I’m not a torts lawyer, so a complete ignoramus on these sorts of matters, but I wonder what the result would have been in each of these cases had the plaintiff not hired a replacement car at all.  My thinking is that this should make no difference, that the cost of hiring an equivalent should be awarded whether or not the plaintiff actually did so.  But is this a crazy thought?

Bill

 

 

Dear Colleagues;

In its unanimous decision today in Arsalan v Rixon, Nguyen v Cassim [2021] HCA 40 (8 Dec 2021) http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA//2021/40.html  the High Court of Australia (Kiefel CJ, Gageler, Keane, Edelman & Steward JJ) ruled that damages can be awarded for “loss of amenity or enjoyment of the use” of a chattel ([3]) which has been damaged and is being repaired. Hence, where a “luxury” vehicle is damaged due to a tort committed by the defendant and is unavailable, and damages for a replacement vehicle are appropriate, the appropriate level of damages is that covering an “equivalent” standard of luxury vehicle, and is not limited to covering the actual “needs” being met by the vehicle. Where such a vehicle is obtained, “the onus of proof will lie upon the defendant to show that the costs incurred in mitigation were unreasonable” ([3] again). 

Four separate cases were discussed, though only the 2 noted in the case name were being appealed. To illustrate, Mr Rixon’s Audi A3 was damaged by Mr Arsalan, and while it was being repaired he spent $12,829.91 on a replacement. The Local Court only allowed recovery of $4,226.25, which was the market rate of hiring a Toyota Corolla which it was said would meet his “needs” to travel to work, to drop off and collect a child at school, and for general errands. While this decision was upheld on a first appeal to the NSW Supreme Court (Basten J sitting alone as a member of the NSW Supreme Court at “trial” level), on appeal the NSWCA overturned the decision and awarded the higher amount.

The core of the reasoning can be found in para [17]:

 

The essence of this division of opinion reflects the lack of any clear recognition in Australian law of loss of amenity, in the sense of loss of pleasure or enjoyment, in the use of a chattel, as a recoverable head of damage for a tort that involves negligent damage to a chattel. Further uncertainty has been created by authorities that have required that, before hire costs can be recovered as damages, the plaintiff must have a "need" for the substitute vehicle. For the reasons below, the head of damage of loss of amenity of use of a chattel should be recognised and the loose concept of "need" should be eschewed. The conclusion of the majority of the Court of Appeal should be upheld on the basis that Mr Rixon and Mr Cassim suffered heads of damage of physical inconvenience and loss of amenity and it was not unreasonable for them to take steps to mitigate both aspects of their loss by the hire, at a reasonable rate, of an equivalent car for a reasonable period of repair. (emphasis added)

 

The court does consider some UK authority, and it also cites 2 ODG colleagues: at n 15 to para [22] a quote from Tettenborn, The Law of Damages, 2nd ed (2010) at 351 [14.86] is accepted as a correct statement of the law, and there is a citation at n 19 to para [25] to Descheemaeker, "The Standardisation of Tort Damages" (2021) 84 Modern Law Review 2. It is good to see the court being clear about what academic work it has found helpful, as I see Lord Burrows urged in his remarks linked by Jamie Lee on Twitter today (see https://www.supremecourt.uk/docs/lionel-cohen-lecture-2021-lord-burrows.pdf .)

There is one disturbing feature of the HCA decision, though. The two cases which were not appealed turn out to have been wrong! The case of Ms Lee, denied the cost of any replacement vehicle, seems particularly concerning- as the court says at [43]:

 

As to Ms Lee's case, an inference that Ms Lee suffered the head of damage of physical inconvenience should have been readily established by her general evidence that she used her damaged car to visit family and friends and to take her children to and from school. More detailed particulars should not have been required to establish her head of damage of physical inconvenience. And there was no basis upon which the defendant could have established that it was unreasonable for Ms Lee to mitigate that loss by the hire of an equivalent replacement car for use for her suite of purposes. 

 

I hope that the relevant insurer will take the hint and make the payment they should have made now. Not sure if the case can be re-opened now- or perhaps, given this strong “hint”, the HCA has signalled that they would be willing to grant special leave if now applied for.

Regards

Neil