Court veers back to the road more travelled on hire car claims

By Leigh Parker and Todd Waugh

The New South Wales Supreme Court of Appeal has handed down its judgment in four disputes relating to the reasonableness of replacement hire vehicles.

The Court’s judgment of 18 June 2020 found that reasonableness is assessed on a ‘like for like’ basis, not what type of vehicle could have met the claimant’s needs.

The decision is a significant departure from Nguyen v Cassim [2019] NSWSC 1130 and Droga v Cannon [2015] NSWSC 1910.

Background

In a landmark development last year, the NSW Supreme Court determined that a claimant’s entitlement to compensation for a non-income producing replacement vehicle is to be assessed with reference to the type of vehicle which could have satisfied their needs. The Court had found that compensation is to represent the inconvenience resulting from the loss of use, rather than the temporary use of a vehicle of equivalent value or prestige.

That decision was appealed.

Appeal decision

On appeal, the Court rejected the view that reasonableness is to be assessed by only considering what vehicle would meet the inconvenience. The Court characterised the loss suffered (of not having the use of a prestige vehicle) as more than just the inconvenience of not having the vehicle to transport themselves ‘from A to B’. Rather, the Court emphasised the loss of use of the vehicle’s features which include the safety, luxury and prestige of the damaged vehicle. That is, a claimant is entitled to hire a ‘broadly comparable’ replacement vehicle.

The claimant must still discharge the onus of proving a need for a replacement vehicle, but the defendant bears the onus of establishing that the particular vehicle hired was in a more luxurious category than the damaged vehicle.

This decision re-instates the position previously set out in Anthanasopoulos v Moseley (2001) 52 NSWLR 262 in that damages should be calculated by reference to the market rate of hiring an equivalent replacement vehicle.

Implications for insurers

Insurers will no doubt see an increase in claims for luxury or higher category hire cars as a result of this decision.

However, it should be noted that even after the need is satisfied, a claimant has a duty to mitigate loss. The claimant’s cost of hiring should be no more than reasonably needed to hire such an equivalent vehicle.  This can be called into question if defendants are able to adduce evidence that a similar vehicle could have been hired for a cheaper daily rate, from a location nearby to the claimant’s place of residence.

Hall & Wilcox maintains a database of hire car rates which are collected daily from various locations across Australia.

Further, insurers should bear in mind when attempting to recover insured losses that this decision will help to establish that ‘need’ is not confined to the satisfaction of bare necessities.

Lee v Strelnicks; Souaid v Nahas; Cassim v Nguyen; Rixon v Arsalan [2020] NSWCA 115