Zdrilic v Fuchs [2008] NSWSC 486 | Case summary

JUDGMENT 1 HIS HONOUR: On 7 August 2005, the plaintiff's motor vehicle ("the vehicle") was involved in a collision with a vehicle being driven by the defendant. It was what was regarded as a prestige vehicle. 2 Proceedings were brought in the Local Court to recover damages for the repair of the vehicle. There was an admission of liability. Accordingly, the only question in issue was one of quantum. A defence of failure to mitigate was abandoned. 3 The vehicle was repaired by Perfect Auto Body Pty Ltd ("the repairer"). It was regarded as a prestige repairer. The actual cost of repairs was $25,458.74 plus GST. The defendant took the stance that this was not a fair and reasonable charge. It led evidence that a fair and reasonable amount for the repair work was $15,897.09. 4 The plaintiff's case relied on the evidence of a loss assessor (Mr Turner). The defendant's case relied on the evidence of another loss assessor (Mr Houliaras). The primary task of the court was to resolve this conflict. The court did so by accepting the evidence of Mr Houliaras. The Magistrate did not accept the evidence of Mr Turner. 5 The plaintiff seeks to challenge that decision in this Court. She presently proceeds on an amended summons. Despite the numerous grounds of appeal enumerated in the amended summons, the issue that is litigated by the plaintiff is whether or not the Local Court correctly applied what were said to be the principles recently enunciated by the Court of Appeal in Stocovaz v Fung [2007] NSWCA 199. The principles said to be enunciated in that case were that actual costs should be allowed if it fell within the range of what was fair and reasonable. A cost incurred that was outside that range was described as being extravagant or unreasonable. 6 The hearing took place on 19 May 2008. The parties were represented by senior counsel. In essence, the hearing was a dispute between two insurers, the insurer for the plaintiff propounding what was said to be an important question of law. The other insurer adopted the approach that the Magistrate was merely dealing with a factual dispute. 7 The court has been taken to a number of decided cases (including The Pactolus (1856) Swab 173, the judgment of Patten AJ at first instance in Fung v Stocovaz [2006] NSWSC 1345, the decision of the Court of Appeal in Stocovaz v Fung [2007] NSWCA 199 and the decision of Hall J in Gordon Martin Pty Limited v State Rail Authority of New South Wales & Anor [2008] NSWSC 343). 8 In The Pactolis, Dr Lushington was dealing with a question of costs of repair following a collision between two ships. He proceeded on the basis that the relevant issues were whether the repairs were necessary and whether the charges made for such repairs were fair and just. Deductions were to be made where charges were extravagant. 9 In Fung, Patten AJ was dealing with a matter that had been transferred from the Local Court on the basis that it raised a question of law or principle common to many other actions of the Local Court. With the consensus of the parties, his Honour proceeded to answer certain questions. This was done in the absence of prior findings. It was a case involving a prestige vehicle and the same repairer. It saw an attack being made against what was said in The Pactolus. 10 In his judgment, Patten AJ observed, inter alia, as follows: "37 Accordingly, I am of the opinion that a plaintiff, acting reasonably, does not have the untrammelled right to recover from a tortfeasor the cost of repairs to his property. Nor, however, in my opinion, is a defendant simply entitled to show that the work could have been carried out more cheaply and to have a deduction on that account from the amount claimed. … 39 It follows from what I have said that I would answer yes to question 1 in the order made on 21 November 2006; no to question 2(i) and yes to question 2(ii). The question for the court in this case on the issue of damage will be whether the Defendant has established that the prima facie or 'sound' evidence of loss, proved by the Plaintiff is extravagant and should be subject to deduction. The evidentiary onus will be upon the Defendant." 11 An application for leave to appeal was made from the judgment of Patten AJ. Leave to appeal was refused. In Stocovaz judgments were delivered by Basten JA and Handley AJA. Hoeben J agreed with Handley AJA. 12 Basten JA observed as follows: "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. … 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 any 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'." 13 Handley AJA observed, inter alia, as follows: "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. … 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." 14 As can be seen from inter alia the observations, there were difficulties with the questions as formulated and what was said by Patten AJ was not without its problems. 15 In Gordon Martin Pty Limited, Hall J was dealing with a damages claim arising out of a collision between a truck and a train at a level crossing. His decision turned on its own particular facts. 16 His Honour referred to Stocovaz as being a case in which the Court of Appeal was asked to deal with what was contended to be an important point of principle in relation to the quantum of damages recoverable for damage to a prestige vehicle caused by the negligence of another driver. There was a citation of paras [17], [37] and a part of [39]. 17 The following observations were also made: "367 In that case, the Court below (Patten AJ) set out relevant principles: Fung v Stocovaz [2006] NSWSC 1345. These included:- • That it has for many years generally been accepted that a plaintiff who has spent money in repairing tortiously damaged property must not only have acted reasonably to minimise his damage, but must be capable of withstanding a challenge that the amount spent was, at least, not extravagant or unreasonable.

• Amounts paid by a plaintiff, acting reasonably, to repair damaged property are 'at least, prima facie evidence of the reasonable cost of repairing that property'. " 18 In the present case, the Local Court had before it inter alia not only the evidence of the two loss assessors but also the tax invoice from the repairer. Both loss assessors were cross-examined. Mr Turner had assessed the damage to the vehicle for the insurer and had approved payment to the repairer. Mr Houliaras was a loss assessor for Australian Associated Motor Insurance. 19 The Magistrate did not accept Mr Turner's methodology as reliable (inter alia, because it was unclear and lacked precision). She commented that his evidence had internal contradictions. Further, she regarded his reliability as being tainted by reason of various credit findings made by her. These credit findings were the subject of detailed observation. 20 The acceptance of the evidence of Mr Houliaras saw an adoption of his complaints as to aspects of the charges (inter alia, inflated time components by the repairer and unnecessary work). 21 The evidence established that there was a small group of repairers who identified themselves as prestige repairers. They had higher charges than other repairers (who mainly used the Motor Traders' Association guide). There was no evidence of a range within which the costs could be said to be fair and reasonable. Whilst there was no evidence of a range for prestige repairers, there was evidence that some prestige repairers could have repaired the vehicle for the amount of $15,892.04. 22 The Magistrate observed that the plaintiff had the onus on the civil standard to establish its claim for quantum of damages. She was referred to the judgments in Fung. She adopted the submissions made by counsel for the defendant as to the applicable law (the judgments reflected an unsuccessful attempt by the insurer to challenge what was said in The Pactolus and the need for the plaintiff to prove that the charges were reasonable) and observed that the plaintiff was limited to the recovery of costs which were fair and reasonable. 23 The Magistrate came to the conclusion that the repair costs were unreasonable and gave reasons for reaching that conclusion. The effect of this conclusion was to regard those costs also as extravagant. 24 The case for the plaintiff is put in the alternative. Firstly, it is said that it has an appeal as of right because there has been error in point of law. Alternatively, it is said that it should have leave to appeal because there has been error involving a question of mixed law and fact. I shall not proceed to address the question of whether or not there has been a material error that justifies the disturbing of the decision. 25 After having addressed that question, I have come to the view that there was no such error. It seems to me that this was a case that turned on its own particular facts. The result reached was inevitable following the evidentiary findings of the Magistrate. The evidence relied on to demonstrate that the charges were fair and reasonable was not accepted. Her findings placed the repair costs outside of any range. The result was that the plaintiff had failed to discharge the onus borne by her, that the defendant had demonstrated that the repairs costs were extravagant and that the amount of $15,897.09 was fair and reasonable. Whatever weight was to be given to the tax invoice disappeared following the adverse findings concerning the evidence of Mr Turner. 26 An analysis of the judgments in Stocovaz reveals differences in approach between Basten JA and the majority. 27 I am far from persuaded that Stocovaz decided any important question of principle (only one of the two limitations on claims mentioned in the head note was relevant in this case). It seems to me that the observations of the majority were made to assist in the resolution of practical problems had in the Local Court (the impact on that court of a "war" involving insurers and repairers). I do not consider that what was said therein was intended to bring about a change in the law. It may be added that Basten JA had "at least some doubt as to the ability" of the case to resolve the Local Court problems. 28 The position remained that the plaintiff was restricted to recovering that which was fair and reasonable. That which was extravagant or unreasonable was not recoverable. The observations give assistance as to what is to be regarded as fair and reasonable in certain cases. 29 The observations draw attention to the fact that there will be cases in which there may be a range of repair costs which will meet the test of being fair and reasonable (such as cases involving prestige vehicles). It was also said that in such cases acceptable evidence that a lower cost was fair and reasonable may not bring about a deduction from the amount claimed. 30 There may be doubt as to whether or not the majority endorsed what was said by Patten AJ on the question of onus borne by the defendant (it may be thought that a plaintiff's failure to discharge the onus would leave the amount claimed stranded in the unreasonable or extravagant category). Basten JA does not appear to have expressed any final view on the matter. (His Honour tended to favour the view that the cases may be resolved by reference to the principles of mitigation of loss where the onus was borne by the defendant.) If the majority did so, it needs to be borne in mind that Patten AJ had regard to an evidentiary onus only (to demonstrate that the charges were unreasonable or extravagant). In the present case, any onus borne by the defendant was discharged. 31 One final observation may be made. As was the position in this case, cases of this nature can be expected to turn on their own particular facts. 32 In the circumstances, the proceedings fail. The proceedings are dismissed. The plaintiff is to pay the costs of the proceedings. The exhibits may be returned. **********

Zdrilic v Fuchs

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