Nguyen v Cassim

Supreme Court of NSW|2019-08-27|Before: Basten J, Martin P

Solicitors: MCK Lawyers (Plaintiff) Martin P Board & Associates (Defendant) File Number(s): 2018/391682 Decision under appeal Court or tribunal: Local Court Jurisdiction: Civil Date of Decision: 6 December 2018 Before: Farnan LCM File Number(s): 2018/34672

Judgment

BASTEN J: This matter is one of three cases which were listed for concurrent hearings. They raise common questions relating to the assessment of damages where a motor vehicle, damaged in a collision for which the owner was not at fault, is unavailable for use while repairs are effected. In each case the owner hired a replacement vehicle and claimed the rental sum as a recoverable expense from the at fault driver. Uncertainty as to the proper basis for assessing damages is said to have resulted in a large number of such cases being litigated in the Local Court, many in the Small Claims Division. These cases were heard in the General Division, from which an appeal on a question of law lies to this Court.

Factual background

In describing the circumstances of the present case, the person whose vehicle was damaged will be described as "the claimant", and the defendant at trial as "the party at fault". That will avoid the confusion arising from a reversal of roles, where the plaintiff in this Court was the defendant at trial because the plaintiff at trial was successful.
On 1 April 2017 a vehicle driven by Dylan Nguyen collided with a 2012 BMW 535i sedan owned by the claimant, Azad Cassim. Mr Nguyen was the party at fault. Although the case was treated as one involving a non-income earning vehicle, the claimant used the vehicle partly for a business which he ran from his home which involved carrying samples, and partly for social and domestic purposes. He travelled approximately 27km per day. These facts were relied on to establish a need for a replacement while the damaged vehicle was repaired.
Because necessary parts had to be imported, the BMW was out of action from 1 April until 22 August 2017, a period of 143 days. This period was broken down into four sub-periods, namely (i) the first two days, when there was no replacement vehicle; (ii) a period of five days during which the claimant had a RAV 4 replacement vehicle provided by a commercial hirer; (iii) a period of some 52 days when the claimant either used his wife's car or was overseas, and (iv) a period of 84 days during which he used a Nissan Infiniti Q50 obtained pursuant to a credit hire contract with Right2Drive Pty Ltd.
The dispute was as to the liability for the payment claimed by Right2Drive in respect of period (iv), an amount of $17,158.02. The statement of claim filed on 1 February 2018 identified that amount together with interest of $400.75 pursuant to s 100 of the Civil Procedure Act 2005 (NSW). The claim itself was pleaded as involving "special damages being the actual cost of hiring a replacement vehicle in the sum of $17,158.02 including GST or in the alternative general damages to be assessed." Pursuant to a judgment delivered on 6 December 2018 and orders entered the following day, Magistrate Farnan awarded the full amount of the claim to the claimant, together with interest of $1,660.42, giving a total judgment in favour of the claimant in an amount of $18,818.44.
Mr Cassim made no claim for recovery of damages for the period when he had no replacement vehicle, or for the period during part of which he used his wife's vehicle and for part of which he was overseas, or with respect to the period when he hired a RAV 4. They were ignored presumably because Right2Drive had carriage of the litigation, pursuant to its agreement with the claimant and had no interest in recovery of any amount other than that due and payable under its contract with the claimant. However, the magistrate appears to have assumed that he was entitled to claim amounts for hiring a replacement vehicle whilst he was in Australia. [5]
The following facts were either not in dispute or were found by the magistrate and not challenged in this Court: 1. the liability of the defendant for the collision; [6] 2. the claimant "needed a vehicle for the business that he ran from home"; [7] 3. the claimant needed the vehicle for ordinary domestic purposes including shopping and taking children to sport; [8] 4. the claimant owned a 2006 Mercedes Benz, but the car was not roadworthy; [9] 5. the Nissan Infiniti was a vehicle of slightly lower value than the 2012 BMW which was damaged; [10] 6. "Apart from a single reference to sporting gear, there was nothing in Mr Cassim's evidence to suggest that other than his personal preference, the things he needed a vehicle for on a day-to-day basis could not have been adequately done using a vehicle like a Toyota Corolla." [11] 7. the daily cost on a comparable basis of the RAV 4 was $139; [12] 8. the daily cost of the Nissan Infiniti was in the order of $204 per day including the delivery fee and damage waiver, and 9. a Toyota Corolla would have met the claimant's needs at a daily cost of $89, which for the 84 days during which he used the Nissan Infiniti was $7,476. [13]
The party at fault had provided information as to the cost of hire of a Toyota Corolla and a Holden Caprice. The magistrate noted that she did not have evidence as to the value of those vehicles, or the relevant features, to enable her to consider whether they were of an equivalent "value" to the plaintiff's vehicle. However she accepted that "contracts for hire of Corolla vehicles are significantly lower than the cost charged by Right2Drive." The magistrate stated: "[51] I accept that the cost of the temporary replacement vehicle the plaintiff has chosen to use is not necessarily the appropriate measure of damages. In my view he is entitled to the market rate of hiring a vehicle of equivalent value to his vehicle for the period during which he has established need for a replacement. I accept that he is not entitled to associated costs of entering into a credit hire contract, in the event that the actual costs exceed the market rate for a vehicle of equivalent value to his vehicle. The market rate for hire can fall within a range."
It appears that the magistrate rejected the relevant market rates for the Toyota Corolla on the basis that it was not a vehicle of "equivalent value to his vehicle"; she also made no adjustment of the cost of the credit hire contract, implicitly at least on the basis that the costs of the contract fell within the range of hire costs of vehicles of equivalent value. Thus, she concluded that the base daily charge for the replacement Nissan Infiniti was $149 per day and the base daily rate used by Thrifty for a Mercedes Benz C200 was $139, and Europcar's daily base rate for a Mercedes Benz E200 was $175. [14] These figures appeared not to take into account the likely reductions for lengthy periods of hire.

Legal principles

The claimant submitted that, once he had established a need for a replacement vehicle whilst his damaged vehicle was being repaired, he was entitled to the reasonable costs of obtaining a replacement vehicle. Further, the replacement vehicle should be a close as reasonably practicable to the damaged vehicle, during the period it was unavailable. The relevant period was a reasonable period for repair of the damaged vehicle, but there had been no challenge to the actual period which had eventuated in the present case. The claimant further noted that, although a cheaper vehicle might have satisfied his needs, there was no basis to require him to use a cheaper vehicle than that which he owned. Such an approach would import a sumptuary law, being a law restraining luxury or extravagance or inordinate expenditure, which formed no part of the common law as to the assessment of damages. Finally, it was submitted, such a principle would be inconsistent with the accepted basis for recovery of the cost of repairs to the damaged vehicle, even though the cost of such repairs might be far higher than the cost of repairing a more modest vehicle.
The party at fault contended that this approach misidentified the basis of recovery. There was no doubt that, in the case of a damaged chattel, the tortfeasor was required to meet the reasonable costs of repair, or if those costs exceeded the value of the chattel, the value of a replacement chattel. However, the submission continued, a temporary loss of use of a chattel during a period of repair was a form of consequential damage which, in the absence of a chattel with income earning capacity, might be described as inconvenience or loss of amenity. Reasonable compensation for that loss required the establishment of the use to which the vehicle had been put prior to the collision and the assessment of the reasonable cost of meeting the inconvenience caused by the temporary unavailability of the vehicle. Approaching the matter on this basis, the use of a prestige vehicle might be justified by the needs of a particular business, but would not normally qualify as a reasonable expense to meet the inconvenience of domestic or social needs.
The parties were in agreement that no appellate decision in Australia provided a basis for resolving the central issue in dispute. However, the party at fault asserted that there were dicta in the Court of Appeal judgments in Anthanasopoulos v Moseley, [15] and decisions in this Division which should be followed unless shown to be clearly wrong, which supported his approach. These decisions included Wong v Maroubra Automotive Refinishers Pty Ltd, [16] Droga v Cannon [17] and Lee v Strelnicks. [18]
Reference was also made to a leading decision in the UK, Dimond v Lovell, [19] which was determined by the House of Lords in May 2000. Similar issues arose in Anthanasopoulos decided by the Court of Appeal 15 months later.
It is convenient to commence by considering the decision of the Court of Appeal in Anthanasopoulos. The case stands as authority for two propositions. The first is that the owner of a vehicle damaged in a collision may recover the cost of hiring a replacement vehicle to cover the period during which the damaged vehicle was being repaired. (That proposition was not in issue in the present case.) The second proposition is that the liability of the tortfeasor to pay compensation is neither diminished nor removed in circumstances where the owner obtained a replacement vehicle at no cost from his or her insurer. That issue also does not arise in the present cases.
Much of the reasoning in the principal judgment of Beazley JA (with whom Handley JA and Ipp AJA agreed), turned on the question whether the principle derived, by analogy, from Griffiths v Kerkemeyer [20] holding that services provided gratuitously by members of an injured person's family by way of gratuitous domestic and care services were recoverable from the tortfeasor. Beazley JA concluded that the claimants were entitled to damages for loss of use of their vehicles, but "without reference to Griffiths v Kerkemeyer." [21] Rather, she relied upon principles derived from admiralty cases including The "Greta Holme" [22] and The "Mediana". [23] These decisions were followed in 1926 in The "Chekiang" [24] and The "Susquehanna". [25] Each of these cases involved a claim for general damages with respect to a non-income earning vessel which suffered tortious damage. In each case the ship at fault was required to pay compensation.
Ipp AJA, in a separate concurring judgment, with which Handley JA also agreed, identified the line of cases flowing from Griffiths v Kerkemeyer and the shipping cases as based on a common principle. He referred to the joint reasons in Grincelis v House [26] to the following effect: "In Van Gervan v Fenton, [27] it was held that the true basis of a claim for damages with respect to care or services provided gratuitously to a person who has suffered personal injury is the need of the plaintiff for those services, not the actual financial loss suffered as a result of their provision. Accordingly, it was held in that case that a plaintiff's damages on this account are not to be determined by reference to the actual cost to the plaintiff of having the care or services provided, or by reference to the income foregone by the provider of the services, but, generally, by reference to the market cost of providing them."
In Anthanasopoulos Ipp AJA continued: "[80] In my opinion, the true basis of claims for damages for injury to a non-income producing chattel is also based on need. In the Greta Holme line of cases, the plaintiffs were held, generally, to be entitled to damages based on the cost (including the capital cost) of keeping and maintaining the damaged vessels while they were being repaired. Underlying the measure of damages so adopted is the owner's need to keep (or replace) the damaged chattel during the period while it is being repaired and cannot be used. … [83] Whatever the nomenclature to be attributed to the nature of damages represented by a plaintiff's need for services, the damages in question are not to be determined by reference to the actual cost to the plaintiff of having the care or services provided, or by reference to the income foregone by the provider of the services, but, generally, by reference to the market cost of providing them: Grincelis v House (2001) 201 CLR 321 at 327 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Van Gervan v Fenton (1992) 175 CLR 327. [84] Similarly, in my opinion, in the case of claims for damages for injury to a non-income producing chattel, there is also no substantive significance in the distinction between special and general damages. Where, by reason of need, the plaintiff is required to hire a replacement chattel, the damages are to be measured by reference to the market rate of hiring the replacement: cf The Greta Holme at 605 per Lord Herschell; Dimond v Lovell at 1140 per Lord Hobhouse."
It is not necessary to debate in this Court whether the reasoning was strictly necessary for the decision in Anthanasopoulos; even if not strictly binding, it should undoubtedly be followed by a judge in the Division, as it has been.
Wong v Maroubra Automotive Refinishers involved a claim for damages, not against the party at fault in the collision, but against repairers who had wrongfully claimed a lien over the cars and refused to release them to their owners, without payment for towing and storage fees. The claim was thus in detinue rather than in negligence, but damages were to be assessed according to established principles for claims in tort. (No different principle applies in detinue. [28] ) McCallum J concluded as a matter of fact that in each case the claimant had established a need for a car for daily transport purposes. She concluded that damages should be calculated "by reference to the market rate of hiring a replacement car, as evidenced by the hire rate in fact paid by NRMA when a courtesy car was provided." [29]
Droga involved an appeal from a magistrate who had allowed the costs of repairs to a damaged vehicle, but had declined to allow an amount for the hire of a replacement vehicle (at approximately twice the cost of the repairs), essentially because he was not satisfied that she had demonstrated a need for a replacement vehicle. The grounds of appeal to this Court alleged that the defendants' admission of liability precluded them insisting that she prove need for a replacement vehicle. However, as Lord Mustill said in Giles v Thompson, [30] "[t]he need for a replacement car is not self-proving."
The issue, identified in a number of separate grounds, was in substance whether the party at fault had put the claimant on notice that she was required to prove a need for a replacement vehicle. That in turn depended on the fact that, if the issue were properly raised, the law placed the burden of proof of need on the claimant. Harrison J dealt with this matter in the following passages: "[46] The defendants' position in relation to both grounds 2 and 3 is based squarely upon a strict view of the law which, by implication, they maintain Ms Droga failed properly to understand or appreciate. The defendants' pleading and their case summary are said to be both consistent with principles now clearly established by the Court of Appeal, namely that: (a) the temporary loss of use of Ms Droga's vehicle during repairs was a loss for which the defendants were liable to compensate Ms Droga by an award of general damages; and (b) the question whether, during the period of wrongful deprivation of her vehicle, Ms Droga intended or needed to use it for any particular purpose, or for any purpose at all, was irrelevant to the defendants' liability to pay general damages: Anthanasopoulos v Moseley at [1], [29]-[37], [72] and [88]; The Mediana [1900] AC 113; (c) the question whether, during the period of wrongful deprivation of her vehicle, Ms Droga intended or needed to use it for any particular purpose, or for any purpose at all, always remains relevant to the quantum of the damages that the defendants were liable to pay in respect of the temporary loss of the use of the vehicle: Anthanasopoulos v Moseley at [1], [59] and [72]; The Mediana at 118. [47] From the defendants' perspective, ground 2 rests upon Ms Droga's misunderstanding or misinterpretation of the defendants' case summary and ground 3 rests upon a similar misunderstanding of the issues that remained in issue which Ms Droga was still required to prove. Those misunderstandings were in turn caused by a failure to recognise or appreciate the distinction between consequential loss (loss of use) and its monetary quantification. In plain terms, the defendants' concession that the loss of use of Ms Droga's vehicle caused by their negligence was compensable did not also amount to a concession or an admission that compensation was recoverable in any particular amount or, specifically for present purposes, that she was entitled to have her damages calculated or quantified by reference to the cost of hiring a replacement vehicle. … [54] In my opinion, this ground is misconceived. For the reasons already considered, the defendants did not ever admit or represent that Ms Droga was required to establish her need for a replacement vehicle. She bore the onus of proving that issue. Ms Droga took no point below that she did not bear that onus and appears tacitly, if not expressly, to have accepted it."
Harrison J also noted that Ms Droga "chose" to replace her damaged BMW X5 SUV with a BMW 520D sedan, at a base daily hiring rate of $480. [31] He continued: "[59] The disputed issue in these proceedings has centred on Ms Droga's need for a replacement vehicle. It seems to me that little attention was given in the court below, or in the context of assessing the commercial wisdom of the proceedings in this court, to the distinction between Ms Droga's need for a replacement vehicle on the one hand and her desire for a particular vehicle on the other hand. The activities specified by Ms Droga as those to which she originally directed her BMW X5 do not appear obviously or even possibly to have mandated the need for a BMW 520D or its equivalent. Although I have no evidence about it, and accepting that the issue is not relevant to my conclusions in these proceedings, it does seem likely that a far less expensive vehicle could have adequately operated to fulfil her identified needs. Once again without evidence about it, it would surprise me if four door sedans of considerably less impressive specifications could not have been hired for less than $100 per day and even less on a contract written for a longer period. [60] It should not go unremarked that the sum required to compensate Ms Droga for the cost of hiring a replacement vehicle with which to conduct the activities she has specified, is not necessarily or automatically co-extensive with the cost of providing a comparable vehicle to the one that was damaged. The defendants would only ever be liable to compensate Ms Droga to the extent necessary to put her in the position she would have been but for the defendants' tortious act. A far less sophisticated vehicle could have adequately coped with the activities identified by Ms Droga at what may well have been a considerably reduced tariff. The issue would have been a question of what was reasonable to meet Ms Droga's needs, not what was necessary to compensate her for her choice."
While these observations were clearly not part of the dispositive reasoning in Droga, they provided an explanation of the needs-based approach, which was affirmed in the dispositive reasoning set out above in the preceding paragraph.
Lee v Strelnicks, a decision delivered on 10 May 2019, involved proceedings for judicial review of a decision of an assessor in the Local Court over an amount of $2,340. The damaged vehicle was a Toyota Camry which was unusable for a period of 15 days whilst undergoing repairs. The assessor refused the cost of hiring a replacement vehicle at market rate, apparently on the basis that she had not established a need for the replacement vehicle. The assessor awarded an amount representing interest on the capital value of the damaged car for the period if was unavailable for use. [32]
Wilson J paid careful attention to the reasoning in Anthanasopoulos, and particularly the observations of Ipp AJA as to the assessment of damages. She accepted that those passages were obiter, but noting that Handley JA agreed with them and that they had been applied by other judges of this Court she considered that she should follow them unless convinced that they were wrong. She was not so convinced. [33] Wilson J continued: "[52] I do not think that the authorities referred to by the plaintiff required the Assessor to approach the question of quantum in a way different to the approach that he took. His Honour found that the defendant was liable for damages, consistent with authority that provides for damages for loss of use; that did not oblige him to necessarily accept that the defendant was liable to pay the sum claimed for the use by the plaintiff of a credit hire car. It remained for the plaintiff to prove her need of such a car. If she established that, quantum fell to be assessed by reference to the market rate for a leased vehicle, and not by reference to the amount the plaintiff actually paid to I'm In The Right. [53] There is a statement in McGregor on Damages, [34] to which the Court was referred by the plaintiff, that the cost of securing a car through a credit car hire company is or may be significantly greater than hiring a car through a company which requires payment of a fee on hire. If so, and credit hire car companies charge excessive fees when compared to non-credit car hire companies, then it would be wrong in my view to refer to the fee charged by such companies as determinative of quantum. Such a fee would not represent the market rate."
I agree with the approach adopted by Wilson J, namely that I should follow the line of authorities in New South Wales, running from the judgment of Ipp AJA in Anthanasopoulos, unless persuaded that they are clearly wrong. However, that requires that attention be given to the underlying earlier authorities, particularly in the UK, and subsequent cases in other jurisdictions.

UK cases

The line of authority relied on in Anthanasopoulos commenced with The "Greta Holme" in 1897. The case arose out of a collision on the River Mersey. The "Greta Holme" collided with a dredger, which was damaged and incapable of being used for a period. The owners of the Greta Holme were liable for any compensable loss suffered by the owners of the dredger. The only basis for declining to award damages for the loss of use of the dredger (for a period of some three months) was that it was not an income earning asset. Rather, its owners were "a public body who have to maintain the harbour works and the River Mersey in a condition fit for public use; that as they are not authorized to make any use of their public machinery for profit, such as a private individual would have been entitled to make, they are not entitled to recover damages". [35] There was also evidence that it would have been "impossible to supply the place of No 7 by chartering another suitable dredger." [36]
As to the assessment of damages, Lord Herschell noted that, had the dredger been hired, they would have been entitled to recover the cost of hire for the months it was out of service; as it was purchased, they were entitled to interest on the capital sum invested in the dredger. Lord Herschell continued: [37] "But I think they are also entitled to general damages in respect of the delay and prejudice caused to them in carrying out the works entrusted to them. It is true these damages cannot be measured by any scale; but that would be equally true in the case of damages in respect of the deprivation of an individual of a chattel which he had purchased for purposes of comfort and not profit."
The "Mediana" involved a collision on the approaches to the River Mersey between the Mediana and a lightship. The lightship was sunk. There was no dispute that the owners of the lightship, the Mersey Docks and Harbour Board, were entitled to recover the expense of removing and repairing the damaged lightship and moving a substitute lightship into its place. As Lord Shand noted, the Board had two options available in circumstances where it was clearly essential to maintain lighting of the channel. First, they maintained an additional lightship as a replacement in the event of emergency at an expense of about £1000 a year. They chose to use that whilst the damaged lightship was repaired. The alternative was to hire a replacement, in which case "there could have been no answer to their claim for the cost of hiring that ship." [38] The claim appears to have been accepted by the parties in the agreed sum of £310 and 6s calculated as hire charges of £4 and 4s per day for 74 days. The case was treated as an application of The "Greta Holme".
The Susquehanna involved damage to an oil tanker steamer belonging to the Admiralty and used to supply oil driven ships of the British Navy in the Baltic. An assessment by the registrar overturned on appeal sought to value the tanker at a commercial rate for such ships, although it was not available for hire. That approach was overturned on the basis that like the Greta Holme, it was owned by a public authority and was not to be valued as a commercial asset. Lord Phillimore stated: [39] "I do not think that the case ought to be treated as one where the oil tank ship Prestol could have been treated as a ship to be let out on a mercantile charter, or that the Admiralty could claim on the footing that they required a similar vessel to take her place while she was under repair and so get a charter hire of a similar vessel. The facts are against this view. The Admiralty dared not have let her out because they would have lost their margin of provision, and they did not require to hire another vessel because they had this margin. … It may be a definite stand-by ship. It may be only such a luxury of provision that, without serious inconvenience, the service can be carried on by rearrangement. In such cases, the loss is the loss of the margin of safety. If there was a second accident, a ship would have to be hired to fill the gap."
In one sense, none of the shipping cases goes further than to affirm that a right of general damages is available for a non-income earning asset which is tortiously damaged. In none was there a replacement vessel available at commercial rates which was engaged by the owner of the damaged vessel. However, the possibility that a commercial hiring rate might be appropriate was discounted in The "Mediana". Accordingly, the cases do not support the adoption of a market rate of calculation for replacement of a non-profit-earning chattel. Rather, they support an underlying principle which is not in dispute; it is necessary to look further to understand the approach adopted in respect of the calculation of general damages.
The earliest of the English cases dealing with car hire was Watson Norie Ltd v Shaw, decided in 1967. [40] The plaintiff company owned a prestige Jensen used by its managing director. It was damaged in a collision and, whilst awaiting repair, the company hired first a Rover 100 and then a Jaguar 3.8, which it considered comparable cars. An amount of £400 was sought as compensation for loss of use of the damaged vehicle. The County Court judge awarded an amount of £185 for the period of seven weeks during which the vehicle was being repaired, calculated as the cost of a Ford Zephyr. The trial judge rejected the claim by the company on the basis that there had been no attempt to obtain those vehicles which were obtained at a more reasonable price, but also rejected the proposition that it was incumbent upon the plaintiff to hire the cheapest vehicle. [41]
Russell LJ stated: [42] "In a case like this, where hire is necessary for a short period, I do not think it is correct to say that the plaintiff is entitled, as an axiom, to put upon the defendants the burden of the cost of hiring a car equally or substantially equal in quality, value and prestige to the damaged car. The test is whether the hiring cost is no more than reasonably necessary to fill the time gap, having regard to the purposes for which the plaintiff company needed to hire a car."
In dismissing the appeal, it is apparent that both Sellers LJ and Diplock LJ adopted a similar approach. The important principle to be derived from the case is that the value or prestige of the damaged vehicle is not an essential characteristic of what is reasonably necessary in a replacement vehicle. Further, the test of reasonable necessity must be applied by reference to the need in question (in this case a car for the use of a managing director of a company) and is to be resolved by applying an objective standard, not necessarily reflected in the plaintiff's choice of vehicle. The trial judge was entitled to take into account whether the amount of the claim was, in all the circumstances, unreasonable.
In May 2000 the House of Lords in Dimond v Lovell [43] addressed a claim for recovery of rental charged by a credit hire car company. The primary issue turned on the assertion that the credit hire agreement failed to comply with the requirements of the Consumer Credit Act 1974 (UK) and was therefore unenforceable. The party at fault submitted that the claimant had thus obtained a replacement vehicle at no cost to her, but would be doubly compensated if she were to receive damages for the loss of use of her vehicle. While the claim failed on that basis, three members of the House expressed views as to the assessment of damages in such a matter, assuming that the credit agreement had been enforceable. Thus, in the words of Lord Browne-Wilkinson, agreeing with Lord Hoffmann, the damages recoverable "would have been limited to the sum required to provide an alternative vehicle, i.e. the spot rate quoted by hirers other than accident hire companies." [44] The calculation based on the rental charges payable to the credit hire company was deemed not to be an appropriate measure of damages because, as Lord Hoffmann and Lord Hobhouse of Woodborough both explained, the charges covered additional benefits which were not compensable in a claim against the tortfeasor. [45] Lord Hoffmann expressed the difficulty in the following terms: [46] "By virtue of her contract, she obtained not only the use of the car but additional benefits as well. She was relieved of the necessity of laying out the money to pay for the car. She was relieved of the trouble and anxiety of pursuing a claim against Mr Lovell or the C.I.S. She was relieved of the risk of having to bear the irrecoverable costs of successful litigation and the risk, small though it might be, of having to bear the expense of unsuccessful litigation. Depending upon the view one takes of the terms of agreement, she may have been relieved of the possibility of having to pay for the car at all."
As explained by Lord Hobhouse, what was recoverable from the defendant was the cost of hiring a substitute car; not the excess cost of other benefits obtained under the credit hire contract. [47]
Lord Nicholls of Birkenhead took a different view as to the additional charges. He stated the principle as follows: [48] "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." In contrast to Lord Hoffmann and Lord Hobhouse, Lord Nicholls took the view that the additional charges might be reasonably necessary because they might provide the only practical way in which a replacement vehicle could be obtained and the cost recovered.
Dimond did address one question which arose in the present case, namely how a calculation of reasonable cost should be assessed; it did not specifically address the question whether the replacement vehicle was to be a vehicle which might adequately fulfil the owner's needs, or a vehicle of equivalent value to the damaged vehicle.
In Lagden v O'Connor [49] Lord Nicholls described the appeal as a "sequel to the decision of the House in Dimond v Lovell". The issue was whether an impecunious claimant who had no other reasonable means of obtaining a replacement car could claim the undiscounted amount of the rental charges payable to the credit hire company. By a majority, the House held that he could; the dissenters considered that such a result was inconsistent with Dimond and should not be accepted.
In the majority, Lord Hope of Craighead stated: "[27] Mr Lagden's claim was, in essence, a claim for the loss of use of his car while it was in the garage undergoing the repairs which needed to be done as result of the accident. There was no evidence that he would have suffered financial loss as a result of being unable to use his car during this period. But inconvenience is another form of loss for which, in principle, damages are recoverable. So it was open to him, as it is to any other motorist, to avoid or mitigate that loss by hiring another vehicle while his own car was unavailable to him. The expense of doing so will then become the measure of the loss which he has sustained under this head of his claim. It will be substituted for his claim for loss of use by way of general damages. But the principle is that he must take reasonable steps to mitigate his loss. The injured party cannot claim reimbursement for expenditure by way of mitigation that is unreasonable. So the motorist cannot claim for the cost of hiring another vehicle if he had no reason to use a car while his own car was being repaired - if, for example, he was in hospital during the relevant period or out of the country on a package holiday. If it is reasonable for him to hire a substitute, he must minimise his loss by spending no more on the hire than he needs to do in order to obtain a substitute vehicle. If the defendant can show that the cost that was incurred was more than was reasonable - if, for example, 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."
Subject to one qualification, it appears that the statement of principle in this passage is generally accepted in the UK as explaining the legally correct approach to rental hire claims. The qualification relates to whether the reasonableness of the expense (the rental charged) is to be assessed by reference to the value of the damaged vehicle, or by reference to the extent of the inconvenience caused by the loss of use of the damaged vehicle. If the former, the claimants in the present cases satisfied the first step (subject to demonstrating the reasonableness of the amounts claimed); if the latter, the claimants must fail.
The last sentence in Lord Hope's observations has been interpreted as supporting reliance on value alone. In Brain v Yorkshire Rider Ltd [50] a County Court judge stated: "Once the starting point of need is established …, then it would seem that ordinarily the motorist will be able to hire an equivalent car to his own. There is, in particular, no principle which requires a claimant to put up with a car that is of a different and less expensive type."
While this statement fairly reflects the claimant's position in this case, as a general proposition it is flawed for three reasons. First, although Mr Brain had established a need for a replacement vehicle, his purpose was "to transport my son and for social and domestic purposes." The trial judge found that a less expensive vehicle would have satisfied those needs. There is no explanation in the reasoning in the County Court as to why that test was rejected.
Secondly, the County Court judge noted that reliance had been placed on Watson Norie for the proposition that "the full cost of hire of a prestige vehicle should not be allowed so long as the car … provided by the defendant is adequate for the claimant's needs." The County Court judge described the reported decision in Watson Norie as "hopelessly inadequate as an authority for the proposition relied on." [51] He did not, however, explain how the outcome in Watson Norie was consistent with his conclusion.
Thirdly, Lord Hope's statement of principle did not address that question beyond giving an example of a case where a claim for rental charges actually incurred might be rejected. The principle stated does not support the claimants' case; it requires proof of a need based on past usage and assessment of what is reasonably necessary to satisfy that need. The purpose is to provide an appropriate sum in compensation to alleviate, so far as reasonably possible, the inconvenience resulting from the loss of use of the damaged vehicle; not to replace the owner's vehicle with the temporary use of another vehicle of equivalent value or prestige. Reasonable expenditure for that purpose provides a mechanism for assessing general damages resulting from inconvenience. Whether the expense is a "substitute" for the claim for general damages is a semantic question which need not be resolved. However, as Lord Hope explained, the claimant "must minimise his loss by spending no more on the hire than he needs to do in order to obtain a substitute vehicle" that is reasonable measured against the actual use of the vehicle which is temporarily unavailable.
As senior counsel for the claimants submitted, the test reasonableness is not to be measured against some abstract moral or social code. That is, if, prior to the accident, the claimant drove to work on a daily basis, despite the ready availability of public transport, then the relevant need is to be assessed against that usage. However, it is the usage rather than the choice of vehicle which must ultimately determine the reasonableness of the expense.
This approach is consistent with the reasoning of Ipp AJA (Handley JA agreeing) in Anthanasopoulos, and with the approach adopted by other judges in this Court. Accordingly, it is the approach which the Court should adopt in these cases.

Calculation of reasonable expenses

In assessing damages, the magistrate adopted the following statement of principle from the decision of Derrick DCJ of the Western Australian District Court in Beamish v Kanakis: [52] "[132] In summary, and for the reasons I have stated, if damages for loss of a non-income producing vehicle damaged by the negligence of a third party are to be calculated by reference to the cost of hiring a replacement vehicle, the determination of what is an appropriate replacement vehicle by reference to which the market rate hire costs are to be quantified requires the taking into account of the precise nature of the need of the person who has lost the use of the damaged vehicle, the value of the damaged vehicle, and the value of available replacement vehicles which are capable of meeting the precise need of the person who has lost the use of the damaged vehicle."
As Derrick DCJ had noted at [123] so far as the approach took into account the value of the damaged vehicle, it was inconsistent with the views expressed by Harrison J in Droga. For reasons explained above, I do not think that the critical views were obiter; in any event, for reasons also expressed above, I should follow them.
In this matter, the magistrate applied those principles by having regard to the evidence before her of the market rates for the hirer of equivalent prestige vehicles. The comparators appeared, however, to be based on a one day hire period; because neither the facts nor the submissions were before this Court, it is not possible to know whether the magistrate was asked to make allowance for the fact that the daily rate for a period in excess of 30 days was likely to be far lower. Indeed, it is not clear that the alternative rate applied to assess the cost of a Toyota Corolla took that factor into account. It is sufficient for present purposes to make the orders sought by the summons in the amount assessed by the magistrate.

Application of principles

Given the findings of the magistrate set out at [15] above, the magistrate was in error in allowing the full invoiced account provided by Right2Drive with respect to the hire of the Infiniti Q50. Having accepted that the plaintiff's needs would have been satisfied by the hire of a Toyota Corolla, at a cost of $7,476, judgment should have been given for that amount.

Orders

The Court makes the following orders: 1. Allow the appeal. 2. Set aside the judgment and orders entered in the Local Court on 7 December 2018. 3. In place thereof, order that the defendant pay the plaintiff the sum of $7,476, together with interest calculated in accordance with s 100 of the Civil Procedure Act 2005 (NSW) from 23 August 2017 to the date of payment. 4. Make no order as to the costs of the proceedings in the Local Court. 5. Order that the defendant pay the plaintiff's costs in this Court.

Endnotes

J Edelman, McGregor on Damages (20th ed, Thomson Reuters, 2018) at [4-051].
McGregor at [4-054].
McGregor at [37-015].
(1826) 2 Hagg Adm 30n.
Judgment at [57].
Judgment at [11].
Judgment at [14].
Judgment at [12].
Judgment at [13].
Judgment at [17].
Judgment at [17].
Judgment at [2].
Judgment at [57].
Although the judge referred to a base rate of $149 per day, at [55], it is not clear where that figure came from: the table provided by the Chief Financial Officer of Right2Drive used a base daily rate of $164.
Anthanasopoulos v Moseley (2001) 52 NSWLR 262; [2001] NSWCA 266.
[2015] NSWSC 222 (McCallum J).
[2015] NSWSC 1910 (Harrison J).
[2019] NSWSC 526 (Wilson J).
Dimond v Lovell [2002] 1 AC 384 (HL).
(1977) 139 CLR 161; [1997] HCA 45.
Anthanasopoulos at [37].
Owners of No 7 Steam Sand Pump Dredger v Owners of the Steamship "Greta Holme" [1897] AC 596.
Owners of the Steamship "Mediana" v Owners, Master and Crew of the Lightship "Comet" [1900] AC 113.
Admiralty Commissioners v Owners of Steamship "Chekiang" [1926] AC 637.
Admiralty Commissioners v Owners of Steamship "Susquehanna" [1926] AC 655.
(2000) 201 CLR 321; [2000] HCA 42 at [9] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).
(1992) 175 CLR 327.
The "Mediana" at 118 (Earl of Halsbury, LC).
Wong at [71]; see also [73].
[1994] 1 AC 142 at 167D.
Droga at [58].
Lee at [5] and [21].
Lee at [51].
McGregor, pp 263-264.
The Greta Holme at 600-601 (Lord Halsbury LC).
The Greta Holme at 603 (Lord Watson).
The Greta Holme at 605.
The Mediana at 122 (Lord Shand).
The Susquehanna at 664-665.
[1967] 1 Lloyds Rep 515 (Sellers, Diplock and Russell LJJ).
Watson Norie at 516-517.
Watson Norie at 518.
[2002] 1 AC 384 (HL).
Dimond at 390C.
Lord Saville of Newdigate expressed no opinion on this issue (403C).
Dimond at 401F.
Dimond at 407C-D.
Dimond at 391A-B.
[2004] 1 AC 1067; [2003] UKHL 64.
[2007] Lloyd's Rep IR 564 at [22] (Judge Grenfell).
Brain at [12].
[2017] WADC 33; 91 SR (WA) 261. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 September 2019

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