Thinking | 12 September 2019

Hire Car Damages

On 18 June 2020, the New South Wales Court of Appeal handed down their judgment on this case. See the update here.

On 3 September 2019, the Supreme Court of NSW handed down judgment in three appeals which were heard concurrently. All three appeals dealt with a plaintiff’s entitlement to damages for a replacement vehicle hired following a motor vehicle collision.

The judgments are a classic example of the Court applying long-standing principles to modern circumstances. Justice Basten acknowledges the growth and prevalence of the ‘credit hire’ industry and considers how the relevant principles should be applied to the motor vehicle accident claims which now flood the Courts.

In each of the three appeals (citations below), Justice Basten found in favour of the liable driver and commented on the limitations on the plaintiffs’ entitlement to hire car damages.

Nguyen v Cassim [2019] NSWSC 1130 – plaintiff’s hire car damages were reduced from $17,158.02 to $7,476. 

Souaid v Nahas [2019] NSWSC 1132 – the Magistrate’s decision to award only $2,805.60 instead of the claimed $11,128.41 was upheld.

Rixon v Arsalan [2019] NSWSC 1136 – the Magistrate’s decision to award only $4,226.25 instead of the claimed $12,829.91 was upheld.

The main analysis is contained in the first case, Nguyen v Cassim. The Magistrate in that case had rejected the alternative rates proposed for a Toyota Corolla because it was not of equivalent value to the plaintiff’s vehicle. The Magistrate also did not adjust the rate charged by Right2Drive to reflect the cost of the credit hire contract, or incorporate a discount for a long-term hire period.

The Supreme Court found that the Magistrate’s approach was flawed, and that where the plaintiff’s vehicle was not an income producing vehicle, the loss of the use of that vehicle should be considered an inconvenience or loss of amenity. The appropriate measure of compensation for that inconvenience is the cost of hiring a vehicle which is adequate for the plaintiff’s particular needs (e.g. travel to and from work). Because a Toyota Corolla would have satisfied the plaintiff’s needs in this case, the cost of hiring a Toyota Corolla was the appropriate measure of damages, rather than a vehicle of equivalent value to the vehicle which was damaged in the collision.

While the Court’s decision was focused on credit hire contracts, those principles apply equally where the hire car is paid for upfront. To put it simply, a plaintiff is entitled to the cost of hiring a replacement vehicle which suits their needs (and therefore the extent of the inconvenience), not the cost of hiring a replacement vehicle of similar value to their damaged vehicle. The Court upheld the Magistrates’ decisions in the other two cases on the basis of similar reasoning.

It is important to note that there will be cases where a smaller or less prestigious replacement vehicle is not adequate for the plaintiff’s needs, for example if the plaintiff regularly transports large equipment. It is also important to note that these principles specifically apply to vehicles which are not income-producing. Finally, while the case was decided in NSW, there is no contrary decision in Victoria and so parties in the Magistrates’ Court of Victoria ought to be able to apply these cases to Victorian hire vehicle claims.

Contact

Liam Campion

Liam is an insurance lawyer with expertise in mass tort litigation including class actions, indemnity disputes and insurance fraud.

Chris Forder

Chris is a general insurance lawyer with expertise in building & construction claims and complex indemnity disputes.

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