Rizk v Chen and National Apollo Bathrooms Pty Ltd

Assessing General Damages for Loss of Use 8When a person is deprived of the use of a chattel as a consequence of negligence of another then that loss of use is compensable. The entitlement for damages for loss of use applies to income producing chattels as well as non-income producing chattels such as privately owned motor vehicles. 9Where a person suffers an ascertainable pecuniary loss as a result of being deprived of their motor vehicle then damages may be assessed as special damages. Following the Court of Appeal decision in Anthanasopolous v Moseley [2001] NSWCA 266 it was affirmed that where a person suffers a loss of a motor vehicle it remains open for the plaintiff to recover the loss as general damages. 10It is the issue of assessment of general damages that the Court is required to consider in the present case. The plaintiff hired a replacement motor vehicle through Compass Claims. Compass Claims provides hirers involved in collisions with non-compensable benefits of hire on credit as well as assistance in the recovery of hire costs from the at-fault driver or his or her insurer. The inclusion of these benefits in the hire charges mean that the credit hire car rate cannot, of itself, constitute evidence of a market rate for the hire of a motor vehicle. As a consequence, plaintiffs who hire a replacement vehicle through a credit hire car company commonly seek general damages for loss of use. 11The assessment of general damages for loss of use of a motor vehicle has been a fertile ground for litigation within the Local Court. A number of credit hire car companies offer services tailored towards persons involved in collisions. The recovery of these credit hire car fees from subrogated insurers has been a constant source of litigation particularly within the Small Claims Division of the Local Court. 12The defendant submits that the approach of the Local Court in Fang v Koumoukelis [2013] NSWLC 5 and Harb v Marchbank [2011] NSWLC 9 when assessing general damages by reference to notional market rates is based on a misinterpretation of the decision of the House of Lords in The Greta Holme [1897] AC 596. 13In The Greta Holme case the plaintiff lost the use of a dredger due to the negligence of the defendant. The plaintiff claimed damages for loss of use of the dredger. Although the plaintiff did not hire a replacement it was proved at trial that a dredger could be hired at a cost of £100 per week. The plaintiff claimed for loss of use for fifteen weeks. Lord Herschell at 605 states that had the plaintiffs hired a dredger then "it cannot be doubted that the sums so paid could have been recovered". However, no replacement had been hired. Their Lordships allowed general damages in the sum of £500. 14The Court accepts that The Greta Holme case is not authority for awarding general damages based on a notional hire rate. The basis upon which the award for general damages of £500 was considered reasonable is not identified within the decision. 15The defendant submits that there is no authority for the proposition that general damages for temporary loss of use of a damaged motor vehicle may properly be assessed and awarded at either the notional rate of hire of the damaged vehicle or the actual or notional rate of hire of a comparable substitute vehicle. 16While not strictly a binding authority on the issue, the Local Court has adopted the obiter comments of Ipp AJA in Anthanasopoulos. 17The comments made by Ipp AJA were made in the context of claims involving loss of use of a motor vehicle referred to the Court of Appeal for determination of questions of law including whether the principles enunciated in Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161 in relation to damages for gratuitous care and services applied to loss of use claims. The Court of Appeal found it unnecessary to answer the question given that the loss was compensable by reason of The Greta Holme line of authority. However, Ipp AJA went on to provide further comment regarding the assessment of damages. 18Ipp AJA noted that many individuals require their motor vehicle to satisfy their transport needs. The need created is similar to injured plaintiffs that who need care and services that are often provided gratuitously by family members. The essence of both claims is to address a need caused by the tortfeasor rather than to compensate a financial loss. Ipp AJA refers to comments made by Stephen J (at 179) in Griffiths v Kerkemeyer to the effect that when assessing the value of gratuitous services in personal injuries claims according to the market value of those services there was no substantive significance in the distinction between special and general damages. Ipp AJA then states at [83]-[84]: 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. 19As claims for gratuitous services needed by an injured plaintiff are analogous to claims for loss of use of a private motor vehicle Ipp AJA concludes that the principles for measuring damages are also the same. Whereas damages for gratuitous care needed by an injured plaintiff is determined by the market cost of supplying that care, damages for loss of use of a motor vehicle is determined by the market cost of supplying that replacement. 20Extending the application of Griffiths v Kerkemeyer principles to loss of use claims is not without difficulty. It can result in substantial claims being awarded even though the plaintiff may not have expended money. This issue becomes even more acute when the claim involves a luxury vehicle or a lengthy period of loss of use. In this context the comments of the South Australian Magistrate Milazzo in Carapetis v Lawrie [2013] SAMC 63 to the effect that the awards in Harb v Marchbank and Fang v Koumoukelis which both involved loss of use of luxury vehicles were "extravagant" are not surprising. 21The same criticisms arise in claims for damages for gratuitous care. In CSR Limited v Eddy [2005] HCA 64 Gleeson CJ, Gummow and Heydon JJ noted the controversial character of Griffiths v Kerkemeyer stating at [26]-[27] (footnote omitted): ... First, the principle of Griffiths v Kerkemeyer is controversial, as evidenced by the number of legislative reversals or qualifications of it. There is also judicial dissatisfaction with it. It can produce very large awards - some think disproportionately large compared to the sums payable under traditional heads of loss. ... Secondly, Griffiths v Kerkemeyer is anomalous in departing from the usual rule that damages other than damages payable for loss not measurable in money are not recoverable for an injury unless the injury produces actual financial loss. 22Notwithstanding these difficulties, the Small Claims Division of the Local Court has applied the comments of Ipp AJA and through decisions such as Harb v Marchbank and Fang v Koumoukelis attempted to developed a guide for the assessment of general damages. 23While the comments by Ipp AJA in Anthanasopoulos that in a claim for loss of use of a motor vehicle damages are to be "measured by reference to the market rate of hiring the replacement" are obiter they are comments with which Handley JA agreed. They have not been subject to judicial criticism by any superior Court. The comments are well considered dicta and should be followed by this Court. 24The defendant submits that the approach taken in decisions such as Harb v Marchbank and Fang v Koumoukelis prevents the defendant from raising defences that would otherwise be available including "betterment" and a "failure to mitigate". In the context of claims for loss of use of a motor vehicle a defendant might argue "betterment" in circumstances where the plaintiff has hired a motor vehicle that is of a higher quality than the one that was damaged. A defendant may also argue a "failure to mitigate" if it was reasonably open to a plaintiff to hire a cheaper motor vehicle. 25Principles of both "betterment" and "mitigation" are irrelevant when assessing general damages. As stated by Beazley JA at [58] in Anthanasopoulos: 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. 26A plaintiff may elect to hire a prestige vehicle to replace an economy vehicle, however, the plaintiff is only entitled to recover damages by reference to the market cost for the replacement of an economy vehicle. 27There is no substantive distinction between special or general damages assessment of damages for loss of use of a motor vehicle as damages on either basis are determined by reference to the market cost of the replacement. 28Finally, the defendant submits that it is incumbent upon the Court to determine an actual market rate rather than determine a range of market rates and allow the plaintiff's claim provided that it falls within the range. 29The defendant relies on comments made in Burdis v Livsey [2003] QB 36 to the effect that unless the plaintiff is impecunious the Court must determine a basic hire rate by reference to "actual locally available figures". The defendant also relies on comments by Lord Aiken in Bent v Highways and Utilities Construction Ltd [2011] EWCA Civ 1384 where his Lordship held at [85] that it was not appropriate to "hold that the appropriate BHR [basic hire rate] was the highest that was reasonable". 30In Harb v Marchbank [2011] NSWLC 9 at [14]-[15] the Court noted that within the car hire market there is likely to be a range of rates available for any particular type of vehicle: The nature of the car hire industry is such that there will be a range of different "spot rates" available in the market at any given time. There will be different rates between competitors in relation to similar vehicles and hire companies will often offer different rates for the same vehicle depending upon how the hire is arranged. For example, hire rates offered over the internet may differ from rates available by walking into the hire company office or over the telephone. As noted by this Court in Tang v Driden, the rates for hire vary significantly based on a range of factors. These include seasonal demands, the location of the hire, whether the hire is for a short period or a longer period, how far in advance the hire booking is made or whether the hire is for a fixed period or a continuing daily rate. In view of the factors that influence hire car rates this Court considers that it is an artificial process to determine a single market rate. The reality is that there will be a range of market rates available from various hire car companies. 31The views expressed in Harb v Marchbank followed the approach applied by Magistrate Dillon in Chong v Berry [2007] NSWLC 33 where his Honour states at [52]: Mr Chong was entitled to go to the nearest convenient source for a replacement vehicle and the defendant does not dispute that he did so. (Its argument is principally to do with the rate of hire.) Moreover, as the defendant fairly concedes, rather than having to prove "the market rate" (as Ipp AJA put it in Anthanasopoulos), a fact that, because of different or variable rates within the market may be incapable of proof, a plaintiff only has to prove that the rate he or she obtained is a market rate. 32The Court is satisfied that it should depart from its previous practice and determine the market rate for replacement of the plaintiff's vehicle instead of ascertaining whether the amount claimed by the plaintiff is a market rate for a number of reasons. 33Firstly, the Court accepts that the practice of accepting a range of rates often results in awards of loss that are at the high end of the range. This may be seen as inconsistent with the objective of assessing general damages by reference to "a reasonable sum for the wrongful use" of another's property (Nicholls LJ in Stoke-on-Trent City Council v Wass Limited [1988] 3 All ER 394 at 402). A reasonable sum should not result in awards that consistently tend towards the high end of the range. 34Secondly, as the Court seeks to follow the approach referred to by Ipp AJA then it should give effect to the statement that damages are "measured by reference to the market rate of hiring the replacement". It is consistent with what Ipp AJA said in Anthanasopoulos for the Court to determine the market rate rather than a range of market rates. Furthermore, the Court's practice of awarding damages on the actual rate of hire provided that it is a market rate in the sense of being within the market range, is arguably contradictory given that the actual rate of hire incurred is said to be irrelevant. 35Thirdly, as the Court seeks to apply the approach referred to by Ipp AJA then the calculation of damages should be consistent with the calculation of damages in Griffiths v Kerkemeyer. Damages for gratuitous services are determined by reference to the cost of having the service provided commercially and it is necessary to determine the market cost of providing those services. 36The principles applicable to assessing gratuitous care were outlined by Mason CJ and Toohey and McHugh JJ at 333-334 in Van Gervan v Fenton [1992] HCA 54; (1992) 175 CLR 327: Once it is recognised that it is the need for the services which gives the plaintiff the right to an award of damages, it follows that the damages which he or she receives are not determined by reference to the actual cost to the plaintiff of having them provided or by reference to the income forgone by the provider of the services. 37The cost of services is to be determined by the market available to the plaintiff. Their Honours noted at 334 that in some cases the market cost may be too high to be the reasonable value of the services. Examples include where the cost of providing services at a remote location is much greater than providing those services in a densely populated area or where there is little competition. In such cases it might be appropriate to discount the market cost. 38Similarly, the Court should have regard to relevant factors when determining the market rate for hire vehicles. 39The determination of market rate is a question of fact. The Court will have regard to factors including the rates for vehicles which are similar to the make, model and age of the plaintiff's damaged motor vehicle, are close in time to the loss suffered and reasonably available to where the plaintiff is located. Where there is a range of rates that are applicable the Court will determine a specific rate by reference to what represents a reasonable option to replace the plaintiff's vehicle. 40The need to determine the market rate represents a modification to the approach referred to in Harb v Marchbank and Fang v Koumoukelis. In the present case, however, the outcome is not affected by the change of approach as the evidence discloses only a single market rate as opposed to a range of market rates.

Assessment of the Market Rate in the Present Case 41The plaintiff lives in Yagoona, a suburb of Sydney. She was the owner of a 1996 Mitsubishi Sedan. At the time of the collision she was 31 years of age (according to the rental agreement), had held a licence for six years and was the holder of a provisional licence. 42Mr Adams, the Senior Recoveries Specialist employed by Compass Corp Pty Ltd, has provided a print out of prices obtained from the website named "Vroom Vroom" on behalf of the plaintiff. It contains a list of rates from various mainstream hirers for the period 23 August to 30 August 2013. The rates are for hire from Sydney Airport. The plaintiff relies on rates for a Toyota Yaris (Hertz & Thrifty) and a Holden Cruze (Avis). Although Mr Adams has included the young driver fees in respect of the hire it is apparent that Ms Rizk was older than the 25 year fee limit. Disregarding the young driver fee the daily rates range from $58.31, $64.86 and $66.93. 43The defendant relies on evidence by Mr Thistlethwaite. He attaches website rates from Cheaper Car Rentals for a Mitsubishi Mirage to be collected from Melbourne CBD. Clearly no weight can be placed on this evidence as it is not a rate available to Ms Rizk. 44Mr Thistlethwaite also attaches evidence of rates from Rent a Bomb. For a Toyota or Hyundai at an estimated total cost of $44.00 per day to be collected from Sydney Airport. The rate was obtained on 28 May 2014. 45The Court is unable to accept the plaintiff's evidence of a Toyota Yaris or Holden Cruze as evidence of the market rate for the replacement of the plaintiff's vehicle. The vehicles quotes bear no similarity to the plaintiff's Mitsubishi sedan. The vehicles offered by Hertz, Thrifty and Avis are also substantially newer than the plaintiff's vehicle. 46In this instance, the evidence discloses only one rate that represents a market rate. The Court accepts the hire rate of $44 per day from Rent a Bomb to be the market rate for the plaintiff's vehicle. In assessing the market rate the Court has placed significant weight on the age of the plaintiff's motor vehicle. 47In the unreported ex tempore decision of Ullah v Markobrad the Court dealt with a claim for loss of use of a Mercedes Benz that was 13 years old at the time of the collision. The Court noted that a substantial difference in age between the plaintiff's vehicle and the hire vehicle will be factor to be considered when determining market rates. The Court stated: Whilst the court does have regard to primarily the model and type of vehicle that is hired as a replacement vehicle, the court considers that it is also relevant in certain circumstances to have regard to the particular age and nature of the vehicle which is subject of the replacement.... It [the plaintiff's damaged vehicle] was 13 years old at the time of the collision. Its value had substantially diminished. One would expect that the vehicle that is [hired as] a replacement would have been likely to be in excess of $50,000 yet it is said by the plaintiff that this is an apples for apples type of replacement simply because it is of the same make and model. The Court is of the view that where there is no great discrepancy between the ages of the vehicles, then that is probably an appropriate view. Here, however, there is over 10 years of difference in terms of the age of the respective vehicles. In those circumstances, the Court doesn't consider it is a case where it can be said that the vehicle which was replaced as a hire vehicle can be considered to be similar to the vehicle that was damaged. 48In the present case Ms Rizk's vehicle was 17 years of age at the time of the collision. The pre accident value of her vehicle was $1,690.00. Rent a Bomb offers for hire older model vehicles similar to a Mitsubishi sedan. It represents the appropriate market rate for the replacement of the plaintiff's vehicle.

Duration of Hire 49The plaintiff hired a replacement vehicle for a period of 87 days. The defendant states that this period is excessive. The defendant submits that it became apparent to the plaintiff on 3 September 2013 that her vehicle was assessed to be damaged beyond economic repair. At that time it was open to her to make arrangements for a permanent replacement. There is no evidence to suggest that she was unable to arrange her financial resources to purchase a replacement vehicle within a reasonable time frame after 3 September 2013. Notwithstanding this, she retained the hire vehicle for a further six weeks until 22 November 2013. 50In Miller v Walker [2011] NSWLC 10 the Court held that a defendant remained liable the duration of the loss of use of a motor vehicle provided that there was no break in the chain of causation. This followed earlier decisions such as Clark v Tull (t/a Ardington Electrical Services) [2002] EWCA Civ 510 and Mattocks v Mann [1993] RTR 13 and Tang v Driden [2010] NSWLC 17 where it was held that the defendant remained liable for loss of use of a vehicle unless there was a supervening event or independent cause of the damage. 51In the present case the plaintiff submits that she was entitled to claim for loss of use of a vehicle until she received payment of the settlement sum from the defendant's insurer. I do not accept this submission in the present case. 52The plaintiff was aware as from 3 September 2013 that her vehicle was damaged beyond economic repair. At that time she was in a position to consider what arrangements she should make for the permanent replacement of her vehicle. She only needed to retain the temporary arrangement of the hire vehicle for such period reasonably necessary to organise a permanent arrangement for the replacement of her vehicle. The pre accident value of her vehicle was $1,690.00. There is no evidence to suggest that the plaintiff did not have the financial resources available to purchase a similar valued vehicle. While it would not be necessary to prove that the plaintiff was impecunious the burden falls on the plaintiff to prove that she was not reasonably capable of funding a replacement vehicle. The only evidence of her financial resources is that she was employed. Given the relatively modest value of her vehicle there is no reason to infer that she could not arrange a purchase from her own funds or that she was dependent upon the settlement funds from the defendant's insurer to fund a replacement. 53There is also no reason to consider that there was not a readily available market of second hand vehicles from which the plaintiff might purchase a permanent replacement. I am satisfied that it was open for the plaintiff to purchase a replacement motor vehicle on the following weekend. 54The loss suffered after this time through continuing hire car charges was a loss that was no longer caused by the defendant. It was a loss attributable to the conduct of the plaintiff electing to continue a temporary arrangement when a permanent replacement could have been arranged. 55In those circumstances, the plaintiff is only entitled to a claim for loss of use for the period of 27 August to 9 September 2013, a period of 14 days. Accordingly the total loss of use claim is $616.00. In view of the part payment already made by the defendant to the plaintiff of $1,590.53 the Court will enter a verdict in favour of the defendant. 56The Court will allow costs in favour of the defendant in the sum of $1,204.00 to be paid within 28 days. Assessor Olischlager 14 August 2014

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: 18 August 2014