant compensable loss cannot recover the additional cost. In particular, the hire of a substitute vehicle on credit, and the obtaining of the other services and benefits provided by credit hire companies, does not mitigate the relevant compensable loss. The hire of a substitute vehicle from a credit hire company involves the purchase of additional benefits at an additional cost. Absent some further fact or circumstance which justifies the purchase of the additional benefits at the additional cost as an aspect of mitigation (for example, the plaintiff's impecuniosity or inability to obtain a substitute vehicle from their own insurer), credit hire charges are not properly characterised as a cost incurred in mitigation of the relevant compensable loss. If and to the extent that credit hire charges are incurred, they constitute benefits that must be brought to account in accordance with the principle in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd.[2]
5. Senior counsel submitted that, on the application of the applicable legal principles to the circumstances of the present case, the primary appeal judge should have affirmed the magistrate's decision. It was submitted that the magistrate correctly identified that it was necessary to determine the part of Compass' credit hire charges that was referable to the hire of the substitute vehicle, with the balance of the charges being attributable to the purchase of the additional benefits. The magistrate found, on the balance of probabilities, that the part of the credit hire charges that was referable to the hire of the substitute vehicle was the 'median hire rate' for the substitute vehicle as established by the evidence adduced at the hearing about the rates charged in the mainstream rental market. It was submitted that, in the absence of evidence from Compass as to the part of its credit hire charges that was referable to the hire of the substitute vehicle, the magistrate's approach to the determination of that issue was a rational basis upon which to proceed and there was no error that justified the setting aside of his finding.

Senior counsel for Ms McKnight's submissions in the appeal to this court

1. Senior counsel for Ms McKnight submitted that Ms Miller's argument on appeal rests largely upon 'the dubious notion that credit‑hire axiomatically includes benefits' that are not in mitigation of the relevant loss.
2. It was submitted that Ms Miller had merely paid 'lip‑service to the decision in Arsalan' and that her submissions were 'really a veil for the bare‑bones "loss of use" analysis still favoured in England', but rejected in Arsalan.
3. Senior counsel argued that before the accident Ms McKnight had the 'convenience or pleasure' of ready access to her own familiar vehicle at a moment's notice and that this state of affairs had been interrupted by Ms Miller's wrongdoing.
4. It was submitted that:

(a) The credit hire service offered by Compass was 'tailor‑made to deal with [Ms McKnight's] predicament, especially by means of deferring immediate payment'. The lack of a requirement to pay up‑front was squarely directed at swiftly restoring to Ms McKnight the 'physical inconvenience' spoken of in Arsalan. At the very least, it could not be said that payment arrangements of the kind involved in this case were wholly extraneous to the act of mitigating compensable physical inconvenience.

(b) Part of the 'amenity of use' experienced by any driver in Ms McKnight's position is enjoying the ongoing availability of their own vehicle without disruption or distress. The loss of that 'amenity of use' is well served by the credit hire service offered by Compass; for example, by the ability to hire the vehicle on a 'rolling' basis until repairs have been completed (thereby eliminating the disruption of rehiring at the end of pre‑booked periods that is the case with mainstream hiring arrangements).

(c) The credit hire service offered by Compass came closer to restoring Ms McKnight's pre‑accident position than a mainstream hiring arrangement would have done.

1. Senior counsel argued that the obvious convenience of a credit hire service is highly relevant in considering whether a plaintiff has acted reasonably in mitigating their loss. Senior counsel noted that, in the present case, the magistrate, after considering Arsalan, said that the credit hire service offered by Compass undoubtedly represented 'the most convenient method of dealing with [Ms McKnight's] loss' [129]. Senior counsel argued that it was difficult to reconcile that observation with the magistrate's ultimate conclusion that, by using the credit hire service, Ms McKnight had failed to mitigate. It was submitted that the primary appeal judge corrected the magistrate's obvious error by applying conventional mitigation principles.
2. Senior counsel referred to Ms Miller's contention that, by using Compass' credit hire service, Ms McKnight had purchased additional non‑compensable services. The various 'additional benefits' enumerated by the magistrate appear to be:

(a) obtaining the replacement vehicle on credit;

(b) having Compass act as Ms McKnight's agent;

(c) having Compass liaise with the repairers;

(d) roadside assistance; and

(e) having Compass appoint legal advisers to act for Ms McKnight.

1. It was submitted that even mainstream hiring arrangements include some 'additional benefits'; for example, a global positioning system or roadside assistance. According to senior counsel, the 'no frills' comparator that is central to Ms Miller's case is a 'chimera'. The offering of 'additional benefits' is merely a consequence of hire businesses differentiating their offerings from one another in the market.
2. Senior counsel submitted that none of the alleged 'additional benefits' which Ms McKnight obtained by using Compass' credit hire service made Ms McKnight better off than before the wrongdoing.
3. Upon a conventional avoidable loss analysis, a plaintiff would never be required to risk money to mitigate his or her loss. A plaintiff in Ms McKnight's position would not be expected to go into overdraft to hire a vehicle and bear the risk of non‑recovery. Before the wrongdoing, Ms McKnight was under no obligation to draw upon her financial resources to facilitate the continued enjoyment of her vehicle. By Compass' credit hire service, Ms McKnight merely deferred payment. Pursuant to cls 1, 2 and 3 of the Mandate and Authority to Act, Ms McKnight was liable to pay the hire charges to Compass upon return of the hired vehicle.
4. Senior counsel submitted that Ms McKnight was required to cooperate in any legal proceedings which Compass might elect to commence. By appointing Compass as her agent to liaise with the repairers of her vehicle and to retain and instruct legal advisers in connection with the accident, Ms McKnight avoided the personal time and trouble involved in dealing with those responsible for the repairs and in bringing proceedings against Ms Miller. A contractual term appointing Compass as her agent could not, without more, improve Ms McKnight's pre‑accident position.
5. Senior counsel argued that Ms Miller's assertion that the magistrate identified correctly a generic 'need' to determine the part of Compass' credit hire charges that was 'attributable to the additional credit hire services', obscured the question of onus. In the proceedings before the primary appeal judge, Ms Miller conceded that there was no evidence as to what proportion of Compass' credit hire charges included the alleged non‑compensable benefits [32], [181]. According to senior counsel for Ms McKnight, that concession obliterated any contention about the application in the present case of the rule in British Westinghouse. It was Ms Miller's obligation to prove the extent to which Ms McKnight was enriched by compensating advantages.
6. It was submitted in relation to a proper application of the onus of proof:

(a) Ms Miller had to do more than merely point to the fact that Ms McKnight may not have been required to pay the hire charges immediately. Senior counsel referred to the observation of Giles JA (Santow JA and Hunt AJA agreeing) in Ruthol Pty Ltd v Tricon (Australia) Pty Ltd,[3] that there is a difference between 'placing a value on a benefit of not having to pay money, according to what interest could have been saved or earned, and determining whether an actual benefit was gained and its amount in dollars and cents because the money did not have to be paid'.

(b) The magistrate did not give any consideration to whether Ms McKnight was enriched by 'having Compass liaise with repairers' on her behalf [138]. Further, no consideration was given to whether this represented an actual benefit or how it might be quantified. Compass' witness, Mr Khoury, said that this service was, in fact, provided gratuitously. There was no evidence that, in the present case, the service was used.

(c) Ms Miller's contention that Compass was 'unquestionably' in a position to identify what part of the credit hire charges of $3,928.53 was exclusively for 'credit hire services' was without foundation. In any event, an assumption of that kind, which was shared by the magistrate [137], cannot reverse the onus of proof.

(d) The magistrate's decision cannot be supported on the basis of the rule in British Westinghouse. The magistrate did not make a finding or give any reasons to support a conclusion that Ms McKnight gained an actual benefit.

1. Senior counsel argued that the primary appeal judge applied ordinary principles governing tortious damages in respect of the avoidable loss rule.
2. It was submitted that Ms Miller's interpretation of the magistrate's reasons was inherently contradictory. Ms Miller suggested that the magistrate had expressed his conclusion in terms that Ms McKnight had acted unreasonably. However, Ms Miller then claimed that the substance of the magistrate's conclusion was that Ms McKnight was only 'entitled' to the compensable part of Compass' credit hire charges.
3. According to senior counsel for Ms McKnight, the magistrate's approach arose out of an obvious misreading of Arsalan. It was submitted that the High Court did not enumerate credit hire as a factor to be taken into account on a failure to mitigate analysis. Further, the High Court did not pose any kind of 'test' in which it might be necessary to 'consider the including of credit hire charges'. The only remark made by the High Court about the assessment of damages in Arsalan was that a defendant would bear a difficult onus in proving a failure to mitigate in a case such as the present. Counsel referred to Arsalan at [36].
4. It was submitted that the magistrate's conclusion that damages should be limited to the median of a set of 'mainstream' rates gives rise to an obvious absurdity. A claimant who (reasonably) hires a vehicle from a mainstream rental company whose rate happens to be at the top of the range will recover in full, whereas a claimant who (equally reasonably) hires from a credit hire company in the same situation and at the same rate will have his or her damages reduced considerably.
5. Senior counsel argued that the magistrate's task was not to locate 'a' reasonable cost of hiring an equivalent vehicle, nor to consider the supply costs of Compass. The magistrate's finding that RAC's payment was reasonable could not lead to the conclusion that Compass' hire charges were unreasonable.
6. It was submitted that the magistrate was required to assess the circumstances confronting Ms McKnight. That should have occurred with the usual 'tenderness' afforded to the victim of wrongdoing. The question to be determined was whether Ms Miller had proven that Ms McKnight acted unreasonably in incurring the relevant expenditure. Ms Miller failed to discharge her onus. No submissions were made to the magistrate or the primary appeal judge regarding the unreasonableness of Ms McKnight's conduct in hiring an equivalent vehicle from Compass as distinct from pursuing some other option. No evidence was called on that issue apart from evidence which established the potential availability of other hire vehicles. It was submitted that, in those circumstances, the primary appeal judge had no alternative other than to award the expense that Ms McKnight had incurred.
7. Senior counsel argued that the present case was a simple example of the magistrate arriving wrongly at a conclusion that there had been a 'failure to mitigate'. There was neither sufficient evidence nor sufficient findings to support the alternative contentions advanced by Ms Miller in this court.

The ground of appeal: relevant Australian principles and authorities

1. The general principle governing the assessment of compensatory damages in actions of tort is that the injured party should receive compensation in a sum which, so far as money can do it, will put the injured party in the same position as he or she would have been in if the tort had not been committed. The fundamental concept is compensation. The injured party cannot recover more than he or she has lost. See Haines v Bendall.[4] The object of the general principle is to undo, by monetary equivalent, the consequences of the wrong suffered by the injured party so far as is reasonable. See Arsalan [25].
2. The injured party bears the legal burden of proving, relevantly, that he or she has suffered loss according to the applicable measure and that the loss was caused by the defendant's breach of duty. Where the injured party acts in an attempt to reduce his or her loss, the onus shifts to the defendant to establish that the injured party's acts were unreasonable. See Arsalan [32].
3. The defendant's onus requires it to establish not merely that the injured party's acts were unreasonable, but also the extent to which those acts were unreasonable. See Watts v Rake;[5] Metal Fabrications (Vic) Pty Ltd v Kelcey;[6] TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd;[7] Goldburg v Shell Oil Co of Australia Ltd.[8] Unless the defendant establishes that the injured party's acts in an attempt to reduce his or her loss were unreasonable, costs incurred by the injured party in an attempt to reduce his or her loss caused by the defendant's breach of duty become, themselves, a head of damage that is recoverable. See Talacko v Talacko;[9] Arsalan [32]. Even if the injured party incurs costs that are greater than the loss he or she was attempting to reduce, the costs will be recoverable other than to the extent that they are shown to have been unreasonable. See Wilson v United Counties Bank Ltd;[10] Arsalan [32].
4. The test of reasonableness, in the context of the injured party's acts in an attempt to reduce his or her loss, is not a high standard. See Chand v Commonwealth Bank of Australia.[11] The injured party will not have acted unreasonably merely because the defendant can suggest other and more beneficial conduct if it was reasonable for the injured party to have acted as he or she did. See Karacominakis v Big Country Developments Pty Ltd.[12] The question whether the injured party's acts were unreasonable depends upon the facts and circumstances of the particular case. See Morrison v Town of Victoria Park.[13]
5. In Clark v Macourt,[14] the issue was the measure of damages recoverable by a purchaser of assets of a business where the vendor had failed to meet its obligations in relation to the delivery of stock (relevantly, human sperm) of the business. The vendor argued that the purchaser was better off because the replacement sperm was more valuable than the contractually compliant sperm. Hayne J pointed out at [16] ‑ [17] that, on the facts of the case, 'mitigation' of damage embraced two separate concepts. First, an injured party cannot recover damages for a loss which he or she ought to have avoided. Secondly, an injured party cannot recover damages for a loss which he or she did avoid. His Honour noted that the second concept was recognised by Viscount Haldane LC in British Westinghouse (689 ‑ 690). Hayne J held that, on the facts of the case, the purchaser's subsequent purchases and use of replacement human sperm 'left her neither better nor worse off than she was before she undertook those transactions' [19]. His Honour added that, unlike British Westinghouse, the purchaser obtained 'no relevant benefit from her subsequent purchases of sperm' because the purchases replaced what the vendor had agreed to supply [19].
6. Similarly, in Clark, Keane J distinguished British Westinghouse on, relevantly, the following basis [142]:

This case is not analogous to British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd ([1912] AC 673), on which [the vendor] relied. In that case, the cost of machines purchased as substitutes for defective machines was recoverable but subject to a reduction to take account of any extra profit to the buyer resulting from the replacement of the defective machines. It is not suggested that the evidence established extra profitability attributable to the use of the [replacement] sperm. As noted above, [the vendor] did not advance evidence which might have permitted a finding that the [replacement] sperm was of a quality which would have commanded a higher price than the [contractually compliant] sperm would have had it satisfied the warranties in the Deed. Rather, [the vendor's] case was that [the purchaser's] claim was flawed in point of principle so that no damages were recoverable, and he advanced no evidence to establish a basis for a 'betterment discount' (Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 291 [24] ‑ [25]).

1. Although the injured party is not under a 'duty' to mitigate his or her loss, the defendant is only liable for that part of the injured party's loss that has been caused by the defendant's breach of duty. In other words, the injured party cannot recover loss that could, by the taking of reasonable action, have been avoided because that loss is not regarded as loss caused by the defendant. See Chand [180] ‑ [181] and the reference in that case to Sotiros Shipping Inc and Aeco Maritime SA v Sameiet Solholt (The 'Solhot').[15] This is the avoidable loss principle.
2. If the injured party does take action to mitigate his or her loss that has been caused by the defendant's breach of duty, the defendant is generally entitled to an allowance for any benefits which the injured party gains from taking that action. This is the avoided loss principle.
3. The avoided loss principle applies only if and to the extent that the injured party has in fact gained a benefit from taking action to mitigate his or her loss. If, as a matter of law, the defendant is entitled to an allowance for any benefits, the defendant bears the onus of establishing the value to the injured party of those benefits. See Simonius Vischer & Co v Holt & Thompson;[16] Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd;[17] Tyco Australia Pty Ltd v Optus Networks Pty Ltd;[18] Ruthol [40], [44], [53]; EK Nominees Pty Ltd v Woolworths Ltd;[19] Mills v Walsh.[20]
4. As Giles JA pointed out in Ruthol [41], although the defendant is generally entitled to an allowance for any benefits which the injured party gains from taking action to mitigate his or her loss that was caused by the defendant's breach of duty, the benefits are not always taken into account. See the speech of Viscount Haldane LC in British Westinghouse (689 ‑ 691).
5. The basic rule to be applied in relation to benefits, where action has been taken by the injured party after the defendant has committed the breach, is expressed in McGregor on Damages (22nd ed, 2024) [10 ‑ 121] as follows:

In any event, it is suggested that the basic rule is that the benefit to the claimant, if it is to be taken into account in mitigation of damage, must arise out of the act of mitigation itself; this approach has been adopted by the courts in quite a number of cases. It may be regarded as simply another way of expressing Viscount Haldane's requirement that the transaction giving rise to the benefit 'must be one arising out of the consequences of the breach'. As we have seen, a matter which 'arises out of' the consequences of the breach has been described as one arising from the 'ordinary course of business' (Bacciottini v Gotelee & Goldsmith (A Firm) [2016] EWCA Civ 170; [2016] 4 WLR 98 at [49], per Davis LJ; Fulton Shipping Inc of Panama v Globalia Business Travel SAU ('The New Flamenco') [2015] EWCA Civ 1299; [2016] 1 WLR 2450 at [23], per Longmore LJ) although a better expression would be whether the claimant's action is reasonably necessary in the sense of not being too remote from the wrong (Globalia Business Travel SAU v Fulton Shipping Inc of Panama [2017] UKSC 43; [2017] 1 WLR 2581 at [32]).

1. In Arsalan, each of the respondents owned a prestige motor vehicle that was damaged in separate collisions with motor vehicles driven negligently by the appellants. During the repair period, each of the respondents hired a replacement vehicle that was the same or broadly equivalent to his damaged vehicle. The respondents separately commenced proceedings in the Local Court of New South Wales. Each of them sought to recover the cost of hiring the replacement vehicle during the repair period.
2. The critical issue in the High Court was for which, if any, substitute motor vehicles can victims of negligence recover hire costs incurred during the period that their vehicles are being repaired [1].
3. Kiefel CJ, Gageler, Keane, Edelman and Steward JJ said that the simple answer to that question is that 'a plaintiff will usually be able to recover from a negligent defendant the reasonable costs incurred in hiring, for the period of repair, a substitute vehicle that is broadly equivalent to their damaged vehicle' [2].
4. Their Honours then elaborated [3] ‑ [4]:

The basis for this answer is that it will not usually be difficult for a plaintiff to prove loss against a negligent defendant who causes the plaintiff's vehicle to be unavailable for a period of repair. That loss will commonly consist of (i) the physical inconvenience from the plaintiff's inability to use the damaged vehicle during the period of repair and (ii) loss of amenity or enjoyment of the use of the vehicle. Those heads of damage can usually be inferred from the plaintiff's ownership and past usage of the vehicle and, but for the damage, the plaintiff's ability to continue to use the vehicle during the period of repair. Recovery of damages under these heads of damage will usually be necessary to restore the plaintiff to the position they would have been in but for the defendant's actions that caused the accident. Once the plaintiff acts to mitigate that loss by hiring a substitute vehicle, the onus of proof will lie upon the defendant to show that the costs incurred in mitigation were unreasonable.

Although it will not usually be unreasonable for a plaintiff to mitigate physical inconvenience and loss of amenity of use by the hire of a broadly equivalent substitute vehicle at a reasonable price, there may be further consequential issues at the margins: the extent to which the vehicles are broadly equivalent; the extent to which particular hire expenses, such as credit hire charges, can be said to have been incurred in mitigation of the losses; and the extent to which the quantum of hire costs is otherwise shown to be unreasonable. None of those issues arises in these appeals. (emphasis added)

1. Kiefel CJ, Gageler, Keane, Edelman and Steward JJ held that 'the head of damage of loss of amenity of use of a chattel should be recognised and the loose concept of "need" should be eschewed' [17].
2. Their Honours observed that where a plaintiff's chattel has been damaged as a result of a defendant's negligence, the plaintiff will generally be entitled to damages for the costs of repair and for consequential loss [18]. However, their Honours emphasised that mere reference to 'the loss of use of a vehicle, or the loss of the availability of a vehicle for use, is inadequate because it does not identify the manner or extent of any loss to a plaintiff' [18]. Their Honours said that an assessment of consequential loss 'always requires the identification of the manner in which the loss of use of a chattel has adversely affected the plaintiff' [18].
3. Kiefel CJ, Gageler, Keane, Edelman and Steward JJ held that where a plaintiff's motor vehicle, which is used for convenience and pleasure, has been damaged as a result of a defendant's negligence, compensation for the consequences of the loss of use of the vehicle should be recognised on the basis that the plaintiff has been 'deprived of the convenience or pleasure' that the plaintiff would have derived from that use [22].
4. Their Honours explained that loss of amenity of use, consequent upon negligent damage to a plaintiff's chattel, should be recognised as a head of damage in addition to physical inconvenience. Their Honours elaborated [27]:

[S]uch recognition is consistent with the broad recognition of loss of amenity of use in other instances of damage to property. Indeed, the lack of any clear boundary between the heads of damage for physical inconvenience and loss of amenity means that it is often convenient to quantify physical inconvenience and the loss of amenity of use of property together as part of a single award of general damages. (footnote omitted)

1. Kiefel CJ, Gageler, Keane, Edelman and Steward JJ said that any concept of 'need' was irrelevant to the heads of damage they had identified. Their Honours distinguished the test of 'need', in the context of personal injury claims concerned with services that have been provided gratuitously to the plaintiff by another, as follows [30]:

[T]he principles of damages concerned with the 'need' for services in circumstances in which services have been provided gratuitously by another cannot be transplanted to replace an analysis of the real loss that has been suffered as a result of damage to a chattel, especially in circumstances in which a gratuitous replacement is not available. Indeed, in a case in which a plaintiff obtained an equivalent replacement vehicle from a hire company without any costs, it was held that the plaintiff was not entitled to damages for the notional hire costs (Dimond v Lovell [2002] 1 AC 384).

1. Their Honours considered the legal principles relating to proof of loss and mitigation. After noting that a plaintiff must prove his or her loss, their Honours said that it will not usually be difficult for a plaintiff to establish 'heads of damage of physical inconvenience and loss of amenity of use consequential upon their lost ability to use their vehicle' [34]. Their Honours added that 'it will usually be sufficient for a plaintiff to identify a past suite of purposes for which the damaged vehicle was used in order to justify an inference that the plaintiff would have put the vehicle to the same uses during the period of repair and would be otherwise inconvenienced' [35]. Similarly, their Honours said that 'it will usually be sufficient to infer that a plaintiff derives amenity from the various functions used in their vehicle' [35]. Their Honours made these comments [36] ‑ [37]:

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. In some cases, a defendant might instead seek to establish that the amount of the hire costs incurred was unreasonable for various reasons: the replacement vehicle hired, in light of the range of vehicles that might fairly be regarded as equivalent to the damaged vehicle; the period of hire, having regard to the reasonable period of time for repairs; or the extent of the costs included in the hire charge. But none of those matters of quantum arises on these appeals.

The usual ease with which a plaintiff may establish heads of damage of physical inconvenience and loss of amenity of use explains why in Dimond v Lovell ([2002] 1 AC 384 at 401 ‑ 402, 406. See also Dimond v Lovell [2000] QB 216 at 238 ‑ 239 [93] ‑ [95], 239 [99]; Giles v Thompson [1993] UKHL 2; [1994] 1 AC 142 at 167) and in Lagden v O'Connor ([2004] 1 AC 1067) their Lordships assumed that it would generally be reasonable for a plaintiff to hire an equivalent vehicle, subject to any dispute about the unreasonableness of the quantum of the hire costs. For instance, in Lagden v O'Connor, Lord Hope assumed that a plaintiff would generally be able to recover as damages the costs of hire of an equivalent vehicle, but if 'a larger or more powerful car was hired although vehicles equivalent to the damaged car were reasonably available at less cost ‑ the amount expended on the hire must be reduced to the amount that would have been needed to hire the equivalent' ([2004] 1 AC 1067 at 1078 [27]). (original emphasis)

1. Kiefel CJ, Gageler, Keane, Edelman and Steward JJ then referred to the decision of the Court of Appeal of England and Wales in Watson Norie Ltd v Shaw.[21] Their Honours said that the decision in that case was consistent with the general position that it is reasonable for a plaintiff to hire an equivalent vehicle. The plaintiff had hired a vehicle (initially a Rover 100 and then a Jaguar 3.8) for its managing director at a cost of £400 to replace his vehicle which had been damaged by the defendants' negligence. The Court of Appeal held that the plaintiff could recover only £185. Their Honours in Arsalan noted that the Court of Appeal's conclusion was not due to the plaintiff acting unreasonably in hiring the type of vehicle that it did. Rather, the Court of Appeal accepted that it was open to the primary judge to find that the defendants had established that the plaintiff acted unreasonably in circumstances including:

(a) the plaintiff having hired from a company that was not in the habit of hiring cars;

(b) the plaintiff having failed to make any real enquiry about price; and

(c) the plaintiff having failed to avail itself of a 20% discount on the cost of the hire by paying cash.

(a) in the present case, Ms McKnight hired each replacement vehicle under a credit hire agreement;

(b) in Arsalan, one of the appellants hired a replacement vehicle under a conventional car hiring agreement and the other appellant hired a replacement vehicle under a credit hire agreement;

(c) in Arsalan, the High Court stated that 'the extent to which particular hire expenses, such as credit hire charges, can be said to have been incurred in mitigation of the losses' did not arise in the appeals [4]; and

(d) in Arsalan, the High Court also stated that, in some cases, a defendant might seek to establish that the amount of the hire costs incurred by the plaintiff was unreasonable for various reasons including 'the extent of the costs included in the hire charge', but that matter of quantum did not arise in the appeals [36].

The ground of appeal: relevant United Kingdom principles and authorities

1. In the United Kingdom the principles to be applied in determining the basis upon which a plaintiff can recover damages where the plaintiff has hired a replacement motor vehicle under a credit hire agreement have been considered in numerous cases, including Giles v Thompson;[22] Dimond v Lovell;[23] Lagden v O'Connor;[24] Pattni v First Leicester Buses Ltd;[25] Bent v Highways and Utilities Construction Ltd;[26] Stevens v Equity Syndicate Management Ltd;[27] McBride v UK Insurance Ltd.[28]
2. In Dimond, the plaintiff, Mrs Dimond, whose motor vehicle had been damaged as a result of the defendant's negligence, hired a replacement vehicle during the repair period under a credit hire agreement. The effect of the agreement was that, in the ordinary course, the hirer would not have to pay. The credit hire company would pursue the hirer's claim at its own expense and satisfy the hiring charges out of the damages recovered on the hirer's behalf. The hirer would not have to pay for the cost of the hire in advance of recovery from the defendant or his insurers. The hirer avoided the trouble and anxiety of pursuing a claim and the risk that the claim may fail. The House of Lords held unanimously that the credit hire agreement was unenforceable in that the agreement breached provisions of consumer credit legislation, and consequently the plaintiff's claim against the defendant for damages for loss of the use of her vehicle failed. Nevertheless, the House of Lords considered whether, even if the plaintiff's claim for damages for loss of the use of her vehicle had been sound, the damages recoverable would have been limited to the amount required to hire a vehicle under a conventional car hiring agreement. A majority of their Lordships (Lord Browne‑Wilkinson, Lord Hoffmann and Lord Hobhouse of Woodborough) held that the plaintiff would, if the credit hire agreement had been enforceable, have been limited to the rate for the hire of the replacement vehicle under a conventional car hiring agreement. The majority were of the view that, although it would be reasonable for a plaintiff to use the services of a credit hire company, the plaintiff obtains more from the agreement than the cost of a replacement vehicle and the additional benefits are not recoverable from the defendant.
3. Lord Hoffmann (Lord Browne‑Wilkinson agreeing) noted that under the credit hire agreement the plaintiff obtained not only the use of the replacement vehicle but additional benefits as well. His Lordship summarised the additional benefits as follows (401):

(a) the plaintiff was relieved of the necessity of laying out the money to pay for the vehicle;

(b) the plaintiff was relieved of the trouble and anxiety of pursuing a claim against the defendant or his insurer;

(c) the plaintiff was relieved of the risk of having to bear the irrecoverable costs of successful litigation and the risk of having to bear the expense of unsuccessful litigation; and

(d) depending upon the proper construction of the credit hire agreement, the plaintiff may have been relieved of the possibility of having to pay for the replacement vehicle at all.

My Lords, English law does not regard the need for any of these additional services as compensatable loss. As Sir Richard Scott V‑C [2000] 1 QB 216, 239 said 'damages for worry and for the nuisance caused by having to deal with the consequences of an accident are not recoverable'. If Mrs Dimond had borrowed the hire money, paid someone else to conduct the claim on her behalf and insured herself against the risk of losing and any irrecoverable costs, her expenses would not have been recoverable. But the effect of the award of damages is that Mrs Dimond has obtained compensation for them indirectly because they were offered as part of a package by 1st Automotive. There is in my opinion something wrong with this conclusion.

I think that what has gone wrong is that the Court of Appeal did not consider the rule that requires additional benefits obtained as a result of taking reasonable steps to mitigate loss to be brought into account in the calculation of damages. The leading case is British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] UKLawRpAC 43; [1912] AC 673.

1. Lord Hobhouse of Woodborough made these observations (407):

What Mrs Dimond was paying for here was more than the cost of hiring a car for a week. It was reasonable for her to pay the additional sum in order to obtain the additional benefits enjoyable under the scheme even though the accident hire company were under no legal obligation to do more than provide her with a car on credit. The sum which she paid, having regard to what she was to get was, on the evidence, reasonable. But she cannot claim the whole cost as the cost of mitigating the loss of the use of her car. The cost of that was, on the evidence, only about £24 per day. The remainder of what she paid was attributable to other matters and therefore should not be included in the cost of mitigation. This is the preferred way of looking at this aspect of the dispute between the parties on this point but there are other ways which lead to the same conclusion. One is that preferred by Judge LJ in the Court of Appeal. The excess cost was not reasonably incurred as the cost of hiring the substitute car. Mrs Dimond's right of recovery is limited to the reasonable cost, that is to say the lesser sum. Another way of looking at the matter is to say, as does my noble and learned friend [Lord Hoffmann], that, if the whole cost is to be brought into account, then the benefits must be brought into account as well. This raises the question discussed in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] UKLawRpAC 43; [1912] AC 673 and the distinction between what is and is not collateral.

But as I have said, in the present context, I prefer the approach of making a commercial apportionment between the cost of hiring a car and the cost of the other benefits included in the scheme. (original emphasis)

1. Lord Nicholls of Birkenhead dissented in relation to the measure of damages which would have been recoverable had the plaintiff's claim not been dismissed. His Lordship reasoned as follows (391):

The position in law is that the negligent driver, backed by his insurers, is liable to pay reasonable charges incurred in hiring a replacement car if this is reasonably necessary. For many motorists the existence of this liability of the other motorist can be more theoretical than real. In practice this source of recompense frequently does not yield money, or even an acceptance of liability, in time to be of use. In Giles v Thompson [1993] UKHL 2; [1994] 1 AC 142, 155A, Lord Mustill observed that:

there exists in practical terms a gap in the remedies available to the motorist, from which the errant driver, and hence his insurers, frequently profit.

The additional services provided by accident car hire companies bridge this gap. They redress the imbalance between the individual car owner and the insurance companies. They enable car owners to shift from themselves to the insurance companies a loss which properly belongs to the insurers but which, in practice, owners of cars often have to bear themselves. So long as the charge for the additional services is reasonable, this charge should be part of the recoverable damages.

1. Lord Saville of Newdigate expressed no view on the question of the principles by which damages should have been calculated had the credit hire agreement been enforceable (403).
2. In Lagden, a majority of the House of Lords (Lord Nicholls of Birkenhead, Lord Slynn of Hadley and Lord Hope of Craighead) held that if a plaintiff was 'impecunious' (that is, the plaintiff was unable to pay car hire charges without making sacrifices the plaintiff could not reasonably be expected to make), the plaintiff was entitled to recover the whole of the charges payable under a credit hire agreement.
3. Lord Nicholls of Birkenhead said [6]:

Common fairness requires that if an innocent plaintiff cannot afford to pay car hire charges, so that left to himself he would be unable to obtain a replacement car to meet the need created by the negligent driver, then the damages payable under this head of loss should include the reasonable costs of a credit hire company.

1. In Dimond, the majority of their Lordships held that the additional benefits obtained by the plaintiff, although obtained by a course of action which was reasonable, were not a compensable loss. In Lagden, the correctness of that view was not challenged. However, the majority of their Lordships in Lagden distinguished Dimond on the basis that the plaintiff in Dimond was not impecunious.
2. In Stevens, Kitchin LJ (Floyd and Jackson LJJ agreeing) summarised a number of principles discernible from earlier authorities in the United Kingdom as follows [11]:

[A]n innocent party who hires a replacement vehicle on credit hire terms suffers a loss which is also recoverable as damages provided always that he has acted reasonably. Nevertheless, and even if he has acted reasonably, the innocent party may not be able to recover the full amount of the credit hire rate that he has agreed to pay to the credit hire company. It all depends upon his financial circumstances. If he could have afforded to hire a replacement vehicle in the normal way, that is to say without credit hire terms and by paying in advance, then the damages recoverable will be that sum which is attributable to the basic hire rate (or BHR) of the replacement vehicle. If, on the other hand, he is impecunious and could not have afforded to hire a replacement vehicle by paying in advance then, prima facie, he is entitled to recover the whole of the credit hire rate he has paid, provided it was a reasonable rate to pay in all the circumstances.

1. In Stevens, Kitchin LJ referred to the practical difficulties in calculating the basic hire rate component of any particular credit hire rate [30]. His Lordship explained [34]:

The difficulty arises because credit hire companies do not routinely value such additional benefits. They quote and charge a single credit hire rate. It follows that any attempt to value the benefits at a later stage in a proportionate way must necessarily involve a degree of imprecision. The best that can be hoped for, absent a very expensive exercise of disclosure and analysis, is a reasonable approximation.

1. Kitchin LJ said that a reasonable estimate could be arrived at by determining what the basic hire rate would have been for a reasonable person in the plaintiff's position to hire a car of the kind hired on credit [34]. A judge who is presented with a range of hire rates should endeavour to identify the rate for the hire in the plaintiff's geographical area of the type of car actually hired and, if that yielded a range of rates, then a reasonable estimate of the basic hire rate could be obtained 'by identifying the lowest reasonable rate quoted by a mainstream supplier or, if there is no mainstream supplier, by a local reputable supplier' [36]. His Lordship said that, in his view, this approach was consistent with the observations of Lord Hoffmann and Lord Hobhouse of Woodborough in Dimond [37].
2. In McBride, Flaux LJ (Sir Timothy Lloyd and Sir Stanley Burnton agreeing) rejected a submission that Stevens was inconsistent with earlier decisions of the Court of Appeal of England and Wales and was wrongly decided. His Lordship said [53]:

I am far from satisfied that there is any real conflict between Stevens and Pattni/Bent (No 2). ...[T]aking a basic hire rate at the top end of the range is always subject to the claimant having acted reasonably. In practical terms, if the defendant can show that a basic hire rate at the top end of the range exceeds the lowest reasonable rate within the range charged by a mainstream supplier or reputable local supplier, then the claimant will not recover more than that lowest reasonable rate, unless he or she can demonstrate that it was appropriate on the facts of the particular case to take some higher rate, which is extremely unlikely ever to be the case.

1. The general principle applicable to Ms McKnight's claim for damages is that Ms McKnight should receive compensation in a sum which, so far as money can do it, would put her in the same position as she would have been in if Ms Miller had not breached her duty of care.
2. Ms McKnight's motor vehicle was damaged as a result of Ms Miller's negligence. In general, Ms McKnight was entitled to damages for the costs of repair and for consequential loss.
3. The assessment of Ms McKnight's consequential loss requires the identification of the manner in which the loss of use of her vehicle during the repair period adversely affected her.
4. Ms McKnight was adversely affected in that she lost the physical convenience and the amenity that she would have derived during the repair period from the availability and use of her vehicle.
5. Ms McKnight proved at the trial that Ms Miller's negligence deprived her of the physical convenience and the amenity that she would have derived during the repair period from the availability and use of her vehicle.
6. Ms McKnight attempted to reduce her consequential loss by hiring a replacement vehicle during the repair period pursuant to the rental agreements she entered into with Compass in respect of the Toyota Camry and Toyota Corolla.
7. The question is whether Ms McKnight acted reasonably in entering into the rental agreements with Compass for the hire of a replacement vehicle during the repair period and incurring the total charges for which she claimed, in effect, reimbursement from Ms Miller by an award of damages for consequential loss.
8. Ms Miller bore the onus of establishing that Ms McKnight's action in hiring a replacement vehicle during the repair period pursuant to the rental agreements with Compass was unreasonable.
9. The Toyota Corolla hired by Ms McKnight was broadly equivalent to the vehicle that was damaged by the collision. The Toyota Camry she hired was not broadly equivalent to her vehicle, but that fact is not material because there was no difference in the cost of hiring the Toyota Camry as opposed to the Toyota Corolla.
10. In Lazicic v Rossi,[29] Kirk J noted that in Arsalan Kiefel CJ, Gageler, Keane, Edelman and Steward JJ referred, with apparent approval, to the reasons of the Court of Appeal of England and Wales in Watson Norie. As we have mentioned, in Watson Norie the Court of Appeal accepted that it was open to the primary judge to find that the defendants had established that the plaintiff acted unreasonably in circumstances including the plaintiff having hired a replacement vehicle from a company that was not in the habit of hiring cars; the plaintiff having failed to make any real enquiry about price; and the plaintiff having failed to avail itself of a 20% discount on the cost of the hire by paying cash.
11. As Kirk J observed in Lazicic, significant factors in assessing the reasonableness of an injured party's claim in respect of the cost of hiring a replacement vehicle will be 'what inquiries [the injured party] made in filling their need for a replacement vehicle, and the availability of other cheaper rates in doing so' [26]. His Honour added that it is 'thus relevant to take account of the market rates of comparable vehicles as at the relevant time' [26].
12. Ms McKnight's relevant consequential loss was the physical inconvenience and the loss of amenity associated with her inability to use her vehicle during the repair period. The avoidance of physical inconvenience and loss of amenity of that kind ordinarily involves the acquisition of a replacement vehicle during the repair period. It does not ordinarily involve the acquisition of additional benefits with associated additional charges. In the present case, the evidence at trial supported the magistrate's conclusion to the effect that the avoidance of Ms McKnight's physical inconvenience and loss of amenity associated with her inability to use her vehicle during the repair period did not, in the circumstances (including her personal circumstances), justify the acquisition of benefits with associated charges in addition to the acquisition of a replacement vehicle.
13. As we have mentioned, Ms McKnight gave evidence that a tow truck driver who attended the accident scene recommended Compass to her; she did not make enquiries with any other car hire companies about the hiring of a replacement vehicle; her only enquiries were with Compass; and she 'skimmed over' the rental agreements before signing them. See [23] above.
14. We are satisfied, having regard to:

(a) Ms McKnight's evidence to which we have referred at [137] above;

(b) Ms McKnight's other evidence at the trial;

(c) the evidence which the parties put before the magistrate as to the rates charged by mainstream motor vehicle rental companies at the material time for the hire of vehicles of the kind hired by Ms McKnight from Compass;

(d) the amount of Compass' total charges under the rental agreements with Ms McKnight; and

(e) the magistrate's findings of fact,

that Ms McKnight's action in hiring a replacement vehicle during the repair period pursuant to the rental agreements with Compass was unreasonable for two reasons.

1. First, the amount of Compass' total charges substantially exceeded the amount that would have been payable to mainstream motor vehicle rental companies for the hire of vehicles of the kind hired by Ms McKnight from Compass. Secondly, the proper inference is that Compass' total charges included amounts for the provision of benefits to Ms McKnight in addition to the provision of the replacement vehicles.
2. In any event, even if (contrary to our opinion) Ms McKnight's action in hiring a replacement vehicle during the repair period pursuant to the rental agreements with Compass was reasonable, whether Ms McKnight was entitled, in effect, to recover from Ms Miller, by an award of damages for consequential loss, the whole of Compass' total charges depends upon whether Ms Miller was entitled to an allowance for any benefit, in addition to the acquisition of the replacement vehicle, which Ms McKnight gained from entering into the rental agreements with Compass.
3. The rental agreements, including the Mandate and Authority to Act, provided, in effect, as follows:

(a) Ms McKnight agreed to pay to Compass all amounts payable under the rental agreements.

(b) Compass agreed to use its best endeavours, as Ms McKnight's agent, to recover from Ms Miller or her insurer all amounts payable by Ms McKnight to Compass under the rental agreements.

(c) If Compass recovered from Ms Miller or her insurer all amounts payable by Ms McKnight to Compass under the rental agreements, Compass 'reserve[d] the right to accept [the amount recovered] in satisfaction of' the amounts payable by Ms McKnight under the rental agreements and, in those circumstances, any amounts payable by Ms McKnight would be waived and she would have no further liability to Compass for those amounts.

(d) To the extent that any amounts payable by Ms McKnight to Compass under the rental agreements were not recoverable from Ms Miller or her insurer, Ms McKnight would be liable to pay to Compass the balance outstanding.

1. The rental agreements, including the Mandate and Authority to Act, reveal that Ms McKnight gained benefits, in addition to the acquisition of a replacement vehicle, as follows:

(a) the replacement vehicle was hired on credit;

(b) Compass acted on Ms McKnight's behalf in liaising with repairers and monitoring the progress of repairs to her vehicle;

(c) the replacement vehicle was hired with a premium roadside assistance package at a cost of $3.30 per day; and

(d) Compass acted on Ms McKnight's behalf in bringing legal proceedings against Ms Miller by appointing legal advisers and meeting Ms McKnight's reasonable out‑of‑pocket expenses in connection with those proceedings.

1. If, as a matter of law, Ms Miller was entitled to an allowance for any of those benefits, Ms Miller bore the onus of establishing the value to Ms McKnight of the benefits that had to be taken into account.
2. At the trial, Ms McKnight did not give any evidence about whether she had a roadside assistance package in relation to the motor vehicle that was damaged in the collision or, if she did have such a package, whether the package applied to the replacement vehicle. Counsel for Ms Miller did not raise this issue with Ms McKnight in cross‑examination. So, there was an absence of evidence about whether Ms McKnight had a comparable roadside assistance package. In the circumstances, Ms Miller did not satisfy her onus of establishing that the premium roadside assistance package was a benefit for which Ms Miller was entitled to an allowance.
3. In our opinion, Compass' provision of the replacement vehicle to Ms McKnight on credit conferred a benefit on her in that it was unnecessary for Ms McKnight to outlay any money to hire the vehicle. There was no evidence that Ms McKnight was impecunious; that is, she was unable to pay vehicle hire charges without making sacrifices she could not reasonably be expected to make. See Lagden [9]. If Compass, using its best endeavours, recovered from Ms Miller or her insurer all amounts payable by Ms McKnight to Compass under the rental agreements, Ms McKnight would be relieved of any obligation to pay any money to Compass for the hire of the vehicle.
4. Further, in our opinion, Compass' agreement to act on Ms McKnight's behalf in:

(a) liaising with repairers and monitoring the progress of repairs to her vehicle; and

(b) bringing legal proceedings against Ms Miller by appointing legal advisers and meeting Ms McKnight's reasonable out‑of‑pocket expenses in connection with those proceedings,

conferred benefits on Ms McKnight in that Compass agreed to provide Ms McKnight with services which alleviated the necessity for Ms McKnight to deal with those matters herself or to retain others to attend to them. If Compass, using its best endeavours, recovered from Ms Miller or her insurer all amounts payable by Ms McKnight to Compass under the rental agreements, Ms McKnight would be relieved of any obligation to pay any money to Compass for the provision of those services.

1. The benefits to which we have referred at [145] ‑ [146] above arose out of Ms McKnight's action in attempting to reduce the loss that was caused by Ms Miller's breach of her duty of care. The relevant benefits were not independent of, collateral to or disconnected from Ms McKnight's action in attempting to reduce her loss. Indeed, the hire of the replacement vehicle and the acquisition of the relevant benefits arose out of a single transaction between Ms McKnight and Compass that was recorded in the rental agreements.
2. In the circumstances, the value of the benefits to which we have referred at [145] ‑ [146] above must be brought to account in determining the amount of the consequential damages payable by Ms Miller to Ms McKnight.
3. It is therefore necessary to consider how the value of the relevant benefits is to be calculated.
4. The rental agreements do not differentiate between the amount that is attributable to the hire of the replacement vehicle and the amount that is attributable to the relevant benefits. At the trial no attempt was made by Ms Miller to break down Compass' total charges under the rental agreements. This would have involved detailed disclosure by Compass of financial and related details of its business model. The time and expense involved in making disclosure and analysing the data would have been disproportionate to the size of Ms McKnight's modest monetary claim. Although detailed disclosure by Compass of financial and related details of its business model and the analysis of that data may have produced the best evidence of the value of the relevant benefits, that approach was not the only basis upon which a reasonable and appropriate estimate of value could be made. See Pattni [38] ‑ [41]; McBride [41] ‑ [42].
5. An alternative approach adopted by the parties at the trial was to put before the magistrate evidence as to the rates charged by mainstream motor vehicle rental companies for the hire of vehicles of the kind provided by Compass to Ms McKnight. See [33] above.
6. In our opinion, a reasonable and appropriate estimate of the value of the relevant benefits acquired by Ms McKnight was the difference between:

(a) the total charges payable by Ms McKnight to Compass under the rental agreements (after deducting the cost of the roadside assistance package), on the one hand; and

(b) the cost that would have been incurred by Ms McKnight had she hired a vehicle of the kind provided by Compass from a mainstream motor vehicle rental company at the median of the market rates in the Perth metropolitan area (excluding the Perth CBD and Perth airport) for a 39 or 40 day hire (but not including the cost of a roadside assistance package) plus the undisputed delivery charge of $88, on the other.

1. On this alternative approach, the amount paid by RAC to Compass exceeded the amount properly claimable by Ms McKnight in the Magistrates Court proceedings.
2. The magistrate's ultimate conclusion that Ms McKnight's claim should be dismissed was correct. The primary appeal judge should have affirmed the magistrate's decision.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Arsalan v Rixon [2021] HCA 40; (2021) 274 CLR 606.

[2] British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] UKLawRpAC 43; [1912] AC 673, 691 (Viscount Haldane LC; Lord Ashbourne, Lord Macnaghten & Lord Atkinson agreeing).

[3] Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443; (2005) 12 BPR 23,923 [33].

[4] Haines v Bendall [1991] HCA 15; (1991) 172 CLR 60, 63 (Mason CJ, Dawson, Toohey & Gaudron JJ; Brennan J relevantly agreeing).

[5] Watts v Rake [1960] HCA 58; (1960) 108 CLR 158, 159 (Dixon CJ), 163 (Menzies J).

[6] Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VicRp 52; [1986] VR 507, 512 ‑ 513 (Murphy J; Brooking & Nicholson JJ agreeing).

[7] TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, 158 (Hope JA; Meagher JA agreeing).

[8] Goldburg v Shell Oil Co of Australia Ltd [1990] FCA 494; (1990) 95 ALR 711, 714 (Sweeney & Ryan JJ).

[9] Talacko v Talacko [2021] HCA 15; (2021) 272 CLR 478 [60] (Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward & Gleeson JJ).

[10] Wilson v United Counties Bank Ltd [1920] AC 102, 125 (Lord Atkinson).

[11] Chand v Commonwealth Bank of Australia [2015] NSWCA 181 [182] (Ward JA; Bathurst CJ & Beazley P agreeing).

[12] Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313; (2000) 10 BPR 18,235 [187] (Giles JA; Handley & Stein JJA agreeing).

[13] Morrison v Town of Victoria Park [2007] WASCA 164 [38] (Wheeler JA; Pullin & Buss JJA agreeing).

[14] Clark v Macourt [2013] HCA 56; (2013) 253 CLR 1.

[15] Sotiros Shipping Inc and Aeco Maritime SA v Sameiet Solholt (The 'Solhot') [1983] 1 Lloyd's Rep 605, 608 (Sir John Donaldson MR, delivering the judgment of the Court of Appeal of England and Wales).

[16] Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322, 361 (Samuels JA; Reynolds JA agreeing).

[17] Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd [1991] FCA 592; (1991) 33 FCR 1, 17 (Burchett J; O'Loughlin J agreeing).

[18] Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 [255] (Giles JA), [264] (Hodgson JA).

[19] EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 [194] ‑ [195] (White J).

[20] Mills v Walsh [2022] NSWCA 255 [131] ‑ [138] (Brereton JA; Bell CJ agreeing).

[21] Watson Norie Ltd v Shaw [1967] 1 Lloyd's Rep 515.

[22] Giles v Thompson [1993] UKHL 2; [1994] 1 AC 142.

[23] Dimond v Lovell [2002] 1 AC 384.

[24] Lagden v O'Connor [2003] UKHL 64; [2004] 1 AC 1067.

[25] Pattni v First Leicester Buses Ltd [2011] EWCA Civ 1384.

[26] Bent v Highways and Utilities Construction Ltd [2011] EWCA Civ 1384.

[27] Stevens v Equity Syndicate Management Ltd [2015] EWCA Civ 93.

[28] McBride v UK Insurance Ltd [2017] EWCA Civ 144.

[29] Lazicic v Rossi [2024] NSWSC 777 [25].