It may be that the common meaning of "extravagant" has connotations which take it beyond the common understanding of a sum which is unreasonably high, where reasonableness may properly be understood as involving a range. On another view the term extravagant may be used to mean something which is clearly outside the range rather than something which, whilst it might be thought to be at the top end of the range, is within the scope of commercially available prices and is not the kind of price which no reasonable person would pay, if required to bear responsibility for the whole of the costs incurred.
16 These difficulties may appear to be largely semantic. However, they are given greater significance because they must be resolved in the abstract, without any substratum of facts to give colour and context to their usage.
17 Once it is understood that reasonable costs may lie within a range, which may not be narrow, it seems likely that the liability of a defendant to pay something less than the actual costs of repair will turn on evidence that the repairs could have been done at a lower cost and that the plaintiff acted unreasonably in not obtaining an alternative quotation or further quotations, or in not accepting a lower quotation. This may mean that such cases will be resolved by reference to principles of mitigation of loss, but it also suggests that the kind of issue sought to be isolated for separate determination in the present case is one which can be isolated only on a somewhat artificial basis.
18 One way of isolating particular issues is to proceed by way of demurrer. As noted by the joint judgment in the High Court in Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at [50], a demurrer assumes the truth of a particular set of facts.
"If the 'facts' which are the basis of an answer to a legal question are identified, that answer will have utility for the parties provided that no other evidence could add to or qualify those 'facts'. In such a case, the parties' rights will be determined when the evidence finally determines the existence or non-existence of those 'facts'. Because that is so, demurrers have been much used in determining the rights of parties to litigation. … Unlike the present case, however, a demurrer assumes that the pleadings exhaust the universe of relevant factual material. The utility of demurrers is, however, heavily dependent on the pleadings containing all the relevant facts."
19 Having considered the role of a demurrer, their Honours continued at [51]:
"It cannot be doubted that in many cases the formulation of specific questions to be tried separately from and in advance of other issues will assist in the more efficient resolution of the matters in issue. However, that will be so only if the questions are capable of final answer and are capable of being answered in accordance with the judicial process."
20 In the present case, it may be doubted whether the questions and the assumptions upon which they were based, conform to those principles. Not only were questions of mitigation tacitly put to one side, but an assumption as to the necessity for the repairs was made, although this Court was told that the assumption was not one which was made for the whole of the litigation.
21 The inappropriateness of the procedure in the present case is highlighted by the insistence in the course of argument, that the context of particular statements in the case-law be understood in order that they be properly applied. For example, there was debate about the term "restitutio in integrum", and the propriety of its use in relation to a claim in negligence. However, that debate appears to be misconceived: the Latin phrase may best be understood as requiring the defendant to place the plaintiff in the position in which he or she would have been absent the negligently caused damage. The vehicle should be treated as if it had not been damaged or, as viewed after the event, was to be reinstated to its earlier form by carrying out all necessary repairs. That principle says nothing as to the costs of the repairs and whether there is any limitation on what may be recovered with respect to cost, once the necessary repairs have been identified.
22 Similarly, the loss or damage suffered by the plaintiff is, as a matter of principle, the extent to which the value of the property has been diminished by the damage caused to it through the negligence of the defendant. In many cases, though not all, the change in value will be reflected by the cost which would be incurred in restoring the vehicle to its former condition. In some cases that assumption may be false. Thus superficial damage to an old car which has already suffered some changes to its appearance, may only be capable of repair at a cost, which significantly exceeds the diminution in its value.
23 In other cases, it would be unreasonable to repair the vehicle because the extent of the damage indicates that the cost of replacement will be below the cost of repair. After noting this view and comments upon it, Priestley JA, in Murphy v Brown (1985) 1 NSWLR 131 at 135 continued:
"A further complication is that it is undoubtedly the practice in many claims for damage to motor cars for the court to accept proof of the reasonable cost of repair to the car without any direct reference to the value of the car immediately before it was damaged. This practice seems to me be as easily explained by tacit recognition by the parties and the court in such cases that the appropriate figure will be arrived at by that method as it is by taking the practice as reflecting the correct view of the law in all circumstances and even against the opposition of the defendant."
24 Once the purpose of reliance on the cost of repair is understood, as a measure of diminution in value, questions of the reasonableness of the cost or the possible extravagance of the cost may bear a particular connotation depending on context. The present context, involving an expensive "prestige" new car may well differ from many other cases brought in the lower courts. It is possible that the resolution of the present dispute will turn quite specifically on the facts of the case. Despite the confidence of the parties, at least before Patten AJ, that the statement of separate questions would be an appropriate way of resolving issues of principle, in my view that confidence was misplaced. Indeed, the claimant went so far as to accept that the questions might better have been answered "inappropriate to answer".
25 It would have been preferable not to have proceeded by way of separate questions. Alternatively, once the difficulties were exposed by argument, it would have been appropriate for the trial judge not to give answers. If answers had yet been thought useful, it would have been desirable for the questions to be reformulated to avoid some of the uncertainties and infelicities noted above. Nevertheless, no doubt because the procedure was adopted by consent in the Court below, the claimant did not seek to challenge the order for determination of the specified questions separately from and before any other issues in the proceedings. It was a process which she had not initiated, but with which her counsel agreed when it was proposed.
26 However, if the answers to the questions are understood as suggested by Handley AJA and in the light of the foregoing comments, there is no reason why the defendant cannot agitate any issue of fact which it wishes to agitate at trial and, if the final judgment gives rise to some dissatisfaction, it will be entitled to raise the same questions again on appeal.
27 In those circumstances leave to appeal should be refused. I would not make any order as to the costs incurred by the parties in this Court.
28 HANDLEY AJA: This is an application for leave to appeal from a decision of Patten AJ who answered questions ordered to be separately determined pursuant to UCP Rule 28.2. The proceedings involved a claim by the opponent to recover $14,197.67 for the cost of repairs to a motor vehicle which the claimant asserted should not have cost more than $5,811.09.
29 The case was removed from the Local Court to the Common Law Division by order of a Registrar because it was said to be a test case. It appears that the Local Court has been flooded with small claims of this kind and the former practice of motor vehicle insurers avoiding such litigation by entering into knock for knock agreements has been abandoned.
30 Leave to appeal is required under s.103 of the Supreme Court Act because the questions had been separately determined, under s.101(2)(e) because the decision was interlocutory and under s.101(2)(r) because the case did not involve more than $100,000.
31 The answers to the questions, which in effect were declarations, were interlocutory, in the sense that the proceedings continue on the remaining issues, but they were final for res judicata purposes and binding on the Court and the parties in later stages of the litigation: Bass v Permanent Trustee Co. Ltd (1999) 198 CLR 334, 360. By granting leave the Court could review the answers to the questions at this stage. If leave were refused the claimant could challenge the answers in an appeal from a final decision affected by those answers: Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478, 482-3.
32 The opponent's claim was for the cost of repairs to a new Mercedes.
33 The parties agreed that the questions isolated for separate determination should be answered on certain assumptions. These were that the repairs were necessary to restore the vehicle to its pre-accident condition, that the opponent had obtained an estimate of the cost of restoration before the work was done and that the work was done for the amount of that estimate. The Court was also asked to assume that the claimant contended that the estimate of the cost of repairs was not fair and reasonable.
34 On these assumptions the questions propounded were:
1. Is the plaintiff entitled to damages from the defendant which indemnify him for the actual cost of repairs to the motor-vehicle referred to in the estimate?
2. If so, can the defendant's liability for damages to indemnify the plaintiff for the actual cost of repairs to the motor vehicle be reduced to the extent of the actual cost of repair:
(i) were not fair and reasonable; and/or
(ii) were extravagant?
35 Patten AJ answered these questions as follows:
1. Yes
2. (i) No
(ii) Yes.
36 The claimant submitted that the answers to questions 2(i) and 2(ii) were inconsistent. Considered in isolation this may appear to be the case. However the questions and answers must be read with his Honour's reasons for judgment. His Honour treated extravagant and unreasonable as synonymous in this context: see para [34] (second dot point) and para [38]. This was also the understanding of Dr Lushington in The Pactolus (1856) Swab 173, at 174 and 175 (twice), which his Honour referred to: paras [14]-[17]. Ever since courts and commentators have treated extravagant and unreasonable in this context as interchangeable. The authorities and texts which establish this are summarised in his Honour's judgment.
37 In my judgment the answers to question 2 can be reconciled when one bears in mind that there may not be a single fair and reasonable cost for repairing a damaged motor vehicle, especially a Mercedes costing $95,563 new. There is likely to be a range of costs all of which are fair and reasonable. In such a case acceptable evidence that a lower cost would be fair and reasonable cannot of itself establish that a higher cost was outside the range and not fair and reasonable.
38 The true question would be whether the cost incurred was outside the range. In my judgment this is only another way of asking whether the cost incurred was extravagant or unreasonable.
39 His Honour's answer to question (1), read in isolation, might appear to establish an entitlement in the plaintiff to be indemnified by the wrongdoer for the actual cost of repairs without any restriction based on the reasonableness of that cost. However that answer should not be read independently of the answers to question (2). There are in fact two caps on the plaintiff's recovery in a case such as this. He is not entitled to recover more than his actual cost, and he is not entitled to recover that cost to the extent that it was extravagant or unreasonable.
40 His Honour's judgment was in substance correct, and it and the answers to the separate questions so understood will not embarrass the resolution of the factual dispute between these parties. In my judgment there would be no utility in further consideration of the legal principles isolated from the actual facts.
41 I would therefore propose that leave to appeal be refused and that the Summons and the Notice of Appeal without appointment be dismissed with costs.
42 HOEBEN J: I agree with Handley AJA and the orders which he proposes.