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District Court of Western Australia |
Last Updated: 16 March 2017
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION : PERTH
CITATION : BEAMISH -v- KANAKIS [2017] WADC 33
CORAM : DERRICK DCJ
HEARD : 8 FEBRUARY 2017
DELIVERED : 15 MARCH 2017
FILE NO/S : APP 69 of 2016
BETWEEN : CATHERINE BEAMISH
Appellant
AND
JAMES KANAKIS
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram : MAGISTRATE COCKRAM
File No : PE GCLM 307 of 2015
Catchwords:
Appeals - Appeal against decision of Magistrate
awarding damages for loss of use of non-income earning motor vehicle - Damages
assessed
by magistrate by reference to cost of hiring comparable vehicle -
Principles to be applied in assessing damages payable for the loss
of use of a
non-income earning motor vehicle
Legislation:
Accident Towing Services Act 2007 (VIC)
Magistrates Court (Civil Proceedings) Act 2004 (WA)
District
Court Rules 2005 (WA)
Result:
Appeal allowed
Damages awarded varied
Representation:
Counsel:
Appellant : Mr C G Colvin SC & Mr G J Pynt
Respondent : Mr M D Howard SC & Ms J L W Henderson
Solicitors:
Appellant : SRB Legal
Respondent : Jonathan D'Arcy & Co
Case(s) referred to in judgment(s):
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Anthanasopoulos v Moseley [2001] NSWCA 266; (2001) 52 NSWLR 262
Bent v Highways and Utilities Construction Ltd [2010] EWCA Civ 292
Brocklehurst v Wolinski [2015] WADC 36
Butler v Bennett [2007] WADC 107
Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Dimond v Lovell [2002] 1 AC 385
Droga v Cannon [2015] NSWSC 1910
Giles v Thompson [1993] UKHL 2; [1994] 1 AC 142
Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161
Hoskins v Armstrong [2008] WADC 168
Livingstone v Rawyards Coal Co (1880) 5 App Cas 25
Lowe v Pearce [2016] NSWLC 5
Pattni v First Leicester Buses Limited [2011] ECWA Civ 1384
Poole v Smith's Car Sales (Balham) Ltd [1962] 2 All ER 482
Regan v Gibson [2010] WADC 144
Saric v Tehan [2011] VSCA 421
The Owners of No 7 Steam Sand Pump Dredger v The Owners of SS 'Greta Holme' [1897] AC 596
The Owners of Steamship 'Mediana' v The Owners, Master and Crew of Lightship 'Comet' [1900] AC 113
Wong v Maroubra Automotive Refinishers Pty Ltd; Ayres v Maroubra Automotive Refinishers Pty Ltd [2015] NSWSC 222
Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463
Introduction
1 Ms Beamish appeals against the judgment of Magistrate Cockram in Kanakis v Beamish, MC/CIV/PER/GCLM 307 of 2015, awarding Mr Kanakis damages in the sum of $16,813.03, plus interest at the rate of 6% per annum from 6 August 2014 - 24 August 2016 plus costs. His Honour delivered written reasons for his decision on 24 August 2016.
2 Ms Beamish seeks orders that the appeal be allowed and that the respondent's claim be dismissed with costs, alternatively, that the appeal be allowed and that the damages awarded to the respondent be substantially reduced.
3 The appeal raises for consideration the issue of the approach to be taken in assessing damages for the temporary loss of use of a non-income producing motor vehicle where the loss of use is the result of damage caused to the vehicle by a negligent third party.
Non-contentious factual background
4 On 27 November 2010 Mr Kanakis purchased a 2006 Porsche Boxster convertible (the 2006 Porsche) from Chellingworth Motors for $63,636.36. As at the date of purchase the odometer reading for the 2006 Porsche was approximately 7,000 km.
5 On 6 August 2014 Ms Beamish negligently drove her vehicle into the rear of the 2006 Porsche causing it to be damaged.
6 On 14 August 2014 Mr Kanakis took the 2006 Porsche to a repair shop so that the damage to it could be repaired. Ms Beamish's insurer, RAC Insurance Pty Ltd (RAC), paid for the costs of the repairs to the 2006 Porsche. As at 14 August 2014 the odometer reading for the 2006 Porsche was 39,541 km.
7 On 18 August 2014 Mr Kanakis entered into a rental agreement with Compass Corporation Pty Ltd (Compass) pursuant to which Compass hired to Mr Kanakis for his use a 2014 Porsche Boxster (the 2014 Porsche) while the 2006 Porsche was being repaired. The odometer reading for the 2014 Porsche as at 18 August 2014 was 2,470 km.
8 Under the rental agreement Compass hired the 2014 Porsche to Mr Kanakis at a daily rate of $540.91. This sum included $49 per day for insurance. In addition to the daily rate Compass charged a delivery fee of $60.
9 On 18 August 2014 Mr Kanakis also entered into a 'Mandate and Authority to Act' agreement with Compass (the Mandate). The arrangement under the Mandate was, in essence, that Mr Kanakis would not have to make any upfront payment to Compass for the costs associated with hiring the 2014 Porsche, and that Compass would seek to recover the costs of providing the 2014 Porsche to Mr Kanakis from Ms Beamish or her liability insurer.
10 Mr Kanakis made use of the 2014 Porsche for a period of 32 days, this being the period of time it took for the 2006 Porsche to be repaired (the repair period). The total charge raised by Compass for the use of the 2014 Porsche during the repair period inclusive of GST and the delivery fee was $19,106.03.
11 During the repair period Mr Kanakis did require the use of a replacement vehicle for the 2006 Porsche. He needed a vehicle for work, to visit his girlfriend, to attend the gym, to attend dancing lessons, to run errands for his parents and to visit his father in hospital.
12 On 24 September 2014 Compass issued an invoice to RAC, Ms Beamish's liability insurer, for the sum of $19,106.03. RAC did not pay the invoice. RAC assessed the value of Mr Kanakis' compensable loss for the repair period to be $2,288. RAC paid this amount to Compass. Compass did not accept the payment of $2,288 in full satisfaction of its invoice. Rather, it accepted the payment as part payment only of its invoice leaving an outstanding balance of $16,818.03.
13 Mr Kanakis was also insured with RAC. Under Mr Kanakis' insurance policy Mr Kanakis had the option to hire a car free of charge for the repair period. This cost would have been charged by a car rental company (Budget) to RAC at the rate of $71.50 per day which would have totalled $2,288. It was on this basis that RAC assessed the value of Mr Kanakis' compensable loss for the repair period to be $2,288.
14 On 12 January 2015 Mr Kanakis initiated his claim in the Magistrates Court seeking to recover $16,818.03 from Ms Beamish.
15 Although it is Mr Kanakis and Ms Beamish who are the parties to the litigation, the reality of the situation is that the dispute that has given rise to the litigation is between Compass and RAC.
16 It is not clear why the magistrate awarded damages in the amount of $16,813.03 as opposed to damages in the amount of $16,818.03. In any event, the unexplained $5 differential is, not surprisingly, of no concern to the parties. It is of no relevance to the issues raised on the appeal.
Statutory provisions and principles governing the appeal
17 The appellant's right to appeal against the decision of the magistrate is created by s 40 of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (the Act). The appeal must also be conducted in accordance with r 50 of the District Court Rules 2005 (WA) (the DCR).
18 It is clear from s 40(4) of the Act and r 50(1) and r 50(2) of the DCR that an appeal from a decision of a magistrate to the District Court is by way of rehearing: Butler v Bennett [2007] WADC 107 [10]; Hoskins v Armstrong [2008] WADC 168 [3]; Regan v Gibson [2010] WADC 144 [7]; Brocklehurst v Wolinski [2015] WADC 36.
19 Given that an appeal from a decision of a magistrate is by way of rehearing it is necessary for the appellant to demonstrate error in the court below: Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 [14]. Thus the appellate powers of the District Court are only exercisable if the appellant demonstrates that the decision made by the magistrate was the result of some legal, factual or discretionary error: Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 [23].
20 The orders that the District Court may make on the appeal are set out in s 43 of the Act.
Appeal notice
21 Ms Beamish's appeal notice contains 10 lengthily expressed grounds of appeal. However, Ms Beamish now presses only grounds 2, 4, 6, 7, 9 and 10.
22 During the hearing of the appeal Ms Beamish's counsel asserted that the various grounds of appeal that are pressed encompass and give rise to four questions for determination (ts 3, 14). The questions identified by counsel are, in substance, as follows:
23 In identifying these questions counsel for Ms Beamish accepted that if, contrary to the contention put on Ms Beamish's behalf, the magistrate did apply the correct legal principles in assessing the quantum of Mr Kanakis' damages, there could be no challenge to the magistrate's assessment of the damages payable with the result that the third and fourth of the above identified questions would not need to be addressed.
24 Counsel for Mr Kanakis did not attempt to suggest that Ms Beamish's counsel's identification of the above four questions did not adequately reflect or encompass the substance of the grounds of appeal. Indeed, he approached the making of his oral submissions by substantially addressing the questions posed by Ms Beamish's counsel albeit without making express reference to each of the questions in turn.
25 Given the approach of counsel for both parties, I propose to approach the matter by dealing with the first and second of the above posed questions, and then if necessary the third and fourth questions, before turning to deal briefly and directly with each of the pursued grounds of appeal.
What are the correct legal principles to apply in assessing quantum for loss of a non-income producing private motor vehicle?
The magistrate's identification of the correct legal principle
26 In his reasons for decision the magistrate, after conducting a review of a number of cases decided in this country and in England, expressed his conclusions as to the principles to be applied in assessing the damages to be paid to Mr Kanakis for the loss of use of the 2006 Porsche during the repair period in the following terms [40] - [42]:
27 Thus the magistrate concluded, in essence, that Mr Kanakis did not, in order to recover damages for the temporary loss of the 2006 Porsche, have to prove that he needed a replacement vehicle, and that the damages payable to Mr Kanakis should be measured not by reference to the cost of hiring a vehicle that met his needs during the repair period, but rather by reference to the cost of hiring the closest vehicle that would compensate him for his loss of use of the 2006 Porsche, namely the 2014 Porsche. Consistently with this expressed conclusion his Honour proceeded to assess the damages payable to Mr Kanakis by reference to the rate paid for the hire of the 2014 Porsche and consequently awarded the sum of $16,813.03.
28 The magistrate's reference in [40] to the decisions in Moseley, Yates and Lowe was a reference to the decisions in Anthanasopoulos v Moseley [2001] NSWCA 266; (2001) 52 NSWLR 262; Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463 and Lowe v Pearce [2016] NSWLC 5 respectively
The parties' contentions - summary
29 On behalf of Ms Beamish it is submitted that the approach of the magistrate as reflected by his Honour's above cited statements, which she asserts involved him putting to one side the issues of use, need and value in assessing the damages payable to Mr Kanakis, was contrary to established principles for determining compensation for the loss of non-income producing chattels. It is submitted that the approach that the magistrate should have adopted, having regard to the relevant authorities and consistently with the fundamental principle governing the award of damages in negligence cases, namely that the damages should place the injured party, so far as money can do it, in the position that he or she would have been in if the injury had not occurred (Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39), was to assess the damages payable to Mr Kanakis by reference to all the relevant circumstances. It is submitted that the relevant circumstances consisted of the use to which Mr Kanakis put the 2006 Porsche and the consequential precise nature of Mr Kanakis' need for a replacement vehicle (referred to by Ms Beamish's counsel as 'the demonstrated need'), the nature and value of the 2006 Porsche, the nature and value of the 2014 Porsche, and the nature and value of vehicles readily available for hire by Mr Kanakis from a mainstream hire car company capable of meeting the precise nature of his need for a replacement vehicle.
30 On behalf of Mr Kanakis it is submitted that the magistrate's reasoning and conclusions as disclosed in the above cited pars of his reasons for decision are in accordance with the relevant authorities and are consistent with the above referred to fundamental principle governing the award of damages in negligence cases. It is submitted that need, and consequently the other circumstances identified by Ms Beamish as also being relevant to the quantification of the damages payable to Mr Kanakis for the temporary loss of the 2006 Porsche, are simply not relevant to the quantification process. It is submitted that on the authorities all that Mr Kanakis was required to demonstrate in order to recover damages was loss of use, or perhaps more precisely, loss of the ability to use the 2006 Porsche during the repair period. Alternatively, it is submitted that even if need for a replacement vehicle is relevant to the quantification process, all that Mr Kanakis was required to demonstrate was that he needed a replacement vehicle in the sense that he would have used the 2006 Porsche during the repair period if it had not been damaged, and that the precise nature of Mr Kanakis' need, that is, the demonstrated need, is irrelevant to the quantification process. It is submitted that the appropriate way to 'fix quantum is by reference to the cost of hiring a similar comparable vehicle' or the closest that one can get to a comparable vehicle (ts 26, 36). In other words, it is submitted that the damages should be fixed by reference to the cost of hiring a vehicle which is the closest available vehicle in make and model to the damaged vehicle, which in the present case was the 2014 Porsche.
31 As will be apparent from what I have said it is necessary, in order to address and deal with the parties' competing contentions as to the proper legal principles to be applied in assessing the damages in this case, to undertake a review of the authorities which bear upon the issue and upon which the parties rely.
The relevant Australian authorities
Anthanasopoulos v Moseley
32 The starting point in any consideration of the relevant Australian authorities is the decision in Anthanasopoulos v Moseley. Both parties place significant reliance on this decision in support of their respective positions.
33 In Anthanasopoulos the respondents were plaintiffs in four separate actions commenced in the New South Wales Local Court to recover the costs of hiring a replacement vehicle while the respondent's own vehicle was being repaired after a collision with the relevant appellant's vehicle. There was no issue that each appellant was the party at fault in the collision.
34 The respondents were each insured with NRMA. There were a number of exclusions from the cover provided by the NRMA insurance policy, including the cost of hiring a vehicle whilst the insured's damaged vehicle was being repaired. Notwithstanding this exclusion, NRMA had in place a 'Courtesy Car Program'. Under the program an insured was entitled to a courtesy car either at no cost to the insured for up to 14 days if the insured was not at fault, or at a preferential rate if the insured was at fault. Where the insured was not at fault NRMA bore the cost of the hire for the 14 day 'courtesy' period. In either case the program required the insured to have the damaged vehicle repaired by an 'NRMA approved' repairer.
35 The respondents took advantage of the Courtesy Car Program. The courtesy car was a car hired from Hertz Australia Pty Ltd (Hertz). Each of the respondents entered into the Hertz Rental Agreement directly with Hertz but NRMA was billed for the hire for the 14 day period.
36 Each of the respondent's had demonstrated at trial the need for the replacement vehicle during the repair period.
37 The appellant in each case was insured by AAMI and denied liability for the hire cost during the courtesy period.
38 The magistrate found for the respondents.
39 On appeal the appellants did not attempt to argue that it was unreasonable for the respondents to take advantage of the Courtesy Car Program. Rather, they argued that need was not the relevant criterion in assessing whether there was a recoverable loss and that the respondents had to demonstrate that they had incurred an actual loss which, in the particular case before the court, would have been the cost of the hire of the courtesy car. In advancing this argument the appellants placed reliance on the principles enunciated in Griffiths v Kerkemeyer [1977] HCA 45; (1977) 139 CLR 161. The question that was posed (among others) for determination by the Court of Appeal was whether the magistrate had erred in finding that each of the respondents had suffered any loss recoverable from the appellants [15].
40 The Court of Appeal held that the magistrate had not erred. The court held that injury to property which is a non-income earning chattel and which deprives a party of the actual use of the chattel is compensable.
41 In her judgment Beazley JA, with whom Handley JA agreed [1], pointed out that the magistrate had based his determination of the respondents' claims on the applicability of Griffiths v Kerkemeyer and had not been referred to the line of English cases commencing with The Owners of No 7 Steam Sand Pump Dredger v The Owners of SS 'Greta Holme' [1897] AC 596 (The Greta Holme) and The Owners of Steamship 'Mediana' v The Owners, Master and Crew of Lightship 'Comet' [1900] AC 113 (The Mediana) which deal with the recovery of damages for injury to property [25]. Her Honour then undertook a review of this line of cases [25] – [55]. In doing so her Honour cited [26] - [28] the following statements of principle made by Lord Halsbury LC in The Greta Holme (601, 602):
It is a sufficiently familiar head of damages between individuals that, if one person injures the property of another, damages may be recovered, not only for the amount which it may be necessary to spend in repairs, but also for the loss of the use of the article injured during the period that the repairing may occupy ...
I am not quite certain that I understand what is meant by the use of the word 'tangible'. If by that is meant that, in order to entitle a plaintiff to recover, you must be able to shew that during the period of repair to his vessel, or his cart or his horse, some specific money has been lost by the period of time during which the article has not been susceptible of being used, the principle so affirmed would, as it appears to me, go very far beyond the particular case now before your Lordships. But to my mind it is a principle for which there is no authority whatever. This public body has to pay money like other people for the conduct of its operations, and if it is deprived of the use of part of its machinery, which deprivation delays or impairs the progress of their works, I know no reason why they are not entitled to the ordinary rights, which other people possess, of obtaining damages for the loss occasioned by the negligence of the wrongdoer.
42 Beazley JA also cited [29] - [30] the following well-known statements made by the Earl of Halsbury LC in The Mediana (116, 117):
... where by [a] wrongful act of one man something belonging to another is either itself so injured as not to be capable of being used or is taken away so that it cannot be used at all, that of itself is a ground for damages ...
... by a wrongful act of the defendants the plaintiffs were deprived of their vessel. When I say deprived of their vessel, I will not use the phrase 'the use of the vessel'. What right has a wrongdoer to consider what use you are going to make of your vessel? More than one case has been put to illustrate this: for example, the owner of a horse, or a chair. Supposing a person took away a chair out of my room and kept it for twelve months, could anybody say you had a right to diminish the damages by shewing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? ... as I say, the broad principle seems to me to be quite independent of the particular use the plaintiffs were going to make of the thing that was taken ...
43 Having completed her review of the English line of cases Beazley JA concluded as follows [58] – [59]:
44 Accordingly, it is in my view clear from Beazley JA's judgment that in her Honour's view if a person's (non-income earning) vehicle is damaged by the negligence of a third party, and as a result the person is deprived of the use, or more precisely the ability to use, his or her vehicle for a period of time while repairs to the damage are undertaken, the person has a right to compensation arising out of the person's loss of the ability to use the vehicle. The person's loss of the ability to use the vehicle, even if the person does not actually need to use the vehicle during the period in which it is being repaired, is of itself compensable. Further, the fact that a replacement vehicle is provided (gratuitously) to the person by another third party for the vehicle damaged does not affect the right to recover damages.
45 As is apparent from Beazley JA's above cited statements, her Honour did not proceed to deal with the question whether the damages that the magistrate did order to be paid by the appellants to the respondents were an appropriate measure of the respondents' compensable loss.
46 Ipp AJA, with whom Handley JA also agreed [1], stated that he agreed with Beazley JA's reasons and conclusions but wished 'merely to add some additional comments of my own' [72]. In making his additional comments Ipp AJA noted that Beazley JA had traced the line of cases since The Greta Holme 'which establishes a plaintiff's right to damages for the loss of use of a non-income producing chattel' [76]. His Honour stated that in the recent decision in Dimond v Lovell [2002] 1 AC 385, 406 Lord Hobhouse 'accepted that where the chattel is non-income earning (as was Ms Dimond's car) "there may still be scope for awarding general damages for loss of use" ', and that his Lordship had accepted that this followed from the general principles of common law [77]. His Honour further stated that in the course of argument on the appeal there had been 'much discussion' as to whether there was a similarity between the respondents' claims for damages for loss of use of their vehicles and Griffiths v Kerkemeyer claims by injured plaintiffs in personal injury actions [78]. His Honour then said the following [79] - [81]:
47 Thus Ipp AJA, by introducing the concept of need into the question whether the loss of a non-income producing chattel is of itself compensable, would appear at first blush to be expressing conflicting views to those of Beazley JA. Indeed, this is the submission made on behalf of Mr Kanakis. However, in my opinion although Ipp AJA introduces the concept of 'need' in his analysis he is not expressing a substantially different view to that expressed by Beazley JA, at least in relation to the situation where the person who has been deprived of the use of his or her vehicle due to the negligence of a third party does not demonstrate an actual need to use the vehicle during the period of loss of use. This is clear, in my view, when one looks closely at what Ipp AJA clearly considered is encompassed in the concept of need, namely to keep or replace the damaged chattel during the period in which it is being repaired and cannot be used. To put it another way, I do not consider that Ipp AJA, by referring to the concept of need, was expressing the opinion that a person's loss of use of a damaged vehicle, in circumstances where the person does not actually need to use the vehicle during the period in which it is being repaired, is not of itself compensable. Rather, all that his Honour was saying, in my respectful view, is that in that scenario compensation is payable because of the existence of the 'need' to keep the vehicle while it cannot be used.
48 Unlike Beazley JA, Ipp AJA did in his judgment proceed to give some consideration to the quantification of the damages payable to a person who has lost the use of a non-income producing chattel. In this regard his Honour said the following [83] – [84]:
49 Having made the above statements Ipp AJA then turned his attention to the 'relevance of the fact that the need of the respondent in each case was satisfied by the gratuitous provision of a replacement car by NRMA' [85]. His Honour considered that such an advantage was to be regarded as collateral to the damage suffered by the respondents and therefore not something which deprived them of the ability to recover damages [86]. In this respect his Honour said the following [87] - [88]:
50 In summary, and bearing in mind that Handley JA expressly agreed with both Beazley JA and Ipp AJA, the following principles can in my opinion be derived from the judgments in Anthanasopoulos and the cases referred to in the judgments.
51 First, if a person's non-income earning vehicle is damaged by the negligence of a third party, and the person is deprived of the ability to use the vehicle for a period of time while repairs to the damage are undertaken, the person has a right to compensation arising out of the person's loss of the ability to use the vehicle: Handley JA [1]; Beazley JA [58]; Ipp AJA [80] - [81].
52 Second, the right to compensation for loss of the ability to use a non-income earning vehicle damaged by the negligence of a third party exists even if the person does not demonstrate an actual need to use the vehicle during the period in which it is being repaired. The loss of the ability to use the vehicle is itself compensable (although the absence of a need to use the vehicle during the period in which it is being repaired may impact upon the amount of damages payable): Handley JA [1]; Beazley JA [58]; Ipp AJA [80] - [81].
53 Third, if a person who has lost the use of their non-income producing vehicle damaged by the negligence of a third party wishes to be awarded damages calculated by reference to the cost of hiring a replacement vehicle, the person must demonstrate a need to hire the replacement vehicle: Handley JA [1]; Ipp AJA [84].
54 Fourth, if a person who has lost the use of their non-income producing vehicle damaged by the negligence of a third party is provided with a replacement vehicle gratuitously by another party in response to an established need for a replacement vehicle, this does not affect the person's right to recover damages for the loss of the use of their vehicle calculated by reference to the cost of hiring a replacement vehicle: Handley JA [1]; Ipp AJA [84], [87] - [88].
55 Fifth, if damages for the loss of a non-income producing vehicle damaged by the negligence of a third party are to be calculated by reference to the cost of hiring a replacement vehicle, the relevant rate is the market rate of hiring the replacement: Handley JA [1]; Ipp AJA [84].
56 As is apparent from what I have just said, the issue which the judgments in Anthanasopoulos do not address is what is capable of constituting a 'replacement vehicle' for the purposes of any calculation of damages based on the costs of hiring the replacement. It is to be noted in this regard that there was no suggestion in Anthanasopoulos that the vehicles hired by the respondents were anything other than appropriate replacements for their damaged vehicles.
Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463
57 In Yates v Mobile Marine Repairs the plaintiff claimed damages for loss arising from the negligent repair of a game fishing vessel known as Eagle (the Eagle). The plaintiff was the owner of the Eagle. The Eagle was purely a pleasure craft used by the plaintiff for his enjoyment.
58 As part of his claim for damages the plaintiff claimed damages for loss of use of the Eagle for the period for which it was non-operational. The plaintiff asserted that damages for his loss could be calculated in either of the following two ways:
59 Despite putting forward the above two alternative methodologies for calculating his damages, the plaintiff at trial accepted the figure of $240,263 as an appropriate damages sum for loss of use.
60 The defendants did not dispute that damage to property depriving the owner of its use is compensable even though the owner cannot prove tangible pecuniary loss, that is, that he or she is out of pocket in any particular sum. Nor did the defendants dispute the calculation of the amount for loss of use ultimately relied upon by the plaintiff (that is, the calculation resulting in the figure of $240,263). Rather the defendants contended that although the principle that damage to property depriving the owner of its use is compensable even though the owner cannot prove tangible pecuniary loss is applicable to a 'not for profit chattel', the principle is not applicable to a chattel used purely for pleasure such as the Eagle.
61 Palmer J rejected the defendant's submission [82]. His Honour considered that the submission was inconsistent with the 'explanation of principle' given by the Earl of Halsbury LC in The Mediana (117). His Honour then cited the relevant passage from the Earl of Halsbury LC's judgment [82]. The passage (part of which I have already set out above in the course of reviewing the judgment of Beazley JA in Anthanasopoulos), is as follows (117):
... the broad proposition seems to me to be that by a wrongful act of the defendants, the plaintiffs were deprived of their vessel. When I say deprived of their vessel, I will not use the phrase 'the use of the vessel'. What right has a wrong doer to consider what use you are going to make of your vessel? More than one case has been put to illustrate this: for example, the owner of a horse, or of a chair. Supposing a person took away a chair out of my room and kept it for 12 months, could anybody say you had a right to diminish the damages by shewing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? The proposition so nakedly stated appears to me to be absurd; but a jury have very often a very difficult task to perform in ascertaining what should be the amount of damages of that sort. I know very well that as a matter of common sense what an arbitrator or a jury very often do is take a perfectly artificial hypothesis and say, 'Well, if you wanted to hire a chair, what would you have to give for it for the period'; and in that way they come to a rough sort of conclusion as to what damages ought to be paid for the unjust and unlawful withdrawal of it from the owner. Here, as I say, the broad principle seems to me to be quite independent of the particular use the plaintiffs were going to make of the thing that was taken, except – and this I think has been the fallacy running through the arguments at the bar – when you are endeavouring to establish the specific loss of profit, or of something that you otherwise would have got which the law recognises as special damage. In that case you must shew it, and by precise evidence, so much so that in the old system of pleading you could not recover damages unless you had made a specific allegation in your pleading so as to give the persons responsible for making good the loss an opportunity of enquiring into it before they came into court. But when we are speaking of general damages no such principle applies at all, and the jury might give whatever they thought would be the proper equivalent for the unlawful withdrawal of the subject-matter then in question. It seems to me that that broad principle comprehends within it many other things. There is no doubt in many cases a jury would say there really has been no damage at all: 'We will give the plaintiffs a trifling amount' – not nominal damages, be it observed, but a trifling amount; in other cases it would be more serious. It appears to me, therefore, that what the noble and learned Lords who gave judgment in your Lordships' House intended to point out, and what Lord Herschell gives expression to in plain terms, was that the unlawful keeping back of what belongs to another person is of itself a ground for real damages, not nominal damages at all.
62 Palmer J, having cited the above passage from The Mediana, continued as follows [83] - [85]:
63 In my view it is clear from Palmer J's judgment, and in particular from his Honour's quoting of the passage from the Earl of Halsbury LC's judgment in The Mediana, that his Honour accepted the correctness of the principle that I have said can be derived from the decision in Anthanasopoulos, namely that if a person's non-income earning chattel is damaged by the negligence of a third party, and as a result the person is deprived of the ability to use the chattel for a period of time while repairs are being undertaken to repair the damage, the person has a right to compensation arising out of his or her loss of the ability to use the chattel regardless of whether or not the person demonstrates an actual need to use the chattel. This is so even if the chattel is one used purely for pleasure.
64 There is, however, a further point that can in my opinion be derived from Palmer J's judgment, namely that the need for the use of the chattel, in a practical sense as opposed to a commercial sense, may be relevant to the assessment of damages payable for loss of use. I say this because it is clear from Palmer J's judgment that it was his Honour's finding that the plaintiff had a substantial practical need for the use of the Eagle (specifically, use for purposes of enjoyment) that formed the basis of his Honour's decision to award the damages claimed by the plaintiff as opposed to merely nominal damages as contended for by the respondents.
Saric v Tehan [2011] VSCA 421
65 In Saric v Tehan the respondent's motor vehicle was damaged in an accident caused by the appellant's negligent driving. The respondent sued the appellant in the Magistrates Court for damages totalling $29,091.67. The amount claimed comprised a little over $24,000 for the cost of repairing the vehicle and $4,598 for the cost of a replacement hire car. The magistrate awarded the respondent only $4,598 for the cost of the hire car. The repair costs were disallowed by the magistrate on the basis that the respondent had suffered no loss in relation to them because the repairer was not entitled to recover them from the respondent as a result of the application of provisions contained in the Accident Towing Services Act 2007 (Vic).
66 The Court of Appeal allowed the appeal. The court's reasoning for allowing the appeal in respect of the cost of repairing the vehicle is of no relevance in the present context. Of some relevance in the present context, however, are the court's references with apparent approval to the statements made by Beazley JA and Ipp AJA in Anthanasopoulos. Thus in the course of his judgment, Mandie JA, with whom Harper JA and Robson AJA agreed, said the following [50] - [52]:
Wong v Maroubra Automotive Refinishers Pty Ltd; Ayres v Maroubra Automotive Refinishers Pty Ltd [2015] NSWSC 222
67 In Wong v Maroubra the two plaintiffs were each the owners of a vehicle insured by NRMA. Each vehicle was damaged in an accident. In each case the two truck drivers attending the scene of the accident nominated the premises of a particular repairer, namely the defendant, as a destination to which the vehicle could be towed and the plaintiff consented to that course. In each case the plaintiff did not ultimately request the defendant to undertake any repairs.
68 After the vehicles had been delivered to the defendant, the defendant refused to release possession of either of them until payment by the relevant plaintiff or NRMA of towing and storage fees. Consequently the plaintiffs brought an action alleging that the defendant was liable in detinue by reason of having wrongly refused to deliver up possession of the vehicles upon demand.
69 McCallum J upheld the plaintiffs' claims in detinue. It is not necessary for me to deal with the reasons for her Honour reaching this decision.
70 Having upheld the claims in detinue McCallum J turned to deal with the assessment of the plaintiffs' damages. After noting that she had not been referred to any authority directly on point as to the appropriate measure of damages in the case of a private motor vehicle wrongly detained, her Honour said the following [67] - [73]:
71 It is, in my view, apparent from McCallum J's above cited statements that her Honour, consistently with the principles that I have identified as being derivable from the decision in Anthanasopoulos, considered firstly that the damages comprised of the costs of hiring the replacement vehicles were payable because each of the plaintiffs had proved that she needed a replacement vehicle during the period in which her car was being detained and secondly, that the plaintiff's right to compensation was not in any way diminished by reason of the fact that the replacement vehicle was provided gratuitously to her by her insurer. It needs to be noted, however, that the issue of the appropriateness or otherwise of the replacement vehicles was not in issue in the case. It was not suggested that the replacement vehicles were anything other than appropriate replacements for the vehicles owned by each of the plaintiffs.
Droga v Cannon [2015] NSWSC 1910
72 In Droga v Cannon the proceedings that gave rise to the appeal concerned a claim in the Magistrates Court by the appellant for damages to her car arising out of a collision with a bus owned and driven by the defendants. The defendants admitted liability. The magistrate awarded damages to the appellant but declined to order the defendants to pay her a sum calculated by reference to the claimed cost of hiring a replacement vehicle, essentially because he was not satisfied that the appellant had demonstrated that she had a need for a replacement vehicle.
73 The appellant appealed against the magistrate's decision on a number of grounds. Some of the grounds related to whether the appellant had been accorded procedural fairness. However, and relevantly for present purposes, one of the grounds was that the magistrate had erred at law by finding that the appellant had to prove that she 'needed' the use of a hire car as this was a compensable loss she was entitled to once the defendants had admitted liability [3].
74 Harrison J dismissed this ground of appeal [54]. During the course of his judgment His Honour, albeit in the context of dealing with the appellant's other grounds of appeal, held that the need for a replacement vehicle was something that the appellant had to establish in order to recover damages for the costs of obtaining a replacement vehicle [25], [36], [46] - [47]. Thus at one point in his judgment his Honour said the following [46] - [47]:
(a) the temporary loss of use of Ms Droga's vehicle during repairs was a loss for which the defendants were liable to compensate Ms Droga by an award of general damages; and
(b) the question whether, during the period of wrongful deprivation of her vehicle, Ms Droga intended or needed to use it for any particular purpose, or for any purpose at all, was irrelevant to the defendants' liability to pay general damages: Anthanasopoulos v Moseley at [1], [29] - [37], [72] and [88]; The Mediana [1900] AC 113;
(c) the question whether, during the period of wrongful deprivation of her vehicle, Ms Droga intended or needed to use it for any particular purpose, or for any purpose at all, always remains relevant to the quantum of the damages that the defendants were liable to pay in respect of the temporary loss of the use of the vehicle: Anthanasopoulos v Moseley at [1], [59] and [72]; The Mediana at 118.
75 Harrison J, in directly addressing the relevant ground of appeal, summed up the position a little later in his judgment in the following terms [54]:
76 It may well be, bearing in mind his Honour's above cited statements in [47], that his Honour intended to say in [54] that 'the defendants did not ever admit or represent that Ms Droga was not required to establish her need for a replacement vehicle'. In any event the position taken by the defendants as set out by Harrison J in [46], which his Honour would appear to have accepted as correct, in my opinion accurately reflects the legal principles that can be derived from Anthanasopoulos and the other cases to which I have already referred.
77 Harrison J also made some obiter comments about the quantum of the appellant's damages claim for the cost of the replacement vehicle. In this regard his Honour said, under the heading 'An aside', the following [57] - [61]:
78 It is clear from Harrison J's above statements that in his Honour's view the application of the basic principle that the purpose of damages is to put the plaintiff in the position he or she would have been in but for the tortious act, does not require damages to be calculated by reference to the cost of hiring a comparable car to the one damaged, and that the issue will be what is the cost of hiring a replacement vehicle that can adequately meet the plaintiff's identified needs. To put it another way, it is clear that in Harrison J's view if damages for the loss of a non-income earning vehicle damaged by the negligence of a third party are to be calculated by reference to the cost of hiring a replacement vehicle, the precise nature of a plaintiff's need for the replacement vehicle, or to use Ms Beamish's terminology the demonstrated need for the replacement vehicle, is relevant to the identification of the market rate for hiring a vehicle that can properly be used in the calculation of the damages. Indeed, it would appear from his Honour's statements that in his view the nature of the need for the replacement vehicle may properly result in the identification of the market rate for hiring a vehicle of lesser value to that of the vehicle damaged as being the rate to be used in the calculation of damages. In these circumstances it is not surprising that Ms Beamish places reliance (albeit, and for reasons that I will elaborate upon in due course, not unqualified reliance) on the statements made by Harrison J in support of her above outlined contentions as to the established principles for determining compensation for the loss of non-income producing chattels. Ms Beamish submits, in effect, that despite the obiter nature of Harrison J's statements I should, given that they were made by a judge of a Supreme Court of another state, treat the statements as being highly persuasive.
79 On behalf of Mr Kanakis it is contended that the statements made by Harrison J should not be followed largely for reasons identified in the case of Lowe v Pearce to which I will now turn and upon which Mr Kanakis places considerable reliance.
Lowe v Pearce
80 In Lowe v Pearce the plaintiff brought an action in the Small Claims Division of the New South Wales Local Court claiming damages arising out of a motor vehicle collision caused by the negligence of the defendant. The collision resulted in damage to the plaintiff's 2009 Holden Commodore.
81 Following the collision the plaintiff took his damaged vehicle to a repair shop to be repaired. On the same day she entered into a credit hire agreement for a replacement vehicle with an entity called 'Right2Drive'. She took possession of a Ford Falcon vehicle under the hire agreement at a basic daily rental rate of $90 per day together with excess reduction and vehicle registration recovery fees. The plaintiff appointed Right2Drive as her agent to recover the hire charges as damages for loss of use from the defendant. The plaintiff had not at the time of commencing her claim in the Local Court been required to pay Right2Drive the hire charges for the replacement vehicle.
82 The parties agreed that the plaintiff was entitled to claim for the loss of use of the motor vehicle for the period during which it was being repaired. However, the defendant disputed the quantum of the claim on two grounds. First, the defendant contended that the plaintiff's loss of use should not be assessed by reference to the market rate of a replacement vehicle by reason of the failure of the plaintiff to establish a need for a replacement vehicle. Second, the defendant contended that if the plaintiff needed a replacement vehicle, the plaintiff failed to establish a need for a replacement motor vehicle of a similar quality to that which was damaged. The defendant relied, in support of the second of its contentions, on the above referred to statements made by Harrison J in Droga v Cannon [57] - [61].
83 As to the first of the grounds on which the defendant disputed the quantum of the plaintiff's claim, the Assessor held that the plaintiff was required to establish a need for a replacement vehicle to meet her daily transport requirements in order to have damages for loss of use of a private motor vehicle assessed by reference to the market rate for a replacement vehicle: [5] - [9]. In arriving at this decision the Assessor relied upon the statements made by Ipp AJA in Anthanasopoulos and McCallum J in Wong v Maroubra. The Assessor's decision in this regard was in my view, and as is apparent from what I have already said in discussing the other Australian cases, clearly correct.
84 In relation to the second of the grounds on which the defendant disputed the quantum of the plaintiff's claim, the Assessor identified the relevant question to be 'whether the market rate should be determined by reference to the market rate for a motor vehicle similar in nature to the plaintiff's damaged vehicle or by reference to a cheaper alternative replacement' [10]. After making reference to the above cited obiter statements made by Harrison J in Droga v Cannon [10] - [14], and concluding that as the statements were obiter he was not bound to follow them [15] - [30], the Assessor said the following [31] – [33]:
85 Having made these observations the Assessor proceeded to explain why in his view the obiter statements made by Harrison J should not be followed by him. The Assessor said the following [34] - [45], [48], [51] - [53]:
'... the question of quantum is not in issue here and it is thus unnecessary for any comment to be made as to the principles which would govern the amount of damages in any given case.'
Ipp AJA made additional comments regarding the right to damages for loss of use of non-income producing chattels, concluding at [80]:
'In my opinion, the true basis of claims for damages for injury to a non-income producing chattel is also based on need. In the Greta Holme line of cases, the plaintiffs were held, generally to be entitled to damages based on the cost (including the capital cost) of keeping and maintaining the damaged vessels while they were being repaired. Underlying the measure of damages so adopted is the owner's need to keep (or replace) the damaged chattel during the period while it is being repaired and cannot be used.'
'I do not agree. Read in context, all his Honour was doing in this passage was explaining the rationale behind the principle as laid down in The Greta Holme. His Honour would have been surprised to find himself quoted as the authority for reversing what Lord Halsbury LC had said in The Mediana.'
'Where, by reason of that need, they were required to hire a replacement chattel, the damages were to be measured by reference to the market rate of hiring a replacement chattel.'
'That sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.'
...
'It is accepted by both parties that the true measure of damages, where a replacement vehicle has been hired, is the market rate or 'spot rate' of hire for the relevant reasonable substitute vehicle in the nearest market.' [citations omitted]
...
86 Having expressed the above views and conclusions, the Assessor decided that the cost of hiring a replacement vehicle with Right2Drive was on the evidence no more expensive than daily rates offered by other hire car companies for similar full-sized vehicles [54]. The Assessor therefore allowed the daily rate of $137.66 per day for the period during which the plaintiff's vehicle was being repaired. The Assessor entered a verdict and judgment in favour of the plaintiff in the sum of $1,580.26 with interest [54].
87 There are, I think, a number of points arising out of the above cited statements of the Assessor that can usefully be made at this juncture.
88 First, although it is true to say that Harrison J did not, in making his obiter statements, cite any authority in support of his statements it is tolerably clear that his Honour was in [60] setting out what he considered to be the applicable principles. In these circumstances it is difficult to understand the Assessor's assertion that Harrison J was not intending to 'lay down principles' new or otherwise.
89 Second, although it is in my view true to say that there is nothing contained in the decisions in Anthanasopoulos or Wong v Maroubra that provides direct support for the proposition that damages should be assessed by reference to a lesser quality replacement vehicle absent proof of the need for an equivalent replacement, nor is there anything in these decisions which directly contradicts the views expressed by Harrison J in Droga v Cannon. As I have already pointed out, the question of what was capable of constituting an appropriate replacement vehicle for the purposes of any calculation of damages based on the costs of hiring the replacement vehicle was not an issue that arose for consideration in those cases.
90 Third, although the Assessor does not expressly state what he means by a 'reasonably equivalent' replacement vehicle, it is relatively clear, given the facts of the case before him and the authorities to which he referred and placed reliance upon, that he used the phrase to refer to a vehicle the features and attributes of which are comparable to the damaged vehicle.
91 Fourth, it is clear that in the Assessor's view, contrary to the view expressed by Harrison J, the provision of anything other than a 'reasonably equivalent' replacement vehicle (save perhaps in the case of 'high end expensive luxury vehicles') would not accord with the fundamental objective of a damages award, namely to put the person whose vehicle is negligently damaged in the position that they would have been in had the damage not occurred.
92 Fifth, the Assessor accepted that once the need for a replacement vehicle is established, damages are to be assessed by reference to the market rate for a 'reasonably equivalent' replacement.
93 Sixth, the Assessor apparently considered that 'when dealing with high end expensive luxury vehicles' the provision of a 'reasonably equivalent' replacement will not in all circumstances necessitate the finding of a 'like for like', or in other words comparable replacement vehicle irrespective of the cost. In such a case the issue of the reasonableness of hire costs will, in the Assessor's view, come into play.
English authorities
94 The parties also referred to three additional English decisions in support of their respective positions. It is therefore appropriate to review these decisions also.
Giles v Thompson [1993] UKHL 2; [1994] 1 AC 142
95 In Giles v Thompson the plaintiffs sustained injuries and damage to their motor vehicles in accidents for which the defendants were to blame. The plaintiffs entered into agreements with car hire companies for the hire of substitute vehicles while their own cars were being repaired. The agreements provided that the companies should have the right to pursue actions against the defendants in the plaintiffs' names.
96 In proceedings at first instance the plaintiffs claimed, among other things, sums by way of special damages in respect of the car hire companies' hire charges. The defendants claimed, among other things, that the hire agreements were champertous and unlawful.
97 The judge at first instance gave judgment for the plaintiffs for damages including the hire charges.
98 The defendants appealed to the Court of Appeal. The appeal was dismissed. The defendants appealed to the House of Lords.
99 The House of Lords dismissed the appeals, holding that the agreements were not champertous.
100 In the course of his speech Lord Mustill, with whom Lord Ackner, Lord Jauncey of Tullichettle and Lord Lowry agreed, addressed the question of whether the plaintiffs had suffered loss. In this context his Lordship said the following (166-167):
I now turn to the wholly distinct question whether the motorists have proved that they have suffered a recoverable loss through the unavailability of their own cars pending repairs. The defendants say that they have not, because the cars were replaced by substitute vehicles which the motorists were able to use free of charge. In essence, it is said that the motorists have mitigated what would otherwise have been a valid claim for general damages reflecting their loss of the opportunity to make use of their own vehicles.
On the opinion which I have formed of the obligations created by the obscure and incomplete terms of the two agreements this contention admits of a very short answer. In my judgment the motorists do not obtain the replacing vehicle free of charge. If the motorist had simply persuaded a garage to hire her a substitute on credit, without any of the superstructure of the present transaction, it would be no answer to a claim for damages equivalent to the sums due to the garage that these sums would not in practice be paid until a judgment in the motorist's favour had provided the necessary funds: for the amount of the outstanding liability represents the loss suffered by the motorist, and the question whether the motorist intends to apply the damages recovered in satisfaction of the debt, or in some wholly different way, cannot affect his right to recovery.
...
In the light of this conclusion I find it unnecessary to discuss the question, by no means easy, what the position would have been if the use of the substitute car really had been free; as, for example, if it had been lent by a kindly friend. To do so would require a reconciliation of cases such as Harlow & Jones Ltd v Panex (International) Ltd [1967] 2 Lloyd's Rep 509, Donnelly v Joyce [1973] EWCA Civ 2; [1974] QB 454, McAll v Brooks [1984] RTR 99 and Cosemar SA v Marimarna Shipping Co Ltd [1990] 2 Lloyd's Rep 323. This question, which is of much general importance, is in my view far better left for decision when it actually arises, rather than as a by-product of two schemes which have not, as I suggest, been fully worked out.
101 Lord Mustill also dealt in his speech with the question whether the plaintiffs had proved the need for the replacement hire car. In this regard his Lordship said the following (167):
... [I]t has been questioned whether, even if all the issues of law are decided in favour of the motorists, there is sufficient proof that the motorist acted reasonably in hiring a replacement vehicle to justify an award in full of the company's hire charges – or, indeed, it would seem any award at all. The question is before the House because the county court judge held:
'As a matter of principle ... if you deprive me of an article of use to me, you have no complaint whatever if I hire another to replace it ... If I have a car simply for my own pleasure, I regard it, in principle, [as] wrong that I should be required, before being able to hire a car and charge it to the wrongdoer, to prove that I need it as opposed to merely desire the use of it.'
Whilst I have sympathy with this point of view I think it too broad. The need for a replacement car is not self-proving. The motorist may have been in hospital through the accident for longer than his vehicle was off the road; or he may have been planning to go abroad for a holiday leaving his car behind; and so on. Thus, although I agree with the judgments in the Court of Appeal that it is not hard to infer that a motorist who incurs the considerable expense of running a private car does so because he has a need for it, and consequently has a need to replace it if, as a result of a wrongful act, it is put out of commission, there remains ample scope for the defendant in an individual case to displace the inference which might otherwise arise.
Further than this I am not prepared to go ...
102 A number of observations can be made with respect to the above quoted passages from Lord Mustill's speech.
103 First, with respect to what his Lordship described as the by no means easy question of 'what the position would have been if the use of the substitute car really had been free', the authorities in Australia to which I have referred support the proposition that plaintiffs in such a situation would still, if they proved the need for a replacement vehicle, be able to claim damages calculated by reference to the cost of hiring a replacement vehicle.
104 Second, Lord Mustill clearly accepted that before a person who has lost the use of his or her vehicle as a result of a third party's negligence can claim damages for loss of use by reference to the cost of hiring a replacement vehicle, the person must prove that he or she needed his or her vehicle and consequently had a need to replace it. His Lordship's view in this regard is consistent with the position taken in the above referred to Australian authorities.
105 Third, the defendants' argument to which Lord Mustill referred in his speech, namely that the plaintiffs mitigated what would otherwise have been a valid claim for general damages by hiring replacement vehicles free of charge, does not appear to me to be an argument that could be successfully run in this country. I say this because the Australian authorities to which I have referred support the proposition, in my view, that the cost of hiring an appropriate replacement vehicle goes to the issue of the quantification of damages for loss not to mitigation of loss suffered.
Bent v Highways and Utilities Construction Ltd [2010] EWCA Civ 292
106 In Bent v Highways and Utilities Construction the plaintiff had an accident in his Mercedes sports car which was worth about £72,000. The first defendant driver was at fault. The second defendant was the first defendant's insurer.
107 The defendants accepted liability. They accepted that the plaintiff was in need of a replacement vehicle while his vehicle was being repaired. They also accepted that the plaintiff was entitled to hire a broadly equivalent car to his own damaged Mercedes and that they would have to pay appropriate hire charges. However, the defendants did not accept that they should be required to pay the full hire charges for the vehicle that the plaintiff actually hired, namely an Aston Martin worth about £105,000. The Aston Martin was provided to the plaintiff by a credit hire company.
108 The defendants argued that the hire charges for the Aston Martin were too much for two reasons. First, because the provided Aston Martin was more expensive than the plaintiff's own car and therefore likely to be more costly to hire. Second, and in any event, the plaintiff pursuant to his duty to mitigate ought to have hired from the 'spot' market which would have been cheaper than hiring on credit (the spot market being the rate at which a broadly similar car could be hired on the market).
109 The trial Judge rejected the defendants' arguments and allowed the plaintiff's claims. The defendants appealed.
110 The Court of Appeal allowed the appeal. The Court held that the trial judge had erred in failing on the evidence that was before him to attempt to assess the spot hire rate for a broadly similar car to the plaintiff's car at around the time that the plaintiff's car was damaged. Further, in the course of his judgment Jacob LJ, with whom the other members of the court agreed, said the following [10]:
111 The Court of Appeal's apparent acceptance of the proposition that the plaintiff was entitled to damages calculated by reference to the spot hire rate 'for a broadly similar car' to the plaintiff's car would appear to be generally consistent with the approach adopted by the Assessor in Lowe v Pearce. I note in this regard, however, that the Court of Appeal's decision was not cited by the Assessor in support of his assertion that there is 'persuasive authority within the United Kingdom to the effect that a plaintiff is entitled to damages assessed by reference to a reasonably equivalent substitute' [45].
112 The point that I have made above in discussing Giles v Thompson in relation to the issue of mitigation applies equally to the second of the plaintiff's arguments advanced before the Court of Appeal in Bent v Highways and Utilities Construction.
Pattni v First Leicester Buses Limited [2011] ECWA Civ 1384
113 In Pattni v First Leicester Buses the two appeals before the Court of Appeal involved the plaintiff hiring a replacement car on credit terms. The precise facts of the appeals before the court and the specific points raised on the appeals are of no particular relevance in the present context, although it should be noted that it was accepted for the purposes of both appeals that it was reasonable for the plaintiffs to have hired the particular make and model of car that they did for the period of hire in question [5]. The relevance of the decision lies in statements made by Aikens LJ (Moore-Bick LJ and Pill LJ agreeing) in his judgment which in effect summarise the legal position that has been arrived at in the United Kingdom. Under the heading 'The Legal Background' his Lordship said the following [29] - [36]:
114 The first part of the statement of principle made by Aikens LJ in [30] above reflects the law in Australia. However, my above made observations in relation to the issue of mitigation apply equally to his Lordship's statement in [30] that it is the duty of the innocent claimant to mitigate his loss of use of a car by hiring a replacement car.
115 A further point to be made about Aikens LJ's comments is that it is clear that in his Lordship's view the claimant cannot claim as damages the hire costs of a replacement vehicle if the hire costs are 'unreasonable'. Thus as his Lordship stated, if the car hired 'was bigger or better than was reasonable in the circumstances' damages will be reduced to an 'amount that would have been needed to hire the equivalent to the damaged car'. It is at least arguable, in my view, that implicit in his Lordship's statement is an acceptance of the proposition that the nature of the person's need for the replacement vehicle and the value of the replacement vehicle is relevant to the determination of the reasonableness or otherwise of incurring the costs of hiring the replacement vehicle. I say this because it is difficult to envisage how one could determine if the replacement car 'was bigger or better than was reasonable in the circumstances' without having regard to the nature of the person's need and the value of the replacement vehicle.
116 Aikens LJ's above quoted further statements relating to the impact that hiring a replacement car on credit may have on the amount of damages recoverable, while illuminating are not directly relevant to the present case given Ms Beamish's concession that if the magistrate did apply the correct legal principles in assessing the quantum of Mr Kanakis' damage there can be no challenge to the magistrate's assessment of damages payable to Mr Kanakis.
Further analysis and conclusion
117 It is, in my view, abundantly clear from both the Australian and English decisions to which I have referred that if a person who has lost the use of their non-income producing vehicle damaged by the negligence of a third party wishes to be awarded damages calculated by reference to the cost of hiring a replacement vehicle, the person must demonstrate a need to hire the replacement vehicle. It is also, in my view, clear from the Australian authorities to which I have referred that if damages for loss of a non-income producing vehicle damaged by the negligence of a third party are to be calculated by reference to the cost of hiring a replacement vehicle, the relevant rate is the market rate of hiring the replacement vehicle.
118 The question which therefore remains is what is the approach that should be taken in determining what is an appropriate replacement vehicle by reference to which the market rate hire costs are to be quantified? This is a question the answer to which is yet to be finally and definitively answered by the courts in this country. Of the Australian cases to which I have referred, only Harrison J in Droga v Cannon and the Assessor in Lowe v Pearce have canvassed the issue directly, with Harrison J's approach providing some support to the position contended for by Ms Beamish and the Assessor's approach providing some support for the position contended for by Mr Kanakis. In England the position as revealed by the cases to which I have referred would appear to be that an appropriate replacement vehicle is one which is 'broadly similar' to the claimant's damaged car and is otherwise a reasonable replacement in all the circumstances. However, it must be said that in the English cases to which I have referred the issue of whether the replacement was 'broadly similar' and/or a reasonable replacement in all the circumstances was not one that required consideration.
119 What then is the approach that should be taken in determining what is an appropriate replacement vehicle by reference to which the market rate hire costs are to be quantified? Is the correct approach as contended for by Ms Beamish, namely that in determining what is an appropriate replacement vehicle I should take into account the precise nature of the need for the replacement vehicle, the nature and value of the damaged vehicle, the nature and value of the replacement vehicle and the nature and value of vehicles readily available for hire from a mainstream hire car company capable of meeting the precise nature of the need for a replacement vehicle? Alternatively, is the correct approach as contended for by Mr Kanakis, namely that in determining what is an appropriate replacement vehicle the need for the replacement and the other circumstances identified by Ms Beamish are irrelevant and that the only question that needs to be asked is whether the replacement vehicle is a 'similar comparable vehicle' to the damaged vehicle? Ultimately I have come to the conclusion that the correct approach, subject to some qualifications, is that advocated for on behalf of Ms Beamish. My reasons for coming to this conclusion are as follows.
120 As I have already stated, there is no question in my view (contrary to the primary submission made on Mr Kanakis' behalf) that if a person who has lost the use of their non-income producing vehicle damaged by the negligence of a third party wishes to be awarded damages calculated by reference to the cost of hiring a replacement vehicle, the person must demonstrate a need to hire the replacement vehicle. This being the case it seems to me to be contrary to principle and logic to ignore the precise nature of the need of the person for the replacement vehicle in determining what is an appropriate replacement vehicle and consequently what is the market hire rate by which damages payable are to be quantified. If a person cannot prove need for a replacement, he or she is not entitled to damages calculated by reference to the cost of hiring a replacement. Why then, if the person proves need, should the nature of the need be irrelevant to the calculation of the damages? In my opinion it should not be.
121 It may be that in certain situations taking into account the precise nature of the need for the replacement vehicle will dictate the provision of a replacement vehicle that is more valuable than the damaged vehicle. The point can be demonstrated by reference to the following example proferred by Ms Beamish's counsel.
122 The plaintiff is the owner of a 10 year old Landcruiser worth $30,000. The Landcruiser is damaged in an accident caused by the negligence of the defendant. The Landcruiser will take three weeks to repair. The accident occurred two days before the commencement of the plaintiff's planned three week family holiday. The planned holiday involved off road driving. The plaintiff therefore needed the off road capacity of the Landcruiser for the holiday. He also needed the long range fuel tank capacity of the Landcruiser. The only Landcruisers that are available for hire are new Landcruisers worth considerably more than the plaintiff's 10 year old vehicle. However, the hiring of a vehicle of equivalent value to the plaintiff's Landcruiser which did not have the off road capacity of the Landcruiser or the long range fuel tank capacity of the Landcruiser would not meet the nature of the plaintiff's need for a replacement vehicle. The provision of such a vehicle to the plaintiff would not properly compensate him for his loss of use of the Landcruiser. Thus in these circumstances the appropriate replacement vehicle would be a new Landcruiser with the result that the damages payable to the plaintiff would be calculated by reference to the market rate of hiring a new Landcruiser even though the value of the new Landcruiser is significantly greater than the value of the plaintiff's Landcruiser.
123 On the other hand, and contrary to the obiter view apparently expressed by Harrison J in Droga v Cannon, I do not consider that taking into account the nature of the need of a person for a replacement vehicle should be seen as providing a justification for replacing the person's damaged vehicle with a vehicle of lesser value. I say this because the provision to a person of a replacement vehicle of lesser value than his or her damaged vehicle, albeit one which meets the nature of the person's need, would be inconsistent with the basic purpose of awarding damages in tort, namely to put the person, so far as money can do it, in the position they would have been in had the damage to their vehicle not occurred. Thus it is in this way that the value of the damaged vehicle and the value of the replacement vehicle becomes relevant to the identification of an appropriate replacement vehicle.
124 I note in this context that in the course of his oral submissions Ms Beamish's counsel made clear, no doubt with Harrison J's statements in Droga v Cannon in mind, that it was not being suggested on Ms Beamish's behalf that any vehicle of an inferior quality to the one being replaced will be an appropriate replacement provided the replacement vehicle is capable of meeting the particular needs of the person whose vehicle has been damaged. Accordingly, to this extent, and consistently with the view I have expressed, counsel did not place unqualified reliance on Harrison J's statements in support of Ms Beamish's case. Counsel put the position in these terms (ts 15):
Because what you're looking for is a replacement having regard to the use. It still needs to be a replacement. So if I have an Aston Martin and two weeks after I take delivery of it I drive it into something at the end of the street just as I am approaching my house, if that were the circumstance and the car is in for repair, you don't say, 'Well here is your Nissan Pulsar to drive around'. Because there is no sense in which that is a replacement.
Why? Because of value, because of the attributes of the vehicle, the attributes of the chattel. And that's because when you are looking at replacement your measure is compensating both for intrinsically the thing itself and for the use to which you want to put it because you've demonstrated use.
125 Counsel again addressed the issue later in his submissions in these terms (ts 21):
So there is nothing in the demonstrated need that requires you to have a Porsche in particular or a Porsche Boxster. But we accept that if a vehicle was offered as a replacement, that was say ... an old battered 3000 value sedan, then it would not be a replacement. Not because of the use but because of – you also are providing compensation for the loss of the possession of the value of the chattel itself. And that's why the use of that kind of inferior replacement is not appropriate.
You don't justify an inferior replacement by reference to the demonstrated need because you're also compensating for the intrinsic value of the asset. Equally, you don't justify a much more valuable replacement by reference to need unless there is a demonstrated need to support it. Hence in our written submissions, the Landcruiser example.
...
There is no evidence of that character and not surprisingly it's hard to conjure how you would say that I require the character of the use to which I am going to put this vehicle requires me to have a Porsche Boxster. You would have to be the kind of person who would not be able to be seen in the presence of your friends at the golf club unless you were in such a vehicle.
And to the credit of Mr Kanakis he was not such a person. In cross-examination he accepted, I could have a Nissan Pulsar ...
126 As is apparent from what I have already said, I accept the above submissions of Ms Beamish's counsel subject to one qualification. The one qualification relates to counsel's references to the 'attributes of the chattel'. If counsel by his references to the 'attributes of the chattel' was intending to submit that such attributes are a relevant consideration in addition to the concepts of need and value, then I do not accept the submission, at least in the context of claims for loss of possession of non-income earning motor vehicles. I say this because if one is to take into account the 'attributes' of the damaged vehicle (however one defines that term) this is, in my view, akin to saying that the appropriate replacement vehicle is one that is comparable to the damaged vehicle as opposed to one that meets the particular needs of the person whose vehicle has been damaged and which is of an equivalent value to the damaged vehicle. To put it another way, if the attributes of a vehicle are said to include anything much more than its body type, then to bring into play the attributes of the damaged vehicle (for example, a 2006 Porsche Boxster) may well result in the person whose vehicle has been damaged being provided with a replacement vehicle which is not necessary to meet the precise needs of the person and which is of a greater value than the damaged vehicle (which is, of course, precisely what Ms Beamish contends has occurred in the present case).
127 The conclusion that I have arrived at in relation to the correct approach to be taken in determining what is an appropriate replacement vehicle by reference to which market rate hire costs are to be quantified are clearly different to those arrived at by the Assessor in Lowe v Pearce. By way of further explanation for my different conclusion I make the following additional observations in relation to the Assessor's decision.
128 First, and for reasons that are apparent from what I have already said, I do not agree with the Assessor that the approach I favour is inconsistent with the decisions of the superior courts in this country. Nor, for that matter, do I consider that my approach is obviously inconsistent with the English authorities given that they appear to accept that the overriding requirement is that the replacement vehicle is a reasonable replacement in all the circumstances. The notion of reasonableness is, in my opinion, consistent with taking into account considerations of need and value.
129 Second, I do not agree with the Assessor that the approach I favour is inconsistent with the fundamental purpose of an award of damages in negligence claims. In my view the calculation of damages by reference to the market rate of hiring a replacement vehicle which meets the particular needs of a person and which is of an equivalent value to the person's damaged vehicle is entirely consistent with the purpose of an award of damages, namely to put the person, to the extent that money can, in the position he or she would have been in had he or she not suffered the negligently inflicted harm. My view in this regard is broadly consistent with that expressed by Harrison J in Droga v Cannon.
130 Third, I do not accept that the application of the approach I favour could lead to the 'clearly absurd' result put forward by the Assessor in [43] of his judgment. Even if it is assumed for the sake of the argument that an upturned milk crate could in truth meet the demonstrated need of a person for his or her chair, a milk crate would not in any sense equate to the value of the chair and would therefore not constitute adequate compensation for the loss of use of the chair.
131 Finally, if as the Assessor suggests, to take into account the nature of the need for a replacement vehicle is inconsistent with the authorities and established principles, it is difficult to see why the concept of reasonableness should become relevant when dealing with 'high end expensive luxury vehicles' or for that matter any other vehicle. At what point does the quantification of damages by reference to market rate of hiring a 'reasonably equivalent' replacement vehicle become 'unreasonable'? What constitutes a 'high end expensive luxury vehicle'? In my respectful view the Assessor's introduction of the concept of reasonableness despite concluding that the law is that damages are to be assessed by reference to the cost of hiring a 'reasonably equivalent' replacement vehicle is somewhat arbitrary.
132 In summary, and for the reasons I have stated, if damages for loss of a non-income producing vehicle damaged by the negligence of a third party are to be calculated by reference to the cost of hiring a replacement vehicle, the determination of what is an appropriate replacement vehicle by reference to which the market rate hire costs are to be quantified requires the taking into account of the precise nature of the need of the person who has lost the use of the damaged vehicle, the value of the damaged vehicle, and the value of available replacement vehicles which are capable of meeting the precise need of the person who has lost the use of the damaged vehicle.
Did the magistrate apply the correct legal principles in assessing quantum for the respondent's loss of use of the 2006 Porsche?
133 I turn to the second of the questions posed for my determination.
134 The magistrate in the relevant pars of his judgment ([40] - [42] cited above and [44]) held as follows:
135 The magistrate's statement that Mr Kanakis did not have to prove need in order to recover damages for the loss of the use of the 2006 Porsche is in itself correct. As I have pointed out, Mr Kanakis did not have to prove that he needed to use the 2006 Porsche in order to recover some amount of damages for the loss of the ability to use the 2006 Porsche. However, and as I have already illustrated by reference to the relevant authorities, Mr Kanakis was required to prove that he needed to use the 2006 Porsche in order to recover damages compensating him for the cost of hiring a replacement vehicle. Accordingly, if the magistrate intended by his statement to suggest that Mr Kanakis did not have to prove that he needed to use the 2006 Porsche in order to recover damages compensating him for the cost of hiring a replacement vehicle, his Honour, with respect, erred.
136 Further, and for reasons that are apparent from what I have said in answering the first of the questions posed for my determination, I also consider that the magistrate erred in holding that the damages payable to Mr Kanakis should not be measured by reference to either the nature of Mr Kanakis' need for a replacement vehicle or the value of the 2006 Porsche.
137 In summary, in my respectful opinion the magistrate, in assessing the damages payable to Mr Kanakis for the loss of the use of the 2006 Porsche, did fail to apply the correct legal principles.
What was the evidence before the magistrate as to the value of the 2006 Porsche?
138 I turn to the third of the questions posed for my consideration.
139 Although the question posed refers to the issue of the evidence that was before the magistrate as to the value of the 2006 Porsche, it became clear as Ms Beamish's counsel developed his argument that the question that was really being asked is what finding can be made on the evidence before the magistrate as to the value of the 2006 Porsche.
140 In relation to the 2006 Porsche the following matters are not in dispute between the parties:
141 No evidence was adduced at trial as to the actual value of the 2006 Porsche as at the date on which it was damaged, that is, 6 August 2014. However, Ms Beamish submits that I can nonetheless find that the value of the 2006 Porsche at the time of the collision was substantially less than the $63,636.36 that Mr Kanakis had paid for it four years earlier. It is submitted that I can make this finding on two separate bases.
142 First, it is submitted that I can take judicial notice of the fact that modern vehicles depreciate in value every year (ts 17). In support of this submission Ms Beamish points to the decision in Poole v Smith's Car Sales (Balham) Ltd [1962] 2 All ER 482, 486 in which judicial notice was taken of a seasonal decline in the market value for second-hand cars.
143 In response to the submission made on behalf of Ms Beamish that I can take judicial notice of the fact that modern vehicles depreciate in value every year, counsel for Mr Kanakis conceded that 'that may well be right' (ts 40). However, counsel also pointed out that 'he did not know what happens with Porsches in the specific rather than what one might infer happens in the general' (ts 40).
144 I accept that I could, in the case of a mass produced 'standard non-luxury' type vehicle, take judicial notice of the fact that the vehicle had depreciated in value each year. However, the 2006 Porsche cannot, on any view of the matter, be described as a mass produced standard non-luxury type vehicle. In these circumstances, and bearing in mind that the decision in Poole v Smith's Car Sales was concerned with second hand Vauxhall cars, I do not accept that I can, via the judicial notice route, make a finding that the 2006 Porsche was as at the date of the collision worth substantially less than the amount that Mr Kanakis had paid for it four years earlier.
145 The second of the bases upon which Ms Beamish submits that I can find that the 2006 Porsche was at the date of the collision worth substantially less than what Mr Kanakis paid for it, relies upon the evidence given at trial by the witness Mr John Leigh. Mr Leigh was called to give evidence by Ms Beamish. Mr Leigh's evidence-in-chief, or at least the bulk of it, was adduced by the tendering of his witness statement dated 28 June 2016 (exhibit 7).
146 Mr Leigh is, or at least was at the time of trial, an audit assessor employed by RAC. He had been employed in this capacity by RAC for three years. Prior to commencing employment with RAC he had been employed by Suncorp as an assessor for three years. In pars 4 - 10 of his statement Mr Leigh states the following:
147 At the end of par 10 of his statement Mr Leigh lists the vehicles that he had been asked to provide values for as at August/September 2014. The list includes a 2006 Porsche Boxster as well as a number of other vehicles.
148 The relevant extract from Glass's Guide (the Guide) by reference to which Mr Leigh ultimately gave his evidence as to the range of values applicable to the 2006 Porsche was not (for reasons that need not be elaborated upon) actually attached to his statement but rather tendered separately (exhibit 8.2) (the Extract). The Extract reveals that in August 2014 the 'below average' price, 'average price' and 'above average' price of a 2006 Porsche Boxster 987 2D Roadster Inline 6 2687 CC MPFI 5 SP Automatic Tiptronic (this being the model of the 2006 Porsche) was $25,900, $30,300 and $36,100 respectively. So on the basis of Mr Leigh's evidence taken in conjunction with the Extract, Ms Beamish submits that I should find that the value of the 2006 Porsche in August 2014 was $30,300 to $36,100.
149 On behalf of Mr Kanakis it is submitted that I should not make the finding contended for by Ms Beamish. The reasoning behind this submission can be summarised as follows.
150 The Guide contains an introductory section headed 'How to use the Guide'. Within this introductory section of the Guide there is a further sub-heading 'Price Variations'. Under the heading 'Price Variations' the following appears:
Kilometres: The bulk of used vehicles that come onto the market within four years of their initial sale as a new vehicle come from one of the fleet, government, business or rental areas. Such vehicles, because of the environment in which they operate, average between 15,000 and 25,000 km per annum. Those vehicles that have travelled substantially more or less than the higher spec vehicles of this parameter may require the trade and retail figures to be adjusted.
After three years the bulk of used vehicles are in the hands of private owners, at which time the average distance a private owner will travel each year is about 15,000 km.
Fleet vehicles generally incorporate both business and private travel in their annual distances, while privately owned vehicles annual distances are generally just that – private km.
From the time that they are new, most prestige/luxury vehicles travel an average of 15,000 km per year.
Our approach to annual km allowance is reflected in the right hand column beside each vehicle. The odometer allocation starts from the date of a vehicle's release and is adjusted each month.
151 Thus it is apparent from the above extract from the introductory section to the Guide that the prices for a vehicle set out in the Guide are based on a certain average number of kilometres according to the vehicle's age and that therefore adjustments should be made for higher or lower odometer readings.
152 In his evidence Mr Leigh agreed that based on the approach taken in the Guide to the annual kilometres allocation for vehicles, the number of kilometres that the 2006 Porsche would been assumed to have travelled by August 2014 for the purpose of coming up with the above range of values for the vehicle, the vehicle having been used privately, was 128,000 (ts 76). In his oral evidence Mr Leigh also agreed that if the 2006 Porsche had done considerably fewer than 128,000 km as at August 2014, which of course it had, this would make a difference to the range of values for the 2006 Porsche as at that date (ts 76). He testified that if the kilometres of the vehicle in question were significantly fewer or significantly higher than the 128,000 km figure the range of values for the 2006 Porsche would have to be adjusted (ts 76). He said that he was not able to provide an adjusted figure (ts 77).
153 So in light of the above evidence of Mr Leigh, Mr Kanakis submits that I cannot make the finding contended for by Ms Beamish, namely that at the time of the collision the 2006 Porsche had a value that ranged between $30,300 and $36,100.
154 I accept the submission made on behalf of Mr Kanakis. In my view the fact that the 2006 Porsche had as at August 2014 travelled only 39,541 km as opposed to 128,000 km, and the fact that Mr Leigh conceded that an adjustment would need to be made to take account of this fact, makes it unsafe to conclude that the value of the 2006 Porsche was within the range contended for by Ms Beamish. In my view the only finding that can be safely made based on the evidence adduced at trial is that the value of the 2006 Porsche in August 2014, bearing in mind that Mr Kanakis had driven the vehicle approximately 32,541 km since he had purchased it, was something less than what Mr Kanakis paid for it ($63,636.36) but something more than $36,100.
155 I note that in the written submissions filed in the appeal on behalf of Mr Kanakis, one of the arguments put forward in support of the proposition that Mr Leigh's evidence did not establish a range of values for the 2006 Porsche as at August 2014 was that Mr Leigh was not a contributor to the Guide and was not able to give evidence as to how the information contained in the Guide was gathered and collated. In other words, the submission made was, in effect, that Mr Leigh's evidence given by reference to the Guide was hearsay. This argument was not pressed by Mr Kanakis' counsel in his oral submissions.
156 At trial the evidence given by Mr Leigh by reference to the Guide was admitted as evidence of expert opinion relating to the assessment of the value of vehicles (ts 65). Further, Mr Kanakis has not lodged a cross-appeal challenging the decision of the magistrate to admit Mr Leigh's evidence. In these circumstances I do not accept the argument that Mr Leigh's evidence was incapable of establishing a range of values for the 2006 Porsche in 2014 on the basis that the evidence was inadmissible hearsay.
On all the evidence did Mr Kanakis prove that he suffered compensable loss greater than the amount already paid by RAC to Compass?
157 I turn to the fourth of the questions posed for my determination.
158 As I have pointed out in setting out the non-contentious factual background, RAC assessed the value of Mr Kanakis' compensable loss for the repair period to be $2,288. This was the amount that would have covered the cost of hiring a Nissan Pulsar for the repair period. On behalf of Ms Beamish it is submitted that this was an appropriate amount of compensation because a Nissan Pulsar would have met the particular need of Mr Kanakis for a replacement car and because the value of a new (or near new) Nissan Pulsar would not have been 'out of the ball park' compared to the value of the 2006 Porsche in August 2014 (ts 23). This submission was premised on the assumption that I would make the finding of fact contended for by Ms Beamish, namely that the value of the 2006 Porsche as at August 2014 was in the range $30,300 to $36,100.
159 At trial no evidence was adduced as to the value in August 2014 of a new or near new Nissan Pulsar.
160 My relevant finding of fact, as I have already stated, is that as at August 2014 the value of the 2006 Porsche was something less than what Mr Kanakis paid for it, but something more than $36,100. Therefore, even if it is assumed for the sake of the argument that in August 2014 a new or near new Nissan Pulsar was valued in the vicinity of $30,000 to $36,000 (something that I consider to be highly unlikely but, in the absence of evidence, will express no concluded view on) the 2006 Porsche was, on my finding, worth more than a new or near new Nissan Pulsar. Accordingly, and consistently with my above expressed conclusion as to the applicable legal principles and the relevance of value to the determination of the assessment of damages, if the amount of $2,288 did not reflect the cost of hiring for the repair period a vehicle of equivalent value to the 2006 Porsche, the payment of $2,288 to Compass did not adequately compensate Mr Kanakis for the loss of use of the 2006 Porsche.
161 This finding does not, of course, mean that I am satisfied that the damages properly payable to Mr Kanakis were those calculated by reference to the cost of hiring the 2014 Porsche. Before I could arrive at this conclusion I would need to be satisfied, again consistently with my above expressed conclusion as to the applicable legal principles, that Mr Kanakis required the 2014 Porsche to meet his particular needs, or that the 2014 Porsche was as at August 2014 of the same or at least a similar value to the value of the 2006 Porsche.
162 It is not in dispute that the new vehicle price of the 2014 Porsche was $106,490 (exhibit 4.1). Of course, the 2014 Porsche was not new as at the date of its hire to Mr Kanakis. However, it was, to use the words of Ms Beamish's counsel, 'near new' (ts 24). It had only travelled approximately 2,500 km.
163 The value of the 2014 Porsche was touched upon in the evidence given by Mr Leigh. During the course of cross-examination Mr Leigh gave the following evidence (ts 77):
And were you asked to value a 2014 Porsche in August/September 2014 that had done 2,500 km? --- No.
And do you agree with me that – I think is it a notorious fact – that as soon as you drive a new car out of the showroom it loses value? --- Well, on most vehicles.
And a Porsche? --- It would depend on the specifics.
Yes. But as a general rule? --- Generally, most cars, but some luxury cars can attach a premium to them if there's waiting list.
164 Thus Mr Leigh was not willing to concede that the 2014 Porsche, as at August 2014, would inevitably have been worth less than its new purchase price of $106,490. However, even assuming that its value had depreciated by some relatively small amount by August 2014 after it had been driven 2,500 km, there is no question that it was, as at that date, worth a very substantial amount more than the 2006 Porsche.
165 Mr Kanakis did not suggest at trial that he required a Porsche Boxster to meet his particular need for a replacement vehicle while the 2006 Porsche was being repaired. To the contrary, he accepted in cross-examination that a number of other vehicles could have met his needs, including a BMW four door sedan, a Mercedes Benz C-Class, a Mercedes Benz E200, a Holden Calais, a Holden Caprice and a Hyundai (ts 27 - 28).
166 Given that Mr Kanakis did not require the 2014 Porsche to meet his particular needs during the repair period, and given that I have found that on the evidence at trial there was a significant albeit unquantifiable difference in value as at August 2014 between the 2006 Porsche and the 2014 Porsche, it necessarily follows, in my opinion, that Mr Kanakis did fail to prove that he suffered compensable loss equivalent to the cost of hiring the 2014 Porsche. He was, in my opinion, over compensated by the award of $16,813.03.
167 Neither at trial nor on the appeal did Mr Kanakis present his case on the basis that if he did not prove that damages should be calculated by reference to the cost of hiring the 2014 Porsche from Compass, he should nonetheless be awarded some lesser amount but still a greater amount than the amount paid by RAC to Compass. In other words, Mr Kanakis adopted an all or nothing approach.
168 In light of this all or nothing approach Ms Beamish's counsel submitted that it was incumbent on Mr Kanakis to prove on the evidence that the compensable loss that he suffered was reflected by the cost of hiring the 2014 Porsche, and that if he failed to discharge this burden he should not be awarded any amount over and above that already paid to Compass by RAC (ts 18, 23, 24). I have some difficulty with this submission. Clearly, for Mr Kanakis to make out his claim to recover the cost of hiring the 2014 Porsche he must prove that the compensable loss that he suffered was reflected by the cost of hiring the 2014 Porsche. However, I do not think that a failure by him to discharge this burden necessarily means that he is automatically disentitled to any amount over and above that already paid to Compass by RAC if the evidence adduced at trial established that the payment of the $2,288 did not amount to adequate compensation for the loss of use of the 2006 Porsche.
169 The question which therefore remains is what compensation is Mr Kanakis entitled to for the loss of the use of the 2006 Porsche during the repair period?
170 The evidence adduced at trial through Mr Leigh and a Ms Gabriela Skinner, a Senior Motor Claims Specialist employed by RAC, who was another of the witnesses called by Ms Beamish, established the following:
171 I note with respect to the Holden Caprice and Toyota Camry that on the appeal Ms Beamish ran her case on the basis that the cost of hiring these vehicles during the repair period should be taken as the cost calculated by reference to the weekly hire rate (Appellant's Submissions dated 31 January 2014, par 58)
172 The value of the proposed replacement vehicle is, for the reasons I have already explained, relevant to the determination of what constitutes an appropriate replacement vehicle. Therefore, the evidence adduced at trial which established only the market cost of hiring certain vehicles for the repair period and not the value of those vehicles as at August 2014, this being the case for the Mercedes Benz C Class, the Toyota Camry and the Holden SV6, is not particularly helpful when it comes to determining the amount of compensation that should be paid to Mr Kanakis. Furthermore, given that I have not been able to make a finding as to the precise value of the 2006 Porsche as at August 2014, there is obviously a considerable degree of imprecision in using the market hire rates for vehicles in respect of which the evidence did establish a value as at August 2014, namely the BMW, Holden Caprice and Holden Calais sportswagon, as the reference point for quantifying the damages payable to Mr Kanakis. However, I must do the best I can on the available evidence.
173 As is apparent from the above, the values of a BMW, Holden Caprice and Holden Calais sportswagon as at August 2014 were broadly similar. Further, the values were all above $36,300 and less than $63,636.36.
174 The onus is on Mr Kanakis to prove his loss. Mr Kanakis did not attempt to prove at trial the precise value of the 2006 Porsche as at August 2014. In these circumstances it seems to me that it is appropriate to calculate the damages payable to Mr Kanakis by reference to the cost of hiring the Caprice for the repair period, this being, on the evidence, a lower amount than that payable for the hire of both the BMW and the Holden Calais. I would therefore assess damages payable to Mr Kanakis at $442.56 (being $2,730.56 less the amount of $2,288 already paid by RAC).
175 It follows from my quantification of the damages payable to Mr Kanakis that the final question posed for my consideration must be answered in the affirmative.
The grounds of appeal
176 Having addressed each of the questions posed for my determination, I now turn to deal directly with the pursued grounds of appeal.
Ground 2
177 Ground 2 is expressed in the following terms:
Measure of damages by reference to 'need'
178 For the reasons that are apparent from my determination of the first and second of the questions posed for my consideration I would uphold this ground of appeal.
Ground 4
179 Ground 4 is expressed in the following terms:
A 'like for like' vehicle
(a) worth more than the Respondent's Porsche;
(b) would suit the purposes for which the Respondent used the Porsche prior to the accident;
(c) readily available for hire from a mainstream hire car company in Perth at the relevant time.
180 For the reasons that are apparent from my determination of the above four questions I would uphold this ground of appeal to the extent that it asserts that the magistrate erred in concluding that the 2014 model Porsche was the 'closest vehicle that would compensate' Mr Kanakis for the loss of the use of the 2006 Porsche.
Ground 6
181 Ground 6 is expressed as follows:
Burden of proof
(a) the Respondent failed to mitigate his loss;
(b) the Respondent's claim should be reduced for betterment;
(c) the Respondent's claim included a claim for 'non-compensable benefits'.
Particulars
(a) Mitigation was not an issue.
In a claim for loss of the use of a non-profit earning chattel, the cost of hiring a replacement chattel goes to measurement of the loss, not mitigation of it.
(b) Betterment was not an issue.
(c) The Respondent carried the burden of proving his loss.
(a) neither mitigation nor betterment were in issue;
(b) the Respondent carried the burden of proving his loss; and
(c) the Appellant did not carry the burden of proving the Respondent's claim included a claim for 'non-compensable benefits'.
182 The relevant paragraphs of the magistrate's reasons for decision, specified in this ground of appeal, are as follows [13], [45]:
'Of course, the facts in these two cases were quite different from those in this case. But I think that the principles on which they were decided are of general application, and it is possible to extract this guidance from them. It is for the defendant who seeks a deduction from expenditure in mitigation on the ground of betterment to make out his case for doing so. It is not enough that an element of betterment can be identified. It has to be shown that the claimant had a choice, and that he would have been able to mitigate his loss at less cost. The wrongdoer is not entitled to demand of the injured party that he incur a loss, bear a burden or make unreasonable sacrifices in the mitigation of his damages. He is entitled to demand that, where there are choices to be made, the least expensive route which will achieve mitigation must be selected. So if the evidence shows that the claimant had a choice, and that the route to mitigate which he chose was more costly than an alternative that was open to him, then a case will have been made out for a deduction. But if it shows that the claimant had no other choice available to him, the betterment must be seen as incidental to the step which he was entitled to take in the mitigation of his loss and there will be no ground for it to be deducted.' (underlining added)
...
183 The ground of appeal as expressed is not one that any of the above posed questions deals directly with although I have, in the context of referring to the relevant English authorities, observed that the comments made in those cases in relation to the issue of mitigation do not sit comfortably with the approach which is in my view reflected in the Australian authorities. The ground is dealt with very briefly (in one paragraph) in the written submissions filed on behalf of Ms Beamish. Further, counsel for Ms Beamish did not seek to make any oral submissions in support of the ground. Indeed, during his submissions counsel said (ts 14):
Yes. So then there are some findings about mitigation, which again, in our submission, are not part of the process here. It is not as if – what we are seeking to do is identify what is the proper measure of the loss and that measure is by reference to a market value of the vehicle that is a replacement having regard to the nature of the use and there is no issue of mitigation in relation to that. It's just identifying what that is, but that's a kind of by the way, as it were. The principal error is related to the fundamental principle being applied.
184 Mr Kanakis agrees that nothing in the magistrate's decision turned on the issues of mitigation or betterment. Further, although the ground is dealt with in the written submissions filed on behalf of Mr Kanakis in somewhat more detail than in the submissions filed on behalf of Ms Beamish, Mr Kanakis' counsel did not make any further oral submissions in response to the ground. This was understandable given the approach taken by Ms Beamish's counsel.
185 Given the relative lack of attention paid to this ground of appeal, the fact that I did not receive the benefit of detailed oral submissions on the points raised by the ground, the fact that the magistrate's decision did not turn on the issues of mitigation and/or betterment, and the fact that it is not necessary for me to deal with the ground in order to determine the appeal, I do not propose to express a concluded view in response to the ground as expressed. I do not propose to do so despite the observations I have made in relation to the issue of mitigation in dealing with the English cases.
Ground 7
186 Ground 7 reads as follows:
Ground 7 - 'Non-compensable benefits'
PARTICULARS
The cost of hiring identified in the Rental Agreement included:
(i) hire the replacement Porsche to the Respondent 'on credit';
(ii) monitor the progress of repairs for the Respondent; and
(iii) seek recovery of the hire costs from the Appellant or her insurer, not the Respondent.
Mainstream hire car companies do not provide any of the Non-compensable benefits for loss of use of a non-profit earning chattel.
187 I have already quoted [45] of the magistrate's reasons for decision.
188 As I pointed out at the beginning of my judgment, given that the appeal from the magistrate is by way of a re-hearing it is necessary for the appellant to demonstrate that the decision made by the magistrate was the result of some legal, factual or discretionary error. It therefore follows that in order to make out this ground of appeal Ms Beamish must demonstrate that it was simply not open on the evidence for the magistrate to make the finding that he did.
189 At trial the appellant called Mr Darryl Adams to give evidence. Mr Adams is a licensed commercial agent and the Senior Recoveries Specialist employed by Compass.
190 The bulk of Mr Adams's evidence-in-chief was given by the tendering of witness statements signed by him on 30 July 2015 and 8 July 2016. In pars 19 and 20 of his statement dated 30 July 2015 Mr Adams states the following:
A daily hire rate of $595.00 (Includes GST & Insurance Excess Reduction Fee)
191 When Mr Adams was being cross-examined he gave the following evidence (ts 31).
Mr Adams, Compass has conducted and is conducting these proceedings on behalf of Mr Kanakis pursuant to the mandate and authority? --- Yes.
And Compass is paying the legal fees for the lawyers acting in this matter? ---Yes.
And this is all part of the – included in the daily hire rate for the Porsche? --- No.
...
In the rental agreement, there is a daily hire rate of $541? --- Yes.
And that covers the hire cost of the vehicle and the efforts that Compass take to recover those hire costs from, in this case, Ms Beamish or her insurer? --- I – I – I don't believe that the – that it's included because if it – if there are – if the invoice is sent over and there are no objections to it, then it's paid, so, no, I don't believe that – that legal costs are built into that rate.
192 A little later in cross-examination the following exchange occurred (ts 41):
Mr Adams, are you able to say to what extent the $540.91 a day, plus GST, for the use of the Porsche Boxster that Compass allocates to the costs it incurs in trying to recover hire charges from defendants? --- No, I – I – I can't. I have nothing to do with how the rates are set or what inclusions are in them.
193 Despite Mr Adams' admission that he had nothing to do with how Compass set its hire rates, the evidence that Mr Adams did give, both in his statement and in cross-examination, did in my opinion provide a basis upon which the magistrate could properly arrive at the conclusion that the cost of hiring the 2014 Porsche did not include an allowance for 'non-compensable benefits'. I would therefore dismiss this ground of appeal.
Ground 9
194 Ground 9 is expressed in the following terms:
Ground 9 – The market cost of hiring a temporary replacement vehicle
195 This ground adds little if anything of substance to ground 4. In any event, and for reasons that are apparent from my answers to the posed questions, I would uphold the ground of appeal to the extent that it asserts that the magistrate erred by failing to conclude that the market cost of hiring a temporary replacement vehicle for the 2006 Porsche was the market cost of hiring a Holden vehicle, specifically a Caprice.
Ground 10
196 Ground 10 is expressed in the following terms:
Ground 10 – The ASCR quote
PARTICULARS
The ASCR quote was by a company that hired Porsches as special occasion cars, for example, weddings and weekends. A replacement Porsche hired from a special occasion company was not a reasonable replacement for the Respondent's Porsche having regard to the range of vehicles readily available for hire from a mainstream hire car company.
197 In [44] of his reasons for decision the magistrate said the following:
I now turn to the rate charged for the 2014 Boxter [sic]. The daily rate was $540.91 plus GST. With GST ($54.09) the daily rate would be $595. The only quote in evidence for a Boxter is from ASCR Sports Car Rentals ('ASCR') – pars 17 and 18 of Exhibit 4.1. The quoted rate is $550 per day for a hire of five days or more. I do not know if that is inclusive or exclusive of GST. I proceed on the basis that it is inclusive of GST. That vehicle has an insurance excess of $5,000. The insurance excess on the 2014 Boxter was reduced from $5,500 to $990. Further, the Boxter from ASCR required a security bond of $5,000. Being a bond, I assume that sum had to be paid up front. Mr Kanakis paid no bond for the 2014 Boxter. Given the above matters, I am satisfied that the rate of $595 per day for the 2014 Boxter was not unreasonable.
198 I accept that the magistrate did make reference to, and take into account, the ASCR quote in coming to the conclusion that the rate charged by Compass for the hire of the 2014 Porsche was 'not unreasonable'. This being the case, and given my finding that the magistrate erred in assessing the damages payable to Mr Kanakis by reference to the cost of hiring the 2014 Porsche, it necessarily follows that I also find that the magistrate made the error as alleged in par 19 of this ground. On this basis I would uphold this ground of appeal. I note, however, that if I had not found that the magistrate had erred in quantifying damages by reference to the cost of hiring the 2014 Porsche, I would not have found that the magistrate had erred in taking into account the quote from ASCR in the way that his Honour did.
Cross-appeal - interest payable
199 After hearing the parties on the issue of costs the magistrate ordered that Ms Beamish pay Mr Kanakis' costs to be assessed if not agreed, and that Ms Beamish pay interest on the sum of $16,813.03 from 6 August 2014 to the date of judgment (ts 3 - 4; 24 August 2016). By cross-appeal Mr Kanakis seeks that the magistrate's interest award be varied so as to require Ms Beamish to pay interest as follows:
200 Thus the cross-appeal arises out of the fact that RAC did not pay the amount of $2,288 until 15 October 2014. Thus Compass was 'out of pocket' to the full extent of the amount charged for the hire of the 2014 Porsche for the period of 6 August 2014 to 15 October 2014.
201 Ms Beamish accepts that the reasoning behind the variation sought is valid and that therefore the variation, subject of course to my finding as to the damages payable to Mr Kanakis, should be made.
202 In the circumstances I would vary the interest award made by the magistrate so that Ms Beamish pay interest on the sum of $2,730.56 for the period 6 August 2014 - 15 October 2014, and interest on the sum of $442.56 ($2,730.56 less $2,288) for the period 16 October 2014 to the date of judgment
Conclusion
203 For the reasons stated I would, subject to hearing from the parties as to the precise terms of the appropriate orders, make orders in the following terms:
(1) on the sum of $2,730.56 from 6 August 2014 - 15 October 2014; and
(2) on the sum of $442.56 from 16 October 2014 to the date of judgment.
204 I will hear the parties in relation to the issue of costs.
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URL: http://www.austlii.edu.au/au/cases/wa/WADC/2017/33.html