Moraghan v Riley

Local Court of NSW|2015-09-08

Judgment

In this matter Mr David Moraghan claims for negligence against Ms Nicole Riley arising out of a motor vehicle accident. Negligence is not in dispute. The vehicle associated with the plaintiff was a 2008 Jaguar XF. It was parked when Ms Riley's Toyota Kluger collided with its rear. The damaged Jaguar was owned by Pan Spraybooths Australia Pty Ltd (Pan) of which the plaintiff, Mr Moraghan, was the managing director. I find that he was the only driver, and he used the car for work and private purposes, including weekend use.
While the Jaguar was being repaired Mr Moraghan obtained a replacement vehicle through Compass. That vehicle also was a Jaguar XF (the substitute vehicle). He was issued a tax invoice for hire charges in the sum of $23,208.17, made up of a daily hire rate of $399.00 over 58 days (which included GST) and a delivery fee of $66.00.
It is that hire fee and delivery fee for which Mr Moraghan sues as a bailee of the owner, Pan. Pan could have sued as owner, but did not.
The plaintiff was represented by Mr T. M. Thawley SC and the defendant by Mr K. G. Oliver of counsel.
The defence denied that Mr Moraghan was a bailee of the substitute vehicle, and the first question to be resolved is whether he was and accordingly whether he has standing to sue.

Whether Mr Moraghan was a bailee

Pollock & Wright, An essay on possession in the common law, 1990

The article explains the methods by which a person might acquire possession. At page 57.7 the authors refer to the fact that possession may be delivered in several ways according to the circumstances. It may be made either to the person who is to acquire possession, or to a servant on his behalf, "and it may be made in either case either by an actual and apparent change in the custody of the goods, or by a change in the character of a continuing custody."
My inclination is to think that the initial physical acquisition of the original Jaguar XF by the plaintiff was on behalf of Pan (the company which may loosely be referred to as his employer). But in any case when (as may be reasonably inferred to have been almost immediately) the plaintiff began to use the vehicle, both for private use on weekends in particular and also for lengthy driving trips in the course of his work, legal as well as physical possession passed to him.
At page 58 the authors note that: On the other hand, a servant in charge of his master's property, or a person having the use of anything by the mere licence of the owner, as a guest has the use of the furniture and plate at an inn, generally has not possession.
Counsel for the defendant relies on that passage to differentiate between the true position of a bailee (which he says has not occurred in the present case) and that of a mere servant. I do not accept that submission. Indeed, the article goes on in the very next paragraph to offer a qualifying view: … and there may be cases of handing over for a limited purpose which are on the face of them not obviously within either of these classes. It must then depend on the true intent of the transaction, as ascertained from all the circumstances, whether there is a bailment or a mere authority or licence to deal with things in a certain way.
It seems to me that the only reasonable inference in the circumstances is that the plaintiff did acquire the original Jaguar XF on behalf of his employer, but that he almost immediately became a bailee. I draw that inference because the plaintiff was the sole director of a holding company, and joint director with his wife of the company which was his employer, and because of the nature of the work which it was intended he would perform, including extensive driving on long country trips, as well as having the personal use of the vehicle particularly on weekends. It is in my view an irresistible inference that Pan, and the plaintiff personally, intended that he would become a bailee of the vehicle.

Question of fact whether plaintiff is a bailee - relevance of 'control' of the item

In support of his view that an employee does not take as a bailee, counsel for the defendant relied on Halsbury's Laws of Australia, particularly at [14-10].
The authors of Halsbury note that "an employer delivering chattels to an employee to deal with in the course of the employee's appointment ... is not bailment".
I do not think that that view assists our present defendant. In my view, what it plainly refers to is the position where an employee is using objects provided in the course of his employment (such, for example, as a roadworker taking signs from a depot and placing them in an appropriate position on a suburban road). In such a case neither the employer nor the roadworker could possibly contemplate that he becomes a bailee of the signs. Someone such as our present plaintiff, using a large luxury vehicle on an extended basis for both personal and work use, is obviously in a very different position.
The defendant relies on Associated Portland Cement Manufacturers (1910) Limited v Ashton [1915] 2 KB 1 at 10 (discussed in Halsbury), a case where the plaintiffs chartered a barge, the Myrtle, for the carriage of a cargo of cement, which was lost through the sinking of the barge consequent upon its unseaworthiness. The barge was being worked on a system of "thirds", under which the master, one Mr Cole, took two thirds of the gross freights, paying from those amounts the mate, crew, cost of provisions, and the expenses of the voyage, and handing over one third less certain expenses to the defendant owner, who provided the barge and paid for its upkeep. The plaintiff sued to recover the amount of the lost cargo, while the defendant denied liability on the ground that the contract was with the master, and there was nothing to show that he was agent of, or servant for an undisclosed principal. The evidence established that Mr Cole usually arranged the chartering, that he was appointed by the defendant to work the ship, and that he was not dismissible during the continuance of the voyage except for grave misconduct.
The Court of Appeal held that upon the true inference to be drawn from the facts there was no demise or bailment of the ship to the master, that he managed and sailed the ship for the joint benefit of himself and the owner whose servant and agent he was, and that the owner was liable on the contract.
The headnote adequately summarises the effect of the test to be applied as follows: "Where does the real control rest? By retaining control over the master the owner retains control also over the ship, and in that event it is immaterial whether he receives a share of the gross freights or the net profit." The Master of the Rolls, Lord Cozens-Hardy, emphasised at 9 that the question whether Mr Cole was really a bailee or was the agent or servant of the owner is a question of fact, a question which had to be decided on the evidence before the court.
Whether there is a bailment will always be a question of fact, but in my view, that decision is readily distinguishable from our present matter. A critical point of difference is the fact that the plaintiff, Mr Moraghan, was able to and did use the subject vehicle for personal use on weekends and at other times including to visit family and to go shopping and other things of that sort. He was not sent off on discrete voyages, as was the master of the barge Myrtle, subject to the supervision of his employer, but rather had the overall control and use of the vehicle.
It will indeed be a question of fact in each case whether a person is a bailee, but inasmuch as the control of the item in question helps to determine that question the present plaintiff's level of control of the vehicle argues in favour of a finding that he was a bailee. In my view, the natural interpretation of the circumstances is that his employer bailed the car to him. Another very relevant circumstance bearing on the plaintiff's control of the vehicle is the fact that with his wife he was a co-director of the employer, and the sole director of the holding company which held the shares in the employer company. Unlike the employer of Mr Cole, there was minimal power in his employer to direct him to do anything. All the circumstances taken together, in my view, show that had control of the vehicle and require an inference that it had been bailed to him.
(I should add that I do not find it necessary to deal with the submission that any personal taking of possession was a breach of Mr Moraghan's fiduciary duty as a director).

Whether possession goes with title - whether overt act needed to show that it did not - Burnett's case

The defendant relied on Burnett v Randwick City Council [2006] NSWCA 196, which he submits is the leading authority. It approved of the unreported 1993 decision in Vincent v Bank of NSW, which emphasised that the question whether a change in possession invested a servant with the character of a bailee is a question of fact in each case.
Burnett was a case where the proprietors of a gym at Randwick were two companies of which the plaintiffs were the sole directors and shareholders. When the council took back the lease to the companies, a good deal of (apparently valuable) equipment remained at the premises. The plaintiffs lived in Queensland, so the gym had been managed by employees. The plaintiffs sued in conversion (which similarly requires possession to ground a right to sue). The Court took the view that there was no overt act by which the status of possession changed from that of the companies to that of the plaintiffs personally.
Counsel for the defendant submitted that there was likewise no overt act in the present matter which might evidence possession having changed to that of Mr Moraghan. He says that because it is not inconsistent with ongoing prospective control in the company nothing can be gained for the plaintiff from the fact that he was permitted to use the vehicle for both work and private purposes. But keeping steadily in mind the need to determine intention as a question of fact in each case I find that, to the extent an overt act needs to be shown, it is found in the consensual use of the vehicle for private purposes.
In my view, the defendant's argument is not assisted by the decisions in Ramsay v Margrett [1894] 2 QB 18 at 25 and R v Taylor [2011] 1 WLR 1809 at [36] on which he relied. Ramsay was a case where an execution creditor executing on the goods of a husband failed because the husband had by agreement passed title to his wife, even though the furniture and other items remained in their house. The defendant cites it for Lord Esher's view that when possession is doubtful it is attached by law to the title. It is easy enough to understand that a court might well be reluctant to allow an execution creditor to claim what were substantially family possessions, seen by the Court as in law in the possession of the wife. In any case, it is a question of fact in each case and in this present matter I find possession is not doubtful (the consensual use for extensive private purposes militates against any such doubt).
The passage in Taylor is little more than a throw-away line so far as its present relevance is concerned. Taylor had been convicted of being privy to falsification of records in relation to an insolvency. Some vehicles were kept in his garage, and the Court of Appeal simply observed that a company director with a company car in his garage cannot truthfully say that the car is not in the possession of the company. Without more, that would be true, but it does not bear on the present matter where the car in question was not just physically sitting in the plaintiff's garage but was used by him with his employer's consent for private purposes, and not just occasional such use but in practical terms he was able to treat the car as his own.
The defendant sought to distinguish the Canadian Wood Motors decision. But because the car salesman in that case was held to be a bailee I find it does not assist the defendant. The Court did find that a driver who was given physical custody by the salesman, and was involved in an accident, was not a bailee, but its observations that the salesman himself was a bailee tend to support the view that the present plaintiff was a bailee.
For all the foregoing reasons I find the present plaintiff was a bailee of the damaged vehicle.

Damages

Mr Oliver for the defendant raised a number of arguments related to the question of damages, particularly damages available to a bailee, and submitted that the plaintiff's claim was for consequential damage and, because of intervening acts (the company making another vehicle available to the plaintiff), there was no compensable loss and he could not succeed. The defendant submitted that the plaintiff had misunderstood authority and applied the wrong principles.
To properly deal with those submissions it is first necessary to state the basis on which Mr Thawley put the plaintiff's claim, put by him as part of the exercise of quantification of damages.

Plaintiff's argument that award of damages is not based on wrongful deprivation of property - defendant's argument that damages are not available for avoided consequential loss

The plaintiff begins by noting that an award of damages for the loss of use of property - in other words, total loss - seeks to compensate a plaintiff who has been wrongfully deprived of property by a wrongdoer, relying on The Mediana [1900] AC 113 for the proposition that property taken away or so injured that it cannot be used at all attracts damages.
(Counsel for the defendant says, in effect, that that principle is well and good, but applies only to total loss of the goods themselves, and that consequential loss (such as hire of a substitute vehicle) will not be compensable where there is an intervening act - there being no loss because the employer company provided a vehicle anyway. Although he does not say so in so many words, he cites authorities which fasten upon total loss as a ground for damages being available in cases of direct damage or taking, such as trespass, detinue and trover. But, he says, not available for avoided consequential loss. I will deal with that submission in detail, but first it is necessary to look at the way in which the plaintiff puts his submissions).
The plaintiff's argument that in the case of total loss the plaintiff does not have to show need.
What The Mediana shows is that when it comes to assessing damages, if claiming for total loss the plaintiff need not show any need, and that the award is one for general not special damages. I come separately later on to the argument of the defendant that that does not apply to consequential loss. The defendant concedes that on the question of liability a plaintiff does not have to show need, but insists that he does when it comes to damages.
In that case, a lightship belonging to a harbour board and used for lighting approaches on the river Mersey was damaged in a collision caused by the negligence of the appellants. While it was out of action the respondent made use of another lightship which it had held in reserve against just such an exigency. That other ship was so employed for seventy four days, during which period it had not been required for any other use. Lord Halsbury LC delivered the principal judgement. His Lordship noted at 117 that the plaintiffs were deprived of their vessel - and he expressly avoided the use of the phrase "the use of the vessel", asking rhetorically "What right has a wrongdoer to consider what use you are going to make of your vessel?" The broad principle which his Lordship accepted was that the assessment of the damages is quite independent of the particular use the plaintiffs were going to make of the thing that was taken, except that in the case of special damages - when the plaintiffs were endeavouring to establish the specific loss of profit or something that otherwise would have been recognised as special damage - the damage in that case needed to be shown, and needed to be shown by precise evidence. (At the time the decision was given 'special damage' was understood to mean damage beyond that which naturally and normally flowed from the injury in question.) General damages, being those which do normally and naturally follow, were not subject to any such limitation. (These days special damage means discrete quantifiable damage which must be proved.)
Lord Halsbury posed an example of a plaintiff wrongfully deprived of a chair, pointing out that it would be no answer if the wrongdoer who had taken it were to argue that the plaintiff had suffered no loss because he had plenty of other chairs anyway. The damages in that case (total loss) are not dependent on need, and are general damages. There is, of course, no consequential loss in such a case, and the plaintiff will get his damages irrespective of need.
If a plaintiff does have to show need on the question of damages for consequential loss, as distinct from liability, such damages might be special rather than general damages. One question is whether the hire of a substitute vehicle in circumstances such as the present ones constitutes general damages or special damage. Lord Halsbury seems to me to be saying that for direct loss damages would be general because, as his Honour said (at 117): Here, as I say, the broad principles seem to me to be quite independent of the particular use the plaintiffs were going to make of the thing that was taken.
I think that is the correct way to look at what his Lordship decided, notwithstanding that on that page he excepted the case of specific loss, characterising it as special damage. Unlike our own matter, the substitute vessel did not need to be hired, but I infer from his Lordship's reasoning that the result would not be any different if it had - the hiring charges would be evidence, although no doubt not conclusive evidence, of the loss of the vehicle, and because no special loss such as loss of profit was sought such loss as is shown would still be general damages, as general and specific damages were differentiated at that time. Consequential loss (as the defendant argues) might well be a different beast, and might be seen as obviated by the provision of a vehicle by the present plaintiff's employer, and these days should be treated as general damages.
The Court of Appeal's decision allowing damages for the loss of the vessel (not, as his Lordship observed, the use of it) was upheld. The quantum (£300) was agreed, so the case is no help in that respect. The general tenor of the judgments, particularly that of Lord Shand, suggests that the Court was greatly influenced by the fact that the harbour authority had had to maintain the substitute ship at a cost of £1,000 per year. There is no analogy to our own matter in that regard.
The overall effect of the decision in my view is that to succeed in the case of total loss of use of an item a plaintiff need not show he had any particular need for the item, and that any damages awarded would be general damages. Although the Court focused on loss of the vessel rather than loss of its use, the result will be the same when proceeding for total loss of use. I therefore agree with Mr Thawley that generally a plaintiff does not have to prove need. (I keep steadily in mind though, that the defendant argues that on a claim for loss of use, of which hire fees for a substitute vehicle is some evidence, consequential loss is what is claimed and that on the question of damages as distinct from liability the plaintiff might well have to show need.)
The plaintiff points out that the general observations of the House of Lords were followed in Anthanasopoulos v Mosely (2001) 52 NSWLR 262 at [28] - [30], by Beazley JA.
However, acceptance that total loss of the item does not require proof of need was extended in the case of mere loss of use, and to further emphasise that recovery is not dependent on establishing need and does not require proof of any out of pocket expenses The plaintiff referred to Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463 at [84], in which Palmer J rejected a submission that Anthanasopoulos introduced into the law any fresh test of need. That was a case of negligent repairs to a motor vessel. Palmer J said at [80]: The Defendants do not dispute that damage to property depriving the owner of its use is compensable even though the owner cannot prove tangible pecuniary loss, i.e. that he or she is out of pocket in any particular sum: see e.g. Owners of No 7 Steam Sand Pump Dredger v Owners of SS Greta Holme [1897] AC 596 ("The Greta Holme"); Anthanasopoulos v Moseley [2001] NSWCA 266, (2001) 52 NSWLR 262.
The motor vehicle was not a total loss but had merely been damaged. Those observations of Palmer J plainly accept, not only that total loss arising from either negligence or direct trespass will sound in general damages, but so also will mere damage to property falling short of total loss. I agree with the plaintiff that such loss must therefore be seen as general damages, and it is not confined to cases of direct trespass nor to total loss but includes loss arising from negligence. It was the cost of repairs or replacement and did not mean consequential loss. In the present matter the claim is for consequential loss.
When one does pass to consequential loss, the provision of a courtesy car or a replacement car, as even the defendant acknowledges, will not affect the question of liability; the defendant will be liable. The defendant argues though that such a replacement car will be relevant to damages, and it might well obviate any need on the part of the plaintiff, with the result that there could be no damages (other than a nominal amount).
That view is borne out by the Court of Appeal in Anthanasopoulos at [82]. The Court specifically said that the provision of a courtesy car by the owners' insurers, or by a third party, was irrelevant to the claim for the cost of hiring a substitute vehicle. That decision is therefore direct authority for the proposition that the provision of a substitute vehicle by a third party is irrelevant at least to liability - the defendant says it is relevant to damages - and also further establishes that the plaintiff is not required to prove need in relation to liability; but the defendant says that for consequential loss, the question of need is very relevant to damages. However, there are two special exceptions which will indeed be relevant to damages. The cases show that a benefit provided by the plaintiff's insurers, or provided in some cases by altruistic third parties, will not be such an intervention as to deprive the plaintiff of damages. A second exception is the provision by relatives or others of free nursing services and the like, and in each case the benefit will not obviate the plaintiff's need. I discuss those exceptions further below.
Counsel for the plaintiff unequivocally submits, and I agree, that the plaintiff's loss is not the expenditure of money to hire a replacement vehicle and the plaintiff makes no such claim. What he means, of course, is that such expenditure is merely evidence of the market rate, general damages flowing from loss of use.

Irrelevance of the employer company's title to the damaged vehicle

The plaintiff submitted that the decision in The Winkfield [1902] P 42 rules that, because possession qualifies as title as between bailee and wrongdoer, the title of the employer company (Pan) is irrelevant to quantum and may not be raised on the question of assessment of damages. The defendant submits that that view is wrong - and that the correct view of The Winkfield is that the legal relations between the two are irrelevant, not to quantum, but only to liability for loss arising from conversion or wrongful detention or as a direct and natural consequence of a trespassory interference whether intentional or unintentional (the latter, of course, including negligence). Of course, the claimed need for a substitute vehicle in this matter is not direct or natural but a consequential loss.
The reason the defendant puts forward that the legal relations between employer and plaintiff are irrelevant to liability for such consequential loss is twofold. He says that such loss is actionable alternatively in either negligence or trespass to goods (for which he cites State of NSW v Knight [2002] NSWCA 392 at [16]), and that like trover and detinue, trespass to goods is a possessory action maintainable by any person who can show title (such, obviously, as a bailee). That is, he means to say that it is possession as title that enables the plaintiff to bring his action and it will not matter what were the terms of his legal relations with the plaintiff.
The judgment of the Court of Appeal in Knight was given by Meagher JA. It was a case seeking damages for assault by a policeman on a fleeing person whom he had been seeking to arrest. His Honour noted that in the UK there has developed a view that negligence actions must all be treated as entirely separate from actions in trespass and the like, but that in Australia that view has not prevailed and that the two have a degree of overlap.
Focusing only on liability and not damages, and pressing the view that for consequential loss a plaintiff must rely on loss caused as a direct and natural consequence (in this case, of negligence), the defendant goes on to submit at paragraphs 25 and following that liability has been extended not only to actions for negligent destruction but also to negligent damage (citing the District Court decision in McCauley v Karooz (1944) 61 WN (NSW) 165 (Nield DCJ). That extremely short decision (less than one page) was a case of a bailee of a horse suing for loss flowing from a collision with a car. Relying on The Winkfield Nield DCJ held that the plaintiff bailee was entitled to sue. It does indeed illustrate that a bailee may recover in negligence for something less than total destruction of the property.
The defendant submits that the reason a plaintiff in such a case can recover for less than a detention or a total destruction is that the loss is a direct and immediate physical consequence of a trespassory interference. It follows, he says, that quantum could not be affected by the identity of the person who was in charge of the damaged chattel at the time of interference. What he means is that either for total loss or for repair costs a bailee can recover, but he insists that for consequential loss such as hire of a substitute vehicle he can only recover if he shows need (and that if someone else meets that need by providing a vehicle there will be no need to meet). It is for that reason that he submits that the legal relations between the plaintiff as bailee and his employer are relevant to damages. He says that while there are a couple of exceptions (eg: where a bailor has insured the vehicle and obtains a replacement as part of his policy entitlements) such provision of a vehicle obviates need and deprives the plaintiff of his entitlement to damages.

The defence submission that for consequential loss need is relevant to damages

The defendant therefore submits that consequential loss is entirely different, and that quantum can be affected by the bailee's legal relations with his owner. It would in his submission not merely be relevant to look at the bailee's legal relations with the owner - relevant in the present case because the owner might well provide, and (unless it is correct to say, as the defendant does, that the plaintiff himself provided it) has provided a substitute vehicle, which would obviate damage - but also to look at such provision of a vehicle by a third party. He adds in effect that collateral evidence such as a third party providing a replacement vehicle free of charge, which would be irrelevant to a claim for direct loss, are very relevant to one for consequential loss. I consider his submission below. But at paragraphs 28 and 29 he goes on (in my view) to elide that principle with a principle that it is unsound to assimilate temporary loss of use of a chattel with loss of the chattel itself. The two principles are entirely different.
When counsel for the defendant submits (at paragraph 31) that the plaintiff's need for the use of a vehicle is relevant to the quantum of his compensable loss, even though not to liability, he must be completely right. However, he cites for that view Beazley JA at [59] of Anthanasopoulos, when her Honour does not say any such thing, but rather says quantum was not there in issue. In any case, at [58] her Honour ruled that: … the better solution is derived from the long line of authority traceable to The Greta Holme, to the effect that injury to property which deprives a party of the use of a thing is compensable. It is irrelevant if a third party provides a substitute for the thing damaged and the principle res inter alios acta applies so as to make it irrelevant as to the basis upon which the third party provides the replacement.
At [59], her Honour made it clear that she was dealing only with liability and not with quantum.

Burdis's case

It is not Anthanasopoulos but rather Burdis v Livsey [2003] QB 36 which might be thought to assist the defendant to establish the principle that if avoided (by such as the provision of a replacement vehicle by the employer), damages for consequential loss would be merely nominal.
The Court of Appeal noted at 91 that collateral, remote or irrelevant events could not affect the amount of a direct loss when a tort is committed. For indirect or consequential loss collateral events will be relevant to the question of damage. At 92-93 the Court said that: In the case of potential future losses, on the other hand, the general rule is that to the extent that such a loss is in fact avoided, for whatever reason, it is a loss which is never suffered and which is accordingly irrecoverable for that reason.
The Court offered an example. It said that if an injured plaintiff is treated as a private patient he is entitled to recover its cost, but if he receives free treatment (under the English National Health Service) his need has been met and he cannot recover. Such a claim, it thought, was on all fours with Dimond v Lovell [2002] 1 AC 384.
The Court referred to two exceptions. The first is that when an insured plaintiff is paid out by the insurer his damages as against the wrongdoer are not to be reduced merely because he has received that collateral benefit. The second occurs when a plaintiff recovers from a third party affected by sympathy for his plight, such as a disaster relief fund. Quoting from an earlier decision (Hussain v New Taplow Paper Mills Ltd [1988] AC 514 at 527) it adopted the view of Lord Bridge who asked rhetorically why a tortfeasor ought to obtain a benefit from monies provided by an insurer, when the plaintiff had paid premiums, or from the benevolence of a third party.
Although the Court considered collateral or irrelevant or remote events to be the same thing, and would not reduce damages in such a case, it does not take much imagination to realise that it is a policy consideration which determines that such benefits as the proceeds of insurance or a gift from a third party are not really irrelevant - rather, as a matter of policy they should be treated as such.
When in this case the plaintiff's employer allows him the use of a substitute vehicle (assuming for the moment that it is the employer and not the plaintiff himself who arranged the substitute for himself personally), and even though the employer is not a stranger but in fact is the plaintiff's bailor, surely that benefit is indistinguishable in principle from the benevolent act of a third party. It is the benevolent act of a company which happens to be his employer. Nor should it make any difference that he is a director and shareholder of that company. The company still remains for all relevant purposes a third party. That is because companies and their directors have wider duties than just to shareholders whether or not the plaintiff himself is a shareholder; there are creditors, and there may well be contracts with third parties which create liabilities, amongst other things. It is reasonable to assume that an employer in the position of the plaintiff's employer would have weighed up any such commitments when deciding to grant him the use of a vehicle. In my view, Mr Moraghan was simply the beneficiary of a benevolent third party (his employer) and its provision of the replacement vehicle was simply a collateral benefit which ought not to reduce his entitlement to damages.
I explain later on in these reasons that in my view, to determine that the provision by the plaintiff's employer does not abrogate his need, the intention of the employer when providing the substitute vehicle is decisive.
While I would agree with the defendant that it may be "unsound to assimilate temporary loss of use of a chattel to loss of the chattel itself (as the plaintiff does in his written submissions) … [and that] The Winkfield is not authority for such assimilation", I find that the plaintiff's loss of use, which is indeed consequential rather than direct, is compensable. It plainly was caused by the negligence of the defendant and I disagree that it is rendered too remote merely because his employer provided him with a replacement vehicle.
So far, however, I would agree with the defendant on the question of relevance to quantum. While completely irrelevant to liability, the provision of a replacement vehicle by some third party will be relevant to quantum, but in this matter not decisive.
Relevant it will be, but whether such replacement is fatal is another matter altogether. One exception recognized in the authorities, even in the UK authorities which seem to have taken a harder line than those in Australia, is a charitable benevolence granted by some body either generally or for the relief of the particular plaintiff. The second commonly allowed exception is a benefit obtained by a plaintiff from insurance, for which he has paid premiums.
Both counsel in the present matter have very diligently provided me with a large number of authorities. None of the Australian authorities appear to have dealt expressly with the position of a plaintiff whose employer has provided the substitute vehicle.
The question generally whether benefits provided by some third party should be taken into account and thereby perhaps obviate any need in a plaintiff begin with personal injury cases where the plaintiff has received some third party benefit. On the question of liability (but on a fair reading also damages) an early decision is Donnelly v Joyce [1974] QB 454, a case of gratuitously provided services to an injured plaintiff. At 462, Megaw LJ said that the provision of such services was irrelevant to the need of the plaintiff.
That decision was followed by the High Court in Griffiths v Kirkemeyer (1977) 139 CLR 161, and the principle survives in Australia, even though not followed in the UK in Hunt v Severs [1994] 2 AC 350, where the House of Lords held that any plaintiff recovering the value of such services was required to hold that amount on trust for the person providing them. At 273- 274 of Anthanasopoulos Beazley JA examined later decisions upholding the Donnelly v Joyce approach. Seemingly without in any way doubting those decisions her Honour (at [58]) added that in property cases like the present one it was preferable to base her decision on a line of authority traceable to The Greta Holme [1897] AC 596, and in the process ruling, but only as to liability, that it is irrelevant if a third party provides a benefit to the plaintiff. Her Honour expressly refrained from addressing damages.
The defendant goes on to submit that whether claiming actual cost of hire of a replacement or general damages assessed by reference to market cost of hiring one, the plaintiff must prove actual need. For that he relies on Ipp JA, at [84] of Anthanasopoulos (emphasis added): Similarly, in my opinion, in the case of claims for damages for injury to a non-income-producing chattel, there is also no substantive significance in the distinction between special and general damages. Where, by reason of need, the plaintiff is required to hire a replacement chattel, the damages are to be measured by reference to the market rate for hiring the replacement: cf The Greta Holme (at 605), per Lord Herschell; Dimond v. Lovell (at 1140; 914), per Lord Hobhouse.
The defendant points out that in the detinue case of Wong v Maroubra Automotive Refinishers Pty Ltd [2015] NSWSC 222 at [68]-[69], McCallum J followed that view.
As McCallum J observed at [68], Ipp JA in Anthanasopoulos had been considering need in the special context of Griffiths v Kirkemeyer claims for nursing services and the like, and that constitutes a second special exception which centres around need. Although it is possible to quibble, in that neither passage rules that need must be proved where there is none (as there is none when considering damages for repair of the chattel itself), a safer approach is to simply accept that the present plaintiff must prove need.
Given that the plaintiff must prove need, the question must then be answered whether that need is met by the provision by the plaintiff's employer of a replacement vehicle, so that when seeking damages he is unable to show that need.
In Anthanasopoulos her Honour, as already noted, was considering liability, and expressly said that she was not considering damages. There seems to be no authority in this State which takes a different line from Donnelly v Joyce on the question of damages as distinct from liability. It therefore seems to me that the whole question of relevance of third party benefits has its genesis in the personal injury cases. While Griffiths v Kirkemeyer makes it plain enough that the provision of third party benefits to a plaintiff in the way of nursing services and the like is accepted as not reducing a plaintiff's entitlement, and while there is also a well-accepted exception for a plaintiff who obtains insurance payouts (even in the UK), one is still left with a need to identify the rationale for taking into account other third party benefits to a plaintiff.
In my view, the proper basis for a view in any individual case that a third party payment to a plaintiff should have the effect of abrogating an otherwise available need on the part of the plaintiff must depend either on the intention of the party making the payment or on a consideration of policy.
Considerations of policy played a role in the decision in Burdis, when the Court considered that common sense required a view that a wrongdoer ought not to be able to benefit from payments made under a plaintiff's insurance policy so as to deny the plaintiff his damages. A similar view is surely applicable in the present matter. Could it be imagined that when providing a replacement vehicle the plaintiff's own employer and its holding company, they being companies in which with his wife he was a shareholder and of which he was a director, intended to take away the plaintiff's entitlement to damages? A person in a different position, such as a public servant working in a department with hundreds of employees, might well pose a different problem. It would in such a case be much more difficult to infer that the employer department intended to provide a benefit even if the plaintiff was entitled to damages from a wrongdoer. In the case of a family company it is inherently likely that it would, and a consideration of general public policy surely militates as much in favour of disregarding the replacement vehicle as it does in favour of disregarding insurance payouts.
The intention of the party making the payment is arguably even more significant than any policy consideration. If a reasonable inference from the evidence should be that the third party, the plaintiff's employer, intended to provide such a benefit as would have the effect of abrogating the plaintiff's entitlement to damages, it should be treated as having that effect. If the evidence supports a view that it did not, the opposite result should follow.

The intention of the third party conferring a benefit

There is authority for a view that, quite apart from the two well-recognized exceptions of insurance payouts and nursing type services, a payment by a third party who does not intend to abrogate the plaintiff's entitlement to damages will not have that effect.
In National Insurance Company of New Zealand Ltd v Espagne [1961] HCA 15 the High Court had to consider a plaintiff blinded in a car accident. A question arose whether the plaintiff's entitlement to a pension had the effect of reducing the damages which would otherwise be awarded. Taking the view that it would not, at [3]-[4] Dixon CJ, while also considering the customary exception of insurance payouts, ruled in effect that one must consider the intention of the party providing the benefit. Pointing out that no rule can be derived which will provide the same result in every case, noting that considerations whether the payments made were remote or irrelevant did not help, and considering whether the plaintiff had taken the benefit of third party payments (in that case a pension), his Honour said - 4. … But, be that as it may, I think that it is wiser as well as better in the general interest to say simply what is the reasoning which leads to the conclusion that the pension under the Social Services Act 1947-1957 should not be taken into account in reduction of damages. The reasoning begins with a distinction which I think is clear enough in general conception. There are certain special services, aids, benefits, subventions and the like which in most communities are available to injured people. Simple examples are hospital and pharmaceutical benefits which lighten the monetary burden of illness. If the injured plaintiff has availed himself of these, he cannot establish or calculate his damages on the footing that he did not do so. On the other hand there may be advantages which accrue to the injured plaintiff, whether as a result of legislation or of contract or of benevolence, which have an additional characteristic. It may be true that they are conferred because he is intended to enjoy them in the events which have happened. Yet they have this distinguishing characteristic, namely they are conferred on him not only independently of the existence in him of a right of redress against others but so that they may be enjoyed by him although he may enforce that right: they are the product of a disposition in his favour intended for his enjoyment and not provided in relief of any liability in others fully to compensate him. This is readily seen in the case of benevolence. [emphasis added]
The critical portion of that passage is in the italicised words.
Although there is the rule that when assessing damage a need met by some other means will remove any need in the plaintiff, and there is a recognized exception in the case of acts of benevolence, his Honour's ruling does not merely pick up that, nor does it do no more than bring pension rights within that exception. Rather, the words in italics make it plain that his Honour applied a principle that to determine whether the third party benefit should reduce his need and his entitlement, one must have regard to the intention by which the benefit was conferred. In other words, the true expression of the 'benevolence' exception is grounded not so much or not just in any idea of general or individual charitable benevolence but in the intention of the donor. The benefit given by a donor who intends that the recipient plaintiff should have the benefit conferred even though he may enforce that right against a defendant will not be regarded as removing the plaintiff's need.
The position in the UK may well be more restricted, as Burdis v Livsey shows, but relying on the passage in the judgment of Dixon CJ, I find the correct view in Australia is different, and that the intention of the employer company in providing the substitute vehicle was to provide Mr Moraghan with the use of a vehicle but without intending that it should affect his right to enforce his claim against the defendant.
I reach that view as a matter of inference. It would be a quite remarkable thing if any company, let alone a family company, intended by its provision of a replacement vehicle to an employee/director when his original one had been damaged by an at-fault driver, to do anything other than preserve his or the company's right to obtain damages from that driver. The defendant himself concedes (at paragraph 49) that the company was under the control of the plaintiff. In my view the only reasonable inference in the circumstances is that the family company which was his employer intended the plaintiff to enjoy the benefits even in the events which have happened - the accident in which the defendant damaged the vehicle creating a right to claim.

Submission that need to incur hire charges not caused by the defendant's wrong and not an expense incurred by the plaintiff

Over paragraphs 46 and following of his submissions, counsel for the defendant submits that from the date of its delivery to the repairer the damaged Jaguar was in its possession and subject to its lien, and not in the possession of the plaintiff. He says that the plaintiff's possession at the time of the collision "was entirely permissive and precarious", seeking to distinguish Millar v Candy (1981) 58 FLR 145 in that respect. In that case the Federal Court held that the bailee's need for a replacement vehicle was not too remote. The defendant distinguishes it because the bailee in that case had a contract, while Mr Moraghan had none with his employer. I find that, because Mr Moraghan was, with his wife, a shareholder and director of his employer, his possession was not at all precarious.
The defendant submits that while the damaged vehicle was with the repairer, Mr Moraghan's possession "simply ceased", and that the cause of any need he may have had to hire a replacement vehicle was his employer's omission to provide a temporary substitute for him. The defendant says that the company's choice in that regard was a free and deliberate omission and was a novus actus, relying on Allianz Australia Insurance Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224 at [106]-[107]. While it is true enough that a deliberate omission can operate in that way, there could be no basis for arriving at that view when, as here, a substitute vehicle was in fact found for him.
The critical time at which Mr Moraghan's need arose and crystallised was immediately after the collision. Moreover, it could not cease merely because he took the car for repair. Nor was his notation of the company at the garage as the owner anything other than a recognition that it was the owner, and in my view there ought not be drawn from that anything adverse to the plaintiff's claim.
The defendant submits that the plaintiff could not show special damages (true enough, as he did not personally outlay money for the repair of the damaged vehicle or for the hire of the substitute). But he does show general damages.
The defendant goes on to argue that because his employer provided a replacement vehicle the plaintiff had no such need. At paragraph 35 he submits that the employer company (Pan) has not been joined, nor has the plaintiff pleaded or proved that it lost the use of the Jaguar or that it needed a replacement. He submits that "The plaintiff should not be permitted to recover, as bailee, damages for a loss of use by the Company that he did not plead." That is a difficult to follow submission, since he pleaded that he himself suffered loss, and I do not accept it.
Next, at paragraph 36, the defendant argues that even if the plaintiff were allowed to prove loss by Pan, it did not suffer any loss because the plaintiff himself hired a satisfactory vehicle and hence avoided any consequential loss to the plaintiff.
But the need that has to be shown is that of the plaintiff, not Pan, and the plaintiff's hire must be seen as on behalf of Pan, which by those means was providing him with the replacement. The plaintiff proved his own need. In my view, there is nothing in either submission.

Whether plaintiff entitled to hire a vehicle equivalent to damaged one

Emphasising a need to mitigate, counsel for the defendant relied on Opoku v Tintas [2013] EWCA Civ 1299 at [13(2)]. Even though the law had previously been that the duty to mitigate only applies to direct and not consequential loss it must, as a result of Opoku, be taken to apply to consequential loss as well. Beatson LJ for the Court of Appeal, noting that the charges of 'credit hire' providers are higher than those on the basic car hire market, said additional benefits obtained as a result of taking reasonable steps to mitigate must be brought into account when calculating damages.
The plaintiff must satisfy the Court that he had a genuine and reasonable need to incur the large expense of credit hire of expensive vehicles (Singh v Yaqubi [2013] EWCA Civ 23 at [33]) and should be allowed only the market cost of an equivalent vehicle without the non-compensable benefits (Masrour v Danzey [2013] NSWLC 9 at [26]). The plaintiff's obligation to account for non-compensable benefits, as the defendant submits, arises without any necessity for the defendant to prove that the replacement on credit hire terms was unreasonable (Dimond v Lovell [2002] 1 AC 384 at 401E - 402G). That cost is peculiarly within the knowledge of the credit hire company that is the plaintiff's agent and the entity with practical conduct of the plaintiff's claim (Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 per Hodgson JA at [268]).
While there is no evidence in the present matter of the basic hire rate for the precise model provided to the plaintiff, the Court must do the best it can on the evidence to arrive at the basic hire rate for vehicles in the same broad range and quality as the damaged car (Bent v Highways and Utilities Construction Ltd [2010] EWCA Civ 292 at [8]-[9]).
The evidence of Mr Adams was that an E class Mercedes was a reasonably comparable vehicle to the damaged Jaguar, and that one was available from Europcar at a base rate of $124.90 per day (exclusive of GST, which should not be part of damages in any event - Gagner Pty Ltd t/as Indochine Cafe v Canturi Corporation Pty Ltd [2009] NSWCA 413). He gave evidence also that one was available from City Car Rentals at a base rate exclusive of GST of $480 per day. Because Mr Adams was not able to say that the $480 per day figure was not a credit hire rate, and given the large disparity compared with the price of hire from Europcar, I infer that it was.
I agree with the defendant's submission that the general damages cannot exceed $163.40 per day, which over the 58 days of loss of use, and after deducting GST, becomes $7,244.20.
I agree also with the defendant's submission that the Court's function is not to find merely that the sum claimed falls within a range of rates available on the market but is rather to determine a unique rate, and that rate will be the basic hire rate. Solar v Elkin [2011] NSWLC 34 at [20] and Fang v Koumoukelis [2013] NSWLC 5 at [68], which favoured a range of dates and were referred to by the plaintiff, were not followed in Rizk v Chen [2014] NSWLC 8 at [32]-[40]. I generally agree with the reasoning of Assessor Olischlager in that case and accept that I must find a unique rate. I agree with the defendant that generally a plaintiff will not be entitled to recover as general damages the notional market cost of a perfect substitute for the vehicle. He will be able to recover the notional market rate of a vehicle the price of which is or is close to the bottom of the range of a vehicle which is reasonably comparable with the damaged vehicle (Beazley JA in Anthanasopoulos at [84], noting incidentally, that there is no need to distinguish between special and general damages), and such price will be the 'basic rate'.
When Assessor Olischlager said (Rizk at [32]) that he was satisfied that a unique rate rather than a range of rates should be arrived at he did not explicitly state reasons, other than warning against the prevalence of awards at the high end of a range, which perhaps might be thought to derogate from a plaintiff's obligation to mitigate or to avoid betterment. At [25] he offered a view that there is no need to mitigate, citing Anthanosopoulos. With respect, the passage he cites (understood in the light of the agreement of Ipp JA with Beazley JA expressly dealing only with liability) bears on liability rather than damages. In any case, as indicated above, it must now be accepted that mitigation is relevant to general damages claiming for consequential loss. Earlier in his decision Assessor Olischlager cited Ipp JA in Anthanosopoulos for the view that one must arrive at a market rate (employing the singular, which must be contrasted with a range of rates), and he might well have been seeking to make the point that it was a single market rate which should be arrived at.
In any case, in my view it is appropriate to have regard to a single rate arrived at by looking to the lower portions of a range of rates (Rizk at [39]), both because that single lower rate represents reasonable mitigation and because a plaintiff must show his loss. If one hiring company, charging a lower rate, allows of a vehicle of broadly similar quality to another charging a higher rate the plaintiff cannot be said to prove his loss if he seeks damages at the higher rate; he would in such a case be proving something beyond what he had lost.
For all the foregoing reasons the plaintiff should have general damages equal to the cost of the hire of the Mercedes E class, $7,244.20. The parties can address separately as to interest and costs. Magistrate W Pierce 7 December 2015 Downing Centre Local Court

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Judgment (14 paragraphs)

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Cases Cited (17)

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