W.R. Building & Maintenance Pty Ltd v Jones

Local Court of NSW|2016-03-16|Before: Mr J

Judgment

The statement of claim pleads that the plaintiff (W. R. Building & Maintenance Pty Ltd) was the owner of a Toyota Hilux motor vehicle when on 6 May 2014 at Llandaff Street, Bondi Junction it collided with a vehicle driven by the second defendant (Mr Mulic). The statement of claim pleads that the first defendant (Mr Jones) was the owner of that vehicle and vicariously liable. There is no issue as to vicarious liability, which was admitted, and no issue as to liability generally. The plaintiff's ownership of the vehicle was not admitted. The plaintiff claims $31,659.45 for loss of use, plus costs and interest.
The defence admitted the credit hiring by the plaintiff of replacement vehicles (a Toyota Prado and a Honda CRV) at $132.16 per day inclusive of excess reduction and GST but denied that the plaintiff suffered any loss of use, and amongst other things pleaded that the amount claimed did not represent the loss and damage suffered, was not fair and reasonable and was excessive and/or extravagant. It also alleged a failure to mitigate.
Mr Jeremy Gruzman appeared for the plaintiff, and Mr Raphael Perla for the defendants. Each party relied on written submissions.
It is necessary for the plaintiff to show that the vehicles it hired were hired at a market rate, and to do that it needed to point to rates for other comparable vehicles. That is a preliminary question of fact which it is as well to get out of the way first.

Need of the plaintiff

It is true, as Mr Perla submits, relying on Singh v Yaqubi [2013] EWCA Civ 23 at [33]-[25] and Chong v Berry [2007] NSWLC 33 at [20] amongst other precedents, that need is the basis for assessment of damages. It is not the basis for determining liability (Anthanasopoulos v Moseley [2001] NSWCA 266 per Beazley J), which in this matter is not in issue, but there can be no doubt but that it must be shown to enable assessment of damages. In Ross v State Transit Authority of NSW & Higgins [2015] NSWLC 11 Assessor Olischlager reached a similar conclusion, with which I respectfully agree.
Need to hire is not self-proving (Chong), even though Dillon LCM in Chong pointed out that in Sydney, a large, broadly spread-out city, the geography indicates need for uses such as work and shopping and other things. He relied on Anthanasopoulos.
Singh was a decision in a matter where a Rolls Royce and a Bentley were hired, at a total cost of just under £93,000. The rate for the Rolls Royce was about £2,000 per day. The House of Lords emphasised that in very expensive hirings like that the hirer's need should be carefully scrutinised and supported by detailed evidence. In this matter Mr Perla drew attention to the paucity of evidence on such things as how often the vehicle was used for work, distance travelled and other similar things.
I take the view that in the case of more ordinary hirings, such as the Prado and the Honda in this matter, it will be easier to infer need from a more limited degree of evidence. Prospective hirers claiming modest amounts for loss of use should put on some evidence, as the plaintiff has done, but cannot be expected to adduce large amounts of detail.
Mr Gruzman submitted and I agree that the statement of the driver of the plaintiff's vehicle and director of the plaintiff, Mr Warren Rosen, at paragraph 9, established that the plaintiff had a need for a vehicle of the type hired. He said he had that need, and he was not cross-examined. His statement goes on to provide detail of his need for the vehicle for work and domestic purposes.
Moreover, the hired vehicles drove some thousands of kilometres, which is a level of use indicative of need.
Right2Drive Pty Ltd hired out the subject vehicles. Mr Damian Mullins was the chief executive of that company, and in his statement gave evidence of internet searches of rates for hire vehicles. The body of his statement details extensive searches for comparable vehicles to the plaintiff's damaged vehicle, including non-credit hire companies which, as Mr Gruzman submitted, were in excess of the rates charged by Right2Drive. He too was not cross-examined.
Perhaps a point might have been raised that the evidence does not reveal any efforts by Mr Warren or other officers or employees of the plaintiff, disclosing only the inquiries made by Mr Mullins of Right2Drive, and as a result that the plaintiff's choice of vehicle was not his own choice and hence not reasonable, but that was not put forward as an issue in the hearing.
If I am wrong in reaching a view that the plaintiff has proved need I would agree with the submissions of Mr Perla for the reasons that he sets out and assess damages at 6% on the pre-accident value of the plaintiff's vehicle, amounting to $7.99 per day for a total of 263 days, but I would add a pro rata proportion of the registration fees for the year. (The invoice provides for 266 days, but only 263 days are the subject of the claim).

Whether claim for general or special damages

In days gone by special damages were those which did not naturally flow from the tortious act in question, but for many years now they have been taken to refer to actual outgoings. Mr Perla submitted that the claim particularised the loss as special damages. It is particularised as "loss of use - hire car charges $31,695.45". Many authorities, including Anthanasopoulos, note that nothing turns on whether damages are said to be general or special, but I find that the present claim is put on the basis that the damages sought are general damages. The use of the phrase "loss of use" followed by the hyphen tends to show that they are general, and in most of the decided cases in this area hire fees have been characterised as general damages. The reference to loss of use and the claim for damages appear under a heading "Particulars of Loss and Damage", there being no pleading at all of damages suffered in that part of the claim. ('Particulars' in a claim are not the pleading), but loss of use is separately pleaded at paragraph 6. I find the claim adequately puts the defendant on notice that damages are sought and that in fact they are general damages.
Assessor Olischlager in Ross at [8] thought that Lagden v O'Connor [2003] UKHL 64 stood for the proposition that it was only in the case of a claim for special damage that impecuniosity as a factor in the entitlement of a hirer to use a credit hire company was available. Apart from some observations by Lord Scott, who was in dissent, I am unable to find anything in the decision to that effect. It was a decision which by a majority overturned the decision in Liesbosch Dredger (Owners of) v Owners of SS Edison (The Liesbosch) [1933] A C 449 that a plaintiff's impecuniosity was not something on which he could rely, and which accepted that for impoverished plaintiffs it might well be appropriate to allow the greater costs of credit hire. Lord Scott at [79] - [88] addressed the question of a claim for special damages, taking a view that if hiring charges were claimed as special damages they would only be properly viewed as mitigation in cases where the vehicle had been used for commercial or business purposes, but in other cases, while expressing a preference for a view that the expenditure must have been reasonably foreseeable, his lordship felt constrained by Dimond v Lovell [2000] 1 QB 216 and was not able to apply that test. None of the other members of the House appear to have taken a view that impecuniosity was only available when a claim was put as special damage.
Lagden (per Lord Hope at [22], [27], [34]) was a case in which mitigation (not the scope of the claim, in respect of which the onus would be on the plaintiff) was the issue. Lord Hope's judgment at [27] suggests that the damages sought were general and not special - "Mr Lagden's claim was, in essence, a claim for the loss of use of his car… inconvenience was another form of loss". Lord Walker at [102] doubted whether there ought to be maintained any sharp distinction between the measure of loss and mitigation, but his Lordship also was in dissent. In Australia there certainly does seem to be such a distinction, and I find that even before looking at mitigation it is necessary to see whether a plaintiff, by taking a more expensive hire, proves more than his loss. In our present matter, especially since the credit hire taken was no more expensive than many ordinary hires, while still needing to be addressed, that distinction is of less importance.
Because the evidence was that the plaintiff paid a rate for his credit hire which was in fact less than the rates deposed to by Mr Mullins as commercially available for straight-out hire without any credit component, there is not the usual question whether because of his impecuniosity he needed to pay and should recover the credit hire component. The only question is whether he should recover the cost of hire.
Lord Hope at [27] did make a preliminary observation that the expense of hiring becomes the measure of the plaintiff's loss, which might be suggestive of the claim being seen as one for special damages. Apart from that brief mention, however, the House of Lords did not approach the matter in that way but rather looked to mitigation. In focussing on mitigation the decision in Lagden says nothing about the preliminary question whether a plaintiff seeking to show the extent of his loss goes too far by seeking to recover more than a market rate - a market rate which I find needs to be a specific rate properly recoverable as being so found and as being at or close to the bottom of the rates for comparable vehicles. A specific market rate must in fact be shown, and I cannot accept Mr Gruzman's submission at paragraph 26 of his reply submissions that the position will be any different when, unlike Anthanasopoulos where the provision of the replacement vehicle was gratuitous, an actual hire fee was incurred. (I should perhaps add that the actual hire fee paid is some evidence of a reasonable market rate, but in my view the onus remains on the plaintiff proving the scope of its claim to show that the amount claimed is such a rate, quite independently of mitigation issues. (For all the reasons set out herein I find that in this matter it is).
In Ross at [8] and [11] Assessor Olischlager thought that even though the claim was for 'loss of use', but based on specific hire car charges incurred, there needed to be a pleading in so many words that the claim was seeking general damages.
I respectfully disagree with that view. This is not a court of strict pleading. In Lagden, the House of Lords thought the action was "in essence" one for general damages for loss of use, as I find it is here. A principal object of pleading is to put one's opponent on notice of the case he has to meet. In the present matter the defendant could not but be aware that general damages are sought for loss of use, and I find the damages sought are general damages, even though the word 'general' does not appear. It should be kept in mind that in most types of cases one may not claim damages at large and must specify the amount (UCPR rule 14.13), but there are exceptions for the Local Court including for the cost of hiring a replacement car in a negligence claim. The plaintiff was therefore entitled to claim damages generally, but (seemingly, out of habit) solicitors usually include the amount claimed in any kind of matter and that is what has occurred here. It is not surprising that the amount was indeed specified, but even without regard to the way in which the claim is pleaded as to damages (which suggests general damages are sought) it would be expected that an amount would be nominated, and in my view its nomination would not indicate that what was sought, was sought by way of special damages.
Ipp JA in Anthanasopoulos, a case where a vehicle was provided gratuitously by a third party, said at [84] of his Honour's judgment that the damages are to be assessed not by the cost to the plaintiff of hiring, but generally by the market cost of hiring. At [80] his Honour said "the true basis of claims for damages for injury to a non-income producing chattel is … based on need". There are similar remarks at [79]. His Honour can only be taken to have been referring to the assessment of damages and not liability. That follows because he agreed with the decision of Beazley JA who at [59] of her Honour's judgment made it plain that she was dealing only with liability and not quantum. Quantum was not in issue in that case.
In Ross at [25] and [27] Assessor Olischlager noted that Mr Ross had not deposed that he had any need for a replacement vehicle, and the only evidence appeared to have been that his wife needed one. Because the plaintiff showed no need, Assessor Olischlager found that the damages should be only interest on the pre-accident value of the plaintiff's vehicle along with a pro rata proportion of the cost of registration.
In our present matter Mr Rosen, a director of the plaintiff, has indeed said that he had a need for the replacement vehicle, which I accept, and which (because the need was partly work-based) should be equated with a need of the plaintiff itself, and the proper approach to damages is the award of an amount equal to the market rate. I do not lose sight of the fact that an extravagant amount may not be awarded.
The benefits in the nature of non-compensable benefits in this matter included the right to recover the costs of a replacement vehicle on behalf of the plaintiff, and other similar things. Mr Perla submitted that because Right2Drive provided non-compensable benefits, unless the plaintiff could show that it is impecunious, it should only be allowed the market cost of an equivalent vehicle without those benefits - that is, relevantly for present purposes, benefits provided by the hire company over and above the market rate of hire, which he submits would not be recoverable. He referred to Dimond v Lovell, Bent v Highways and Utilities Construction [2011] EWCA Civ 1384 at [35] (but probably meant to refer to Bent v Highways and Utilities Construction Ltd [2010] EWCA Civ 292) and Moraghan v Riley [2015] NSWLC 27 (presumably at [94]).
He is, of course, right in that regard, although in some cases there may be other reasons as well (such as extreme distance from any hirer offering a market rate and a consequent need to take a higher rate closer to home) but that principle can have no application when the hire company makes no charge over and above the ordinary market rate of hire. In the present matter it makes no such charge. That is so because in this matter the evidence is overwhelming that benefits were provided over and above the ordinary incidents of hire, yet the only reasonable inference from the rates of hire in evidence in relation to Right2Drive and the rates of the other hire companies deposed to by Mr Mullins is that Right2Drive absorbed the cost to it of providing what would normally be seen as non-compensable benefits.
Mr Gruzman submitted that the claim did not plead a hiring which included non-compensable benefits. But I agree with Mr Perla's submission that any response to claims for damages is taken to be traversed unless admitted (UCPR 14.26(3)). In any case though, because what would normally be non-compensable benefits were absorbed by the hiring company, they really ceased to be non-compensable benefits in the hands of the plaintiff in any relevant sense.
The reason I must find a specific market rate (at the lower end in any range of comparable rates, unless the plaintiff puts forward some justifiable reason for choosing one of the more expensive ones) is that the plaintiff will need, acting reasonably and in possession of local information of hire charges, to choose a single rate. If there are several rates clustered close together in price at the bottom end of a range of available hirings he should prima facie pick the lowest one, but if there is reasonable cause to choose another of those rates he may do so (e.g. if he had an unhappy experience with the company providing the lower rate, or if one had a better commercial reputation in its dealings with customers). But if he puts forward nothing at all to justify a higher priced one, unless the difference was trivial, he could not be reasonable. At least in a large city like Sydney a plaintiff cannot be expected to hunt down every single instance of hiring, and would not fail to recover merely because a defendant was able to point to a cheaper hiring somewhere. It must be accepted in the present day and age that if the cheaper establishments were well advertised, especially on the internet, it will sometimes be possible to infer that the plaintiff should have come across them. Yet if a hirer were to give evidence that he had looked and not found that cheaper place, and if he is believed, he would have acted reasonably nonetheless.
Mr Gruzman at [24] submitted that Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd [2001] NSWCA 313 was authority for the view that when the actual cost of repair was known that was an impeccable method of calculating the cost of repairs. That was a case of a construction of pavement, and very early quotes had been for about half a million dollars. The trial judge found himself obliged to accept that figure following Bellgrove v Eldridge (1954) 90 CLR 613 at 617-618, even though the trial proceeded on the basis that the actual cost had been $354,281. The Court of Appeal held that his Honour had misunderstood that decision, that such a result was not required, and that the actual cost was an impeccable alternative means of calculating the cost. Actual cost of hire, like actual cost of repair, will be relevant but will not help a plaintiff/hirer if he chose that cost in the teeth of cheaper reasonable options.
Mr Gruzman also relied heavily on Stocovaz v Fung [2007] NSWCA 199 particularly at [37] and [38], the Court there observing that "there may not be a single fair and reasonable cost for repairing a damaged motor vehicle … there is likely to be a range of costs of which all are fair and reasonable".
That, however, was a decision regarding the cost of repair, not the cost of hiring a substitute vehicle. There will often be reasons why there might be a range of reasonable costs of repair. An example will be where one repair shop uses a particular brand of replacement parts, or a different method of repair, each of which is professionally respectable, and even though its price may be different from another repair shop it may well be the case that both are reasonable. Further, a person whose car has been damaged might well have had a satisfactory relationship with a repair shop, which might charge a little more than another repair shop nearby with which the person had had difficulty in the past. Such factors bear strongly on a choice of repairers, but except in the fairly rare case where a person frequently hires vehicles there will not usually be such personal factors operating when choosing a hire car.
If Mr Gruzman is right in his submission that there may be a range of reasonable hire rates it would follow that without any particular reason a hirer could choose a more expensive option merely because objectively it was reasonable when a lower one just as good was available.
In any case, one might well ask what is meant by an objectively reasonable rate or range of rates. If considered separately from the obligation on a hirer to himself act reasonably, it might well mean no more than that the rate provides a modest or competitive rate of return to the hiring company after covering its overheads. Its content is limited except when considered in conjunction with the obligation on the hirer to act reasonably, and acting reasonably will usually mean taking a cheaper hire and only choosing an expensive option if there is some good reason to do so.
A hypothetical hirer would not be acting reasonably if he chose a $400 per day rate when a competitor offered a rate of $300, unless there were some specific reason to choose the higher rate, and there would need to be some evidence of such a reason (always assuming that he knew or ought to have known of the availability of the lower rate).
Burdis v Livesy [2003] QB 36 establishes that the obligation to take the lowest quote is not absolute, which I find to be consistent with the view that provided the hirer acts reasonably it may well in an individual case be appropriate to take a higher quote. Usually though, a hirer should take the lowest rate. In the example given above, if in addition to the $400 rate the range included some at $300, some at $310 and some at $315, because those are all at the lower end he should ordinarily choose one of them. In some cases it might be reasonable to choose, say, the $315 offering (perhaps because it is closer to the plaintiff's residence or some other personal reason), but absent any reason at all being put forward I think one must regard the lowest ($300) as the market rate. Very tiny differences might be de minimis (say, up to $305) but ordinarily, assuming that it should be found that the plaintiff either was or ought to have been aware of the availability of the lower rate, I would find the lowest figure to be the market rate. That is the practical effect of the decision in Rizk v Chen and National Apollo Bathrooms Pty Ltd [2014] NSWLC 8, with which I respectfully agree.
I am, with respect, not bound to take a view, merely because of what was said in Stocovaz speaking of a range of reasonable repair costs, that a hirer in a demurrage case acts reasonably by choosing a higher rate of hire when a lower one is available. If he does so act reasonably it could only be because there was either an identifiable reason why the lower rate need not be found to be a reasonable market rate or that for some reason personal to the hirer it was reasonable for him to take the vehicle offered at the higher rate (such as, perhaps, that he lived a much further distance from the offices of the hire company offering the cheaper rate).
Stocovaz is plainly distinguishable from demurrage cases such as the present.

Mitigation

The defendant has the burden of showing that the plaintiff did not act reasonably in mitigation. It does not do that merely by showing that some cheaper vehicles could be found. There would need to be evidence either that their availability was so well known that the plaintiff could not have missed them unless he was careless in his search or that perhaps he did indeed know of them and chose a more expensive option instead.
Duration of hire, since both parties dealt with it that way, is best dealt with as part of a need to show mitigation and needs separate attention.
The plaintiff's claim is for 263 days of hire. That is a lengthy period and necessarily increases the claim to the substantial amount in fact claimed.
Mr Perla submitted that there were three discrete periods in respect of which the defendant should not be liable.

The first period

The first was 5 June 2014 - 15 September 2014, which was the period during which the plaintiff asked his insurer, AAMI, to stop repairing his vehicle and disputed its decision not to write it off.
Mr Gruzman submitted that such a dispute with an insurer about a method of repair is no different than a dispute regarding a delay in obtaining parts. Analogies are dangerous, but Mr Gruzman submits (at [43] of reply submissions) that the real question is whether the plaintiff acted reasonably. I agree with what he says in that regard, but in any case the onus in the case of mitigation is on the defendant to show that the plaintiff has not been reasonable.
Although Mr Perla made reference to a number of matters, in my view the defendant has not produced any evidence which would support a finding that it was not reasonable, and as a result I find that the plaintiff acted reasonably in its wish to have the vehicle written off rather than repaired. Mr Perla drew attention to the fact that Mr Rosen sought a review of AAMI's decision by an internal dispute resolution system, and subsequently made a complaint to the Financial Ombudsman Service. On 15 September he withdrew that complaint and pursued the claim for repairs against Innovation Group, which is the claims management agent for the defendant's insurance company (Calliden Insurance).
However, an aggrieved party unhappy with the performance of a repairer cannot be expected to abandon his rights to internal dispute review and the like. Those procedures are available to the public, and it cannot simply be assumed that by taking advantage of them the plaintiff has acted unreasonably in its duty to mitigate. I do not accept Mr Perla's submission in relation to the first period. The email correspondence at pages 12 - 26 of Ex 1, annexure D relied upon by Mr Perla, in my view, shows simply that the plaintiff was legitimately and reasonably arguing for its rights.
Nor, in my view, can Mr Perla's submission that the plaintiff's decision to contact AAMI and stop repairs amounted to an intervening act which 'stopped the clock'. The mere fact that the decision by the plaintiff to halt the repairs was something outside the control of Innovation Group did not unjustly (or unreasonably) increase the plaintiff's loss. The action by the plaintiff in stopping the repairs was a reasonable exercise of his rights, and the consequent extension of the hiring period is no more than an unfortunate consequence which could not bear on the reasonableness of the plaintiff's mitigation.
Bearing on the question of the reasonableness of stopping the repairs, as Mr Gruzman submits, is the fact that the plaintiff offered to authorise and allow the defendant's insurer to monitor the repairs, an offer which was refused.
I also accept Mr Gruzman's submission that nothing in what the plaintiff did in complaining to the Financial Ombudsman prevented settlement of the claim for repairs had the defendant been so minded.

The second period

The second period referred to by Mr Perla was 16t September 2014 - 14 October 2014. That was the period during which Innovation Group took steps to assess the plaintiff's vehicle and offered to cash settle the claim, which was rejected by the plaintiff (page 67, exhibit AA to the affidavit of Ms McDowell).
Mr Perla submits that the several different steps taken by Innovation Group to assess and offer to cash settle was unreasonably rejected by the plaintiff. While at page 67 the rejection email is indeed very terse, I agree with Mr Gruzman's reply submissions at [56] and following that the settlement offer was several thousand dollars short of a reasonable figure and the defendant has certainly not discharged its onus to show that the actions of the plaintiff in not accepting the offer were not reasonable as part of its duty to mitigate.
Mr Perla further submitted that a delay on the plaintiff's part of four or five days between 9 and 14 October 2014 advising AAMI to proceed with repairs was unreasonable. It is a very short period, and I agree with Mr Gruzman that especially since it spanned a weekend the plaintiff's actions were not shown to have been unreasonable and in fact were reasonable.

The third period

This period was 15 October 2014 - 28 January 2015. Mr Perla (at [66]) submits that the plaintiff's decision not to accept the cash settlement and to revert back to AAMI meant that even after 14 October the plaintiff's actions in disputing Innovation Group's decision amounted to a supervening event, and that it was unreasonable not to accept the cash settlement offer, in part because an independent report at pages 25 - 46 of Ex 3 formed the basis for the offer and concluded that it was more appropriate to repair the vehicle, supported by the evidence of Ms McDowell.
As indicated above, I agree with Mr Gruzman that the settlement offer was not adequate, and do not accept this submission.
Further, I agree also with Mr Gruzman's submission that there is nothing in the fact that the repairs took too long. As he submits, it is a question of fact how long they took, and in any case the period of the repairs from the time that they were authorised amounted to about twelve weeks, which for substantial repairs might not be thought to be so long. Moreover, it is the defendant's obligation to show that in some fashion the plaintiff's actions in this regard were unreasonable as part of its duty to mitigate. The defendant does not do that merely by pointing to the time the mechanics took - even when one considers that the entire period from beginning to end took 263 or perhaps 266 days, since as Mr Gruzman points out much of that period was occupied with the plaintiff actively managing the problem.
Mr Gruzman in his submissions nominated a period of 263 days hire. Less the $60.00 delivery and return fee the total claimed is 263 x $120.15. That comes to $31,599.45. That figure is the basic hire fee of $85 per day, plus $27.50 excess reduction fee, and $7.65 registration recovery fee, to which has to be re-added the $60 return fee, a total of $31,659.45. For all the foregoing reasons there will be judgment for the plaintiff in the sum of $31,659.45. Costs and interest can be the subject of separate submissions. Magistrate W Pierce Downing Centre Local Court 13 July 2016

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: 31 August 2016

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Judgment (9 paragraphs)

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