Young v Waters

9. The spare parts invoices from Maroubra Mitsubishi were called for and became Exhibit "4". Mr Schumak was taken to Invoice No. 360867 and referred to a part number MR392857 at a "list price" or $652.00 and a "nett price" of $586.80. He agreed M.A.R. had paid the "nett price" but had charged the Plaintiff $717.20 for the same item - a front bumper bar.
10. There was further cross-examination as to the provision of a temporary replacement vehicle and the fact that it was hired for a longer-than-normal period. Mr Schumak said that the car was so new that some parts had to come from Japan and he produced a note to that effect from Maroubra Mitsubishi which became Exhibit "5". He said that the provision of a car on such favourable terms as were made was a service offered to "not- at-fault" drivers. That point being cleared up, it led to the fair concession by the Defendant that the cost was in the circumstances properly a part of the Plaintiff's claim. But it does bring a slightly different perspective to the Defendant's claim of failure to mitigate. The cost of the car was 33 days at $45.00 per day - a total of $1,485.00.

11. Mr Schumak said that M.A.R. had no agreement with N.R.M.A. for the past four years. His company was free to choose whether to have such an agreement and it had chosen not to. The Defendant's case
12. The Defendant called Ms Carol Koprivanic. She has been an employee of N.R.M.A. Insurance and its successor, Insurance Manufacturers of Australia (hereinafter "I.M.A.") for something in the order of twenty-seven years. Her present position is one of 'litigation operations consultant' whose function, as I understand it, is to handle litigated files and manage claims arising there-from as well as providing instructions to solicitors. I.M.A. is the insurer of vehicle number ODA-709 belonging to Thomas Waters. Her Statement of 30th August, 2005, became Exhibit "6" and served as her evidence-in-chief.

13. In summary (paragraph 4), she said that the first contact with M.A.R. was by letter of demand sent to I.M.A. after the Plaintiff's vehicle had been repaired. She said after-repair contact with M.A.R. "always occurs" and she was of the belief and opinion that this post-repair contact was a deliberate attempt to deny the owner/driver of the 'at-fault' vehicle and/or I.M.A. the opportunity to inspect the vehicle prior to repair. Further, she said, (paragraph 5) "usual industry practice" requires a repairer to notify the insurer of the "at-fault" vehicle of the existence of the vehicle requiring repair so as to allow the insurer to inspect and assess that vehicle prior to repair. In her view (paragraph 6), she considered what M.A.R. had done was a deliberate failure to follow "usual industry practice" and I.M.A. was "deliberately denied an opportunity to assess the necessary scope and reasonable costs of repair work prior to the repairs being undertaken."
14. In cross-examination Ms Koprivanic was taken to Exhibit "6". She said she only referred matters to solicitors were there was a dispute, usually as to differences in quantum being between what was claimed and "what we are prepared to pay." Asked upon what basis she asserted the first two sentences in paragraph 4 she replied, "I can't answer that." As to the basis of the third sentence, she agreed there was no contract binding N.R.M.A. and M.A.R. regulating any conduct as between/against the other. In paragraph 5, it was suggested to her that she did not know "industry practice". She said that she did. She agreed that N.R.M.A. was the only insurance company for which she had managed matters. It had never occurred to her to request an inspection of either vehicle at any time - before or after repair. A call was made for the N.R.M.A. file which became MFI "C". Ms Koprivanic agreed there was no record therein of any request to inspect the Plaintiff's car nor was there evidence of any refusal. There had never been a refusal, she said.
15. It was suggested to her that she was being critical of M.A.R., in particular, her use of the pejorative words, "a deliberate failure" on their part to follow 'usual industry practice'. When asked upon what basis she came to that opinion she replied that her opinion was based on previous experience. In re-examination, when asked had she worked for any other insurers, she said she had not but dealt with other insurers usually in regards to demands against her company.

16. The Defendant's next witness was Mr James Taliana, a licensed panel beater of fifteen years experience and employed by N.R.M.A. as a loss assessor since 28th October, 2003. He was put forward, but not in the strict sense, as an expert witness based upon his experience, training and occupation over many years. His statement of 30th August, 2005 and annexures became Exhibit "8" and served as his evidence-in-chief.
17. In summary, he had inspected the M.A.R. estimate (Annexure 'A' to his statement) as well as that of Mr Stephen Manning, Loss Assessor (which, I take it, was part of Annexure 'A'). His Annexure 'B' was a copy of the M.A.R. estimate amended by himself so as to reflect, "…a fair and reasonable cost of repair, which totals $12,129.64 plus GST". He said (paragraph 8) he had adjusted the time spent on each task claimed by M.A.R. to conform with what was said to be "…the charge rates negotiated between IAL, (that is, N.R.M.A.) and repairers in New South Wales." That done, he had allowed a total of $3,3161.84 plus GST, for labour, representing 87.6 hours.
18. He said (paragraph 9) he had checked the list prices claimed in Annexure 'A' for the cost of spare parts and that he had listed (paragraph 10) the true and correct price of each item in his Annexure 'B'. He asserted that M.A.R. had obtained the parts at a trade price (paragraph 13) and was entitled to supply the parts to a customer at the industry list price. To add another 10% on the industry list price was, "…unreasonable and constitutes double-dipping." He said that reasonable repairs could have been effected by a wide variety of repairers prepared to perform such work at N.R.M.A. approved rates and allowances. In his opinion (paragraph 15), in having her vehicle repaired by M.A.R. the Plaintiff had failed to follow, "…reasonable industry practice…" by not notifying the Defendant nor the Defendant's insurer of the claim before the repairs were carried out. The insurer had been denied an opportunity to assess the necessary scope and reasonable costs of such repair work prior to the repairs being undertaken.
19. In cross-examination he agreed he had never owned or managed a panel beating business. He agreed that he had not seen the colour photographs, Exhibit "3", rather, he saw only black and white photo copies. He did not have any photographs of the rear damage. It was a 'desk assessment' by him. He did not inspect; nor ask to inspect; nor contact anyone regarding an inspection of the vehicle. The photographs were not helpful in any event and he relied upon the R & R [remove and replace] hourly rate times. He said that N.R.M.A. sets these rates and he abides by them. He agreed these rates had not changed from October, 2003 to date. He said his amendments to Stephen Manning's assessed estimates reflected N.R.M.A. schedule times. Asked upon what his assessment was based, he said that he had read the M.A.R. quote and the accident description from the insured. He had also checked the quote to see it equated with the damage described.
20. He agreed he used the M.A.R. quote and the Manning Assessment upon which to base his own assessment. He was referred to paragraph 9 of his Statement - in particular, where he asserted, "I have checked the list prices…" He was challenged as to whether he had "checked" anything of the sort and said, "That is probably incorrect." But the cross-examiner persevered and it resulted in the following admissions: he did not know whether the handwritten prices he wrote on the M.A.R. quote were true; he did not know the list price; he did not know the mark-up; and he did not know the price M.A.R paid for the parts. And, no, he never checked the list price. As to paragraph 10 of his Statement - in particular, where he asserted, "I have listed the true and correct price…" He was challenged as to whether he had done anything of the sort and agreed that what appeared in the document was incorrect.
21. Mr Taliana was referred to Annexure 'B' of his Statement, in particular to the R & R (remove and replace) times. He agreed the initial figures of M.A.R. were based upon the Motor Traders Association (the M.T.A.) guidelines and that his alternations were based upon the N.R.M.A. guidelines.
22. He was referred to paragraph 13 of his Statement and asked upon what basis did he assert that an additional 10% mark-up on the industry list price of the parts (which he earlier admitted he never checked) was unreasonable and constituted double-dipping and he replied, "That should have been amended." In the same paragraph he was asked upon what basis he asserted that M.A.R. obtained the parts at a trade price and he replied, "I don't know that." In the same paragraph he was asked what he meant by the assertion that M.A.R. was entitled to supply the parts to a customer at the industry list price. He appeared to me to have difficulty answering the question. Mr Gower put to him that the Statement, Exhibit "8", was not his document; it had been written for him. He replied that he did not write it but he had read it.

23. When asked on what basis he asserted that what M.A.R. had done was 'unreasonable' he said that N.R.M.A. said it was unreasonable. He agreed this was not his independent view at all, rather, it was what he had been told to say. He agreed there was no agreement between N.R.M.A. and M.A.R. nor any agreement between N.R.M.A. and the Plaintiff.
24. That concluded the evidence in the case.
25. Mr Gower submitted that the Court had to decide what is the reasonable cost of repair. How is it to be calculated? It came down to a competition between M.T.A. times and N.R.M.A. times. An hourly rate of 30.90 vs. 31.10. He submitted that the issue was not the hourly rates - it was the hours. He said the decision in Jones v Ho , November, 2004, Horler LCM says that the only parties bound by N.R.M.A. rates are those who enter agreements with N.R.M.A. Here, M.A.R. was not a party to any agreement with N.R.M.A.
26. He said that the Plaintiff agrees that no more than the "reasonable cost" of repairs can be recovered and that there was a positive duty to mitigate. It was, he said, unreasonable to expect the Plaintiff to do more than she did. She took her vehicle to a licensed repairer; obtained a quotation; asked for independent advice from an independent loss assessor (Manning); that assessor said the quotation was fair and reasonable. It must be remembered that it is the Plaintiff seeking relief - not the repairer M.A.R. The Plaintiff has no control over the repairer's price.
27. The flaw in the Defendant's case, it was submitted, was that the repairer is not a party to the present proceedings and never has been. The proceedings have been brought by a Plaintiff who has been wronged and she should be put back in the position she was prior to the collision. What right, Mr Gower asks, has N.R.M.A. to dictate to the Plaintiff how, when and where her car would be repaired. She was not a policy-holder with N.R.M.A. He agreed that N.R.M.A. should not be 'gouged'. That, he said, was why the independent assessor, Manning, was in the mix - to protect both the Plaintiff and N.R.M.A. What more could the Plaintiff do? Should she have collected the parts? Should she have checked the invoices? In any event, she was in no position to change the work practices of M.A.R. (or any other repairer).
28. Mr Gower submits that the Court will not accept much of what Mr Taliana said in his evidence. It needs to be said at once that that is certainly so and for reasons to which I will shortly come. Even if there is a mark-up on parts, Mr Taliana could not explain upon what basis that was unreasonable. Mr Schumak, on the other hand, provided an explanation - he said there was a 17 per cent mark-up prior to the G.S.T. He says that I should ignore Mr Taliana's suggestion that M.R.A.'s price was unreasonable and double-dipping.
29. As for Ms Koprivanic, Mr Gower submits that she purports to give evidence of "usual industry practice" but she has only ever worked for N.R.M.A. and can really only give N.R.M.A's practice. She gave no evidence of any request to inspect the vehicle either pre or post repair. There was no evidence, he submitted, that N.R.M.A. could not inspect and there was a strong inference they deliberately did not inspect.
30. Mr Bliim for the Defendant submitted there were two live issues: the ten per cent mark-up on the suggested list price; and the difference in the hours assessed. He said that the parts as charged by M.A.R. was $8,940.36 which included the ten percent mark-up. Re-calculated, he said, this meant that $812.76 on part numbers had to be deducted. Mr Taliana's labour was $3,161.84 plus GST and M.A.R.'s labour was $3,782.10 which left a difference of $620.26 plus GST or $682.28 inclusive of GST. Mr Bliim said that the amount the subject of argument is really $1,495.04.
31. He was critical of M.A.R. charging the suggested list price plus ten percent to the Plaintiff. As an example, he referred to the front bumper bar - a charge of twenty percent over and above the M.A.R. list price. He said that the Loss Assessor, Manning, did not give evidence and there was no evidence that he had checked the price of parts. This, he said, leaves the Defendant in a situation where it cannot properly determine how the assessment was arrived at. Therefore, he said, how reliable is the assessment as to a "fair and reasonable price". As to the ten percent mark-up, he agreed that M.A.R. had costs to cover, however, he submitted, perhaps that was covered by the supplier's discounts. The additional ten percent was excessive and extravagant. He submitted that there are obviously people prepared to work for the N.R.M.A. rate - it is a 'reasonable rate' and there is no suggestion that the repairs could not have been carried out at that rate.
32. In brief reply, Mr Gower said there was nothing to infer that any discount was to compensate the repairer. It was to see that M.A.R. continued to buy from the same supplier. He said that in this case M.A.R. was not the Plaintiff - a different situation to the Plaintiff in the case of Maroubra Auto Refinishers Pty Limited v David Christopher Johnson Local Court Civil Claim 1480/04 - 7 October 2004, per Magistrate M Quinn. Mr Bliim said that in that case, Magistrate Quinn had to decide the validity of an assignment - not quantum, and anything she said in that regard was obiter. Her decision did not require any finding of quantum.
33. I turn now to see whether the Plaintiff has established her case pursuant to her Statement of Liquidated Claim.
34. As has been seen, the pecuniary difference between Plaintiff and Defendant is not of great moment. It comes down to, as Mr Bliim says, a figure of something in the order of $1,495.04. It is the Defendant's position that the Plaintiff has failed to mitigate her damages. The Defendant says that the N.R.M.A. rates permitted the cost of repair to the vehicle to be done at a lesser cost than the M.T.A. rates as used by M.A.R. What does "mitigation" mean in the present sense? For guidance I referred to McGregor on Damages Sweet & Maxwell, 16th Ed. There, the learned authors [185-186] say that the principal meaning comprises three different, although closely interrelated, rules the first two of which I adopt (the third not being relevant for present purposes) and set out hereunder, as follows:-

· The first and most important rule is that the plaintiff must take all reasonable steps to mitigate the loss to him consequent upon the defendant's wrong and cannot recover damages for any such loss which he could thus have avoided but has failed, through unreasonable action or inaction, to avoid. Put shortly, the plaintiff cannot recover for avoidable loss. · The second rule is the corollary of the first and is that, where the plaintiff does take reasonable steps to mitigate the loss to him consequent upon the defendant's wrong, he can recover for loss incurred in so dong; this is so even though the resulting damage is in the event greater than it would have been had the mitigating steps not been taken. Put shortly, the plaintiff can recover for loss incurred in reasonable attempts to avoid loss.

35. It is not correct in stricto sensu to speak of a "duty to mitigate" on the part of a Plaintiff: see Darbishire v Warran [1963] 1 W.L.R. 1067. See also The Solholt [1983] 1 Lloyd's Rep. 605, C.A. @ 608. The Plaintiff is completely free to act as he judges to be in his best interests. On the other hand, a defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting. The onus of proof on the issue of mitigation is on the Defendant: see London and South of England Building Society v Stone [1983] 1 W.L.R. 1242; Metelmann & Co. v N.B.R. (London) [1984] 1 Lloyd's Rep 614, per Lord Donaldson MR @ 631 - "…it is no doubt true that the burden of proof lies upon the defendant." If he fails to show that the Plaintiff ought reasonably to have taken certain mitigating steps, then the normal measure will apply: see Roper v Johnson (1873) L.R. 8 C.P. 167. See also Garnac Grain Co. v Faure & Fairclough [1968] A.C. 1130 @ 1140. Although the former cases are for repudiation, the onus is the same for avoided loss.
36. The Plaintiff must take all reasonable steps to mitigate the loss to him consequent upon the Defendant's wrong and cannot recover damages for any such loss which he could thus have avoided but has failed, through unreasonable action or inaction to avoid: see British Westinghouse Electric and Manufacturing Company Limited Underground Electric Railways Company of London Limited [1912] A.C. 673 @ 689 per Viscount Haldane LC. McCardie J in Payzu Limited v Saunders [1919] KB 581 posed the following question in relation to mitigation (at 586) - "The question, therefore, is what a prudent person ought reasonably to do in order to mitigate his loss arising from a breach of contract". (emphasis added)
37. A criterion for "reasonableness", stated concisely in the words of James L.J. in Dunkirk Colliery Company v Lever [1878] 9 Ch D 20 @ 25 which was cited with approval by Viscount Haldane LC in British Westinghouse (supra), is that the Plaintiff is not "under any obligation to do anything other than in the ordinary course of business." It is a question of whether or not the Plaintiff acted reasonably in all the circumstances: see The Solholt (supra) @ 609.
38. The Plaintiff found herself in the following position: her parked motor vehicle was struck by the Defendant's motor vehicle on 9th November, 2004. She was, and it is agreed, the "not-at-fault" party. Her vehicle was taken to M.A.R. in a suburb nearby to where she lived.
39. A quotation was provided by M.A.R. M.A.R. engaged and paid for a Licensed Assessor, Mr Manning, to assess the vehicle independently. The vehicle was repaired to a proper standard by M.A.R. The Plaintiff was not a policy-holder of N.R.M.A. The Plaintiff had no control over how M.A.R. conducted its business. M.A.R. had no agreement with N.R.M.A.
40. How, then, does the Defendant show that the Plaintiff failed to take reasonable steps in accordance with the established authorities? Did she act other than in the ordinary course of business?
41. The Defendant's case was largely directed to the alleged perfidies of M.A.R. and to establishing itself as an arbiter of "usual industry practice". As to the former, it departs from the point, it seems to me, to refer in pejorative terms to the practices of M.A.R. As to the latter, I found the Defendant's evidence to be less than persuasive. I accept that N.R.M.A. has a different 'scale' of charges less than that of the M.T.A. (adopted by M.A.R.). But I found the assertions amounting to sharp practice (and that is what they were) on the part of M.A.R. in the evidence-in-chief of Ms Koprivanic to be found wanting in cross-examination. So, too, her use of the phrase "usual industry practice". It is mentioned three times in Exhibit 6, paragraph 5 without any evidentiary foundation that I can see. I interpolate that its inclusion is intended to convey that there is a "usual industry practice" but that M.A.R. operates outside it. Other than that, I have no idea what it means. If there really is such a thing as a "usual industry practice", I doubt Ms Koprivanic is qualified to give evidence of it.
42. I found the evidence of Mr Taliana to be of only minor assistance. He is a loss assessor employed by N.R.M.A. I do not understand him to have been put forward as an expert witness but nonetheless I accept his evidence was expected to be regarded as having some force. He replaced "usual industry practice" with "reasonable industry practice". Like the former, the latter is without evidentiary foundation and provides no assistance to the tribunal of fact. A matter of no small concern was his concession in cross-examination that important parts of Exhibit 8 did not represent his own independent view but, rather, what he had been told to say by his employer. He put forward a variety of opinions - many of which have been referred to in paragraphs 19 to 23 above.
43. Although not put forward as an expert witness in stricto sensu, I must have regard to the decision of the Court of Appeal in Makita (Australia) Pty Limited v Sprowles [2001] NSWCA 305 per Heydon JA., Priestley and Powell agreeing. I note also the judgment of McLelland J., in Bell v F.S. & U Industrial Benefit Society (Unrep) NSWSC 9 September, 1987, where his Honour said, "the importance of proving the facts underlying an opinion is that the absence of such evidence deprives the court of an important opportunity of testing the validity of process by which the opinion was formed, and substantially reduces the value and cogency of the opinion evidence".

44. If the Defendant by its witnesses is not able to say what is reasonable and what is not by reference to established criteria and standards (other than that its rates are lower than others), how is the Plaintiff in any better a position to judge what she might do so as to avoid the suggestion that she failed to mitigate the damages. Mr Taliana has provided no defensible reason for his view (if it is his view) being preferred to the course of conduct that was followed by the Plaintiff in this case.
45. It is not my function to find that the M.T.A. rate is to be preferred over that of the N.R.M.A. (or vice versa) as qualifying as a "reasonable rate". Each rate has its adherents and it is doubtless something over which reasonable minds might differ. For my part, I find little difference between them. But, as must be born in mind in this case, the test to be applied is: did the Plaintiff take reasonable steps to mitigate the loss in all the circumstances. I find as a fact that she did and, in my view, such a finding is supported by respectable authority.

I propose the following orders.

1. Judgment for the Plaintiff against the Defendant in the amount of $16,681.80.
2. The Defendant is to pay the Plaintiff's costs and disbursements of the action as agreed. In default of agreement within 28 days, the costs and disbursements are to be assessed under the Legal Practitioners' Act.
3. The Defendant is to pay interest on the judgment debt from 9th December, 2004 pursuant to Section 39A Local Court (Civil Claims) Act, 1970 as calculated by the Registrar.

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