Chong v Berry

CITATION: Chong v Berry [2007] NSWLC 33
PARTIES: Moe-Ava Chong – Nicole Berry
FILE NUMBER: 4338/06
PLACE OF HEARING: Downing Centre
DATE OF DECISION: 12/20/2007
MAGISTRATE: Magistrate H Dillon

CATCHWORDS: Damages – Quantum – Quantification of loss of use of motor vehicle after traffic accident – Quantification of loss in period before hiring replacement vehicle – Quantification of loss during period in which hire car used – “Market rate” — Receipt of non-compensable benefits – Entitlement to claim collision damage waiver fee – Pre-judgment interest – Evidence – Onus of proof – Rebuttable assumption that invoice for hire of car corresponds with market rate – Matters that rebut presumption – Lack of “straightforwardness”

LEGISLATION CITED: Civil Liability Act 2002, Civil Procedure Act 2005, Local Courts Act 1982

CASES CITED: Admiralty Commissioners v SS Susequehanna (“The Susequehanna”) [1926] AC 655, Alexander v Lang [1967] Scots LT (Sheriff Court R) 64, Athanasopoulos v Moseley (2001) 52 NSWLR 262, Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452, Batchelor v Burke (1981) 148 CLR 448, Bee v Jenson [2006] EWHC 3359 (Comm), British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673, Burdis v Livsey [2003] QB 36, Dimond v Lovell [2002] 1 AC 384, Fire and All Risks Insurance Co Ltd (1978) 140 CLR 427, Fung v Stocavaz [2006] NSWSC 1345; (2007) ANZ Insurance Cases 61-730, Giles v Thompson [1994] 1 AC 142, The Greta Holme [1897] AC 596, J&E Hall Ltd v Barclay [1937] 3 All ER 620, Lagden v O’Connor [2004] 1 AC 1067, Lodge Holes Colliery Co Ltd v Wednesbury Corporation [1908] AC 323, Marcic v Davies (20 Feb 1985), Mersey Docks & Harbour Board v Owners of the SS Marpessa (“The Marpessa”) [1907] AC 241, Patel v London Transport Executive [1981] RTR 29, Radford v De Froberville [1977] 1WLR 1262, Reid v Brown (1952) WN(NSW) 131, Screenco Pty Ltd v RL Dew Pty Ltd (2003) 58 NSWLR 720, Solomon Pacific Resources NL v Acacia Resources Ltd (1996) 19 ACSR 677, Stanton v Drayton Commercial Investment Co [1983] 1 AC 501, REPRESENTATION: Mr M. Hodges (Counsel for Plaintiff ), Anne Finnerty & Assoc (Solicitors for Plaintiff), Mr K. Oliver (Counsel for Defendant), Mason Black Lawyers (Solicitors for Defendant)

ORDERS: Verdict and judgment for plaintiff in sum of $1136.75. Costs reserved.

Reasons For Decision

1 On 18 January 2006, the defendant, Ms Nicole Berry, drove her vehicle into the rear of a car being driven by the plaintiff, Mr Moe-Ava Chong, which was stationary at traffic lights at an intersection in Narrabeen. His car was driveable but had sustained damage. Ms Berry’s vehicle was insured. Liability was admitted and the subrogated insurer, NRMA Insurance, has paid the cost of the repairs of Mr Chong’s vehicle.

2 These proceedings concern a claim by Mr Chong for compensation for the loss of the use of his car while it was under repair. Although the statement of claim was pleaded as if this was a liquidated claim, it is, in fact, a claim for general damages. He asserts his loss to be the sum of $1683. This includes a sum in respect of the period of seven days when he was without a car ($385) and a sum paid for the hire of a replacement car ($1298). The latter sum included a fee paid to reduce the excess that may otherwise have been payable by Mr Chong if the car was damaged.

3 Despite the relatively small sums involved, the matter has been transferred to the General Division because it raises a number of significant issues of principle. The defendant, in particular, seeks the court’s guidance on a number of questions in what is, effectively, a test case. The wider commercial implications for plaintiffs and insurers in the Small Claims Division of the Local Court are considerable.

The Facts

4 The facts in the matter are largely uncontentious. After Mr Chong’s car was damaged, he drove to a smash repairer but the repair shop was unable to accept the car for about a week. The proprietor of the repair shop, Mr Scott Norris, advised Mr Chong not to drive the car because gas fumes may enter the car from the damaged boot. Although the car was otherwise driveable, he did not drive it until he took it to the repair shop a week later and left it there for repair.

5 When Mr Chong brought his car in to the repair shop, Mr Norris informed him that he may be entitled to hire a car to replace his vehicle while it was under repair. He gave Mr Chong a telephone number to call. It is not entirely clear whether Mr Chong then telephoned Simply Car Hire or MVACARS but it is of little importance which occurred first. It is clear, however, that Mr Chong spoke to Mr Gregory Edmunds of MVACARS shortly afterwards and that, as a result, Mr Chong hired a car from Simply Car Hire. Although Mr Chong was not himself sure about dates, it appears from the business records tendered in evidence that the car was leased to Mr Chong on 25 January 2006 and that the conversation between Messrs Chong and Edmunds took place on 24 January.

6 The business of MVACARS is, in essence, to provide the services of organising the hire of temporary replacement vehicles for people whose cars are damaged by the negligent conduct of others and who have a compensable loss due to their need for a motor vehicle, and of recovering the damages suffered by its clients.

7 In this case, the defendant concedes that Mr Chong had a need for a car and that he suffered a loss as a result of being temporarily deprived of the use of his car.

8 In January 2006, Simply Car Hire was offering potential clients the option of paying a fee to reduce the excess for which the client could otherwise be held liable. The excess of $2700 could be reduced to $1000 on payment of a daily fee of $10, or to $500 if a daily fee of $18 was paid. Mr Chong chose the $18 per day option.

9 The daily hire rate charged by Simply Car Hire in January 2006 was $60 per day for up to 14 days hire; $55 daily for hire of 15 to 21 days and $50 per day for hire of more than three weeks. In addition, stamp duty and GST were charged to clients. According to the records produced in evidence, Mr Chong hired a 1999 Toyota Corolla from 25 January to 10 February, a period of 16 days. GST of $116.80 and stamp duty of $13.20 were charged. The sum total of $1298 also included daily hire fees of $880 and the collision damage waiver fees of $288.

10 Mr Edmunds gave evidence to the effect that MVACARS, Simply Car Hire and a number of other rental car companies, including Rental Car Group, which supplied cars to Simply Car Hire, were informally associated. The owners, directors and shareholders of the various companies were either friends or member of Mr Edmunds’s family. (This evidence is relevant to one of the defendant’s arguments below.)

The issues

11 A number of questions are to be resolved. First, does the claim to $385 properly represent and quantify in money the plaintiff’s loss of the use of his own car during the period before he hired a replacement vehicle?

12 Second, does the claim to $1298 represent a proper quantification of his loss of the use of his car during the period in which he used a hire car?

13 Both these questions raise others concerning the onus of proof; the way or ways loss of use of a chattel may be quantified in money; the reasonable assumptions that may be made concerning the use to which certain types of evidence, such as invoices from car hire companies, may be put; the limits on the use of such evidence; and the distinction between market rates of hire of vehicles and the reasonableness of the sum ultimately claimed.

14 Third, is the plaintiff entitled to recover the excess waiver fees he paid? This is a problem concerning the scope of the defendant’s liability.

15 Fourth, is the plaintiff entitled to recover pre-judgment interest?

The Pre-Hire Period

16 There is no question that, once need is demonstrated or admitted, a plaintiff in Mr Chong’s position is entitled to compensation for the loss of the use of his or her vehicle. That much is common ground between the parties in this case. The contested issue is quantification.

17 Counsel for the defendant’s subrogated insurer, Mr Oliver, argues that the plaintiff has not proven that the sum of $385, that Mr Chong asserts was the notional cost of hiring a replacement vehicle, represents a proper quantification in money of his loss, namely, the loss of use of his vehicle for seven days. He submits that there is no automatic equation to be made of the two sums but that, to the contrary, a different approach ought be taken. Mr Oliver contends that to allow the plaintiff to claim the full amount of cost of the notional hire may result in an owner’s profit, a result which courts have always refused to contemplate. See, for example, Reid v Brown (1952) WN(NSW) 131; Mersey Docks & Harbour Board v Owners of the SS Marpessa (“The Marpessa”) [1907] AC 241.

18 That said, the defendant conceded that the court is in the position of “an 18th century jury” and is entitled to come to its own conclusions. He contends, nevertheless, that there are certain principles from the authorities which are relevant to these considerations and supportive of the defendant’s case.

19 The plaintiff simply argues that he has a compensable loss. He accepts that the cost of hiring a replacement vehicle for seven days would represent the upper limit of what he could reasonably claim but contends that his claim is reasonable and that the court should award what is reasonable in the circumstance, in the manner of the notional “18th century jury”.

20 It is to be observed, first, that the basis for compensating a plaintiff for the loss of use of a motor vehicle arises from need. This is relatively easily demonstrated. They are matters of common knowledge that in 21st century Australia most adults obtain a driver’s licence and that Sydney, Mr Chong’s home town at the time his car was under repair, is a large, broadly spread city. The convenience of using motor vehicles for such day-to-day affairs as shopping, travelling to work, sport, recreation and so on is self-evident. Nevertheless, need is not self-proving in cases such as this but must be demonstrated by the plaintiff. Giles v Thompson [1994] 1 AC 142 per Lord Mustill at 167; Athanasopoulos v Moseley (2001) 52 NSWLR 262. It might also be the case that need for a vehicle increases over time; inconvenience becomes increasingly burdensome as time passes. In this case, however, as noted above, the insurer concedes that Mr Chong had a need for a vehicle during the pre-hire and hire periods.

21 The important question here is how to quantify the loss. In Mersey Docks & Harbour Board v Owners of the SS Marpessa (“The Marpessa”) [1907] AC 241, a ship collided with a dredger off Liverpool, disabling it. The question for the House of Lords was quantification of damages for the period the dredger was out of commission. No replacement vessel was available. The House of Lords held that, had the plaintiffs hired another vessel, they could have claimed the cost of doing so. Lord Loreburn said (at 244) that they would also have been entitled to quantify their loss another way: the cost of maintaining and working the dredger, plus the daily cost of depreciation.

22 While The Marpessa denies a plaintiff’s right to an owner’s profit, it did not prescribe an immutable method or regime for quantifying loss of use of a chattel. Lord Loreburn, with whom the other Lords agreed, noted (at 244) the general principle that “the damages depend on the facts and upon the actual loss sustained by the owner, which will vary in different cases.”

23 Subsequent English cases did not establish a principled methodology for quantifying such damages. In Admiralty Commissioners v SS Susequehanna (“The Susequehanna”) [1926] AC 655, a case in which a merchant ship had damaged a Navy tanker, putting her into drydock for repair and requiring her to be replaced in the Danzig by another tanker, the majority held that damages ought be assessed on the principle in The Greta Holme [1897] AC 596 with such rates of interest and depreciation as the evidence might justify.

24 That was not a helpful outcome so far as the present case is concerned because the method applied by Lord Halsbury in The Greta Holme was simply, in the manner of a jury, to express an opinion (at 602) as to the reasonable damage without explaining the basis for his opinion.
25 In The Susequehanna, Lord Dunedin (at 661) said that quantification of general damages was “a jury question” although (at 662) he went on to opine that a jury ought take into account “the expenses of keeping that stand-by [tanker]”. Those expenses, he reckoned, included the “not only the daily upkeep but something representing the amount of capital which had been parted with in order to have another ship.” In short, he thought that the daily running costs and depreciation ought be taken into account.

26 In this case, Mr Chong has not provided evidence of the daily running costs of his vehicle during the time it was under repair, nor any evidence of depreciation.

27 The court, then, is thrown back on the general principle that it must do the best it can in the circumstances, liability and need for the vehicle having been conceded.

28 Mr Chong did not part with any money for the period of seven days until he hired a car. Had he hired a car, an owner’s profit would have been built into the hire charge. He is not entitled to that sum. No evidence was given as to the profit margin(s) applied by Simply Car Hire or any other car hire companies operating at time Mr Chong’s repairs were underway.

29 Lord Loreburn’s method of calculating the cost of maintaining and working the chattel, plus the daily cost of depreciation, is one approach that might be taken to the assessment but that will not work in these circumstances. Another approach might be to calculate the market price of a replacement hire vehicle and discount it by a certain amount to take into account owner’s profit, preferably with the aid of evidence of that profit margin. In this case, the plaintiff contends that the starting point is the sum of $55 per day, that being the rate he was charged by Simply Car Hire for the hire of the replacement motor vehicle he used.
30 In Athanasopoulos v Moseley (2001) 52 NSWLR 262, Ipp AJA said (at 276-277):
Whatever the nomenclature to be attributed to the nature of damages represented by a plaintiff’s need for services, the damages in question are not to be determined by reference to the actual cost to the plaintiff of having the care or services provided… but, generally, by reference to the market cost of providing them.

31 It seems to me that the best starting point for considering the quantification of Mr Chong’s loss is to find a true market rate. The onus falls on the plaintiff to prove one.

32 A plaintiff is entitled to reasonable and not extravagant compensation for his or her loss Fung v Stocavaz [2006] 1345.. He or she is not obliged to take the cheapest quotation available Burdis v Livsey [2003] QB 36.. He or she is entitled to go into the market and find a replacement car which is a reasonable replacement for his or her vehicle Burdis v Livsey [2003] QB 36.. A party who is the victim of another’s negligence is not, however, obliged to undertake acts of supererogation to mitigate his or her loss but is only required to act reasonably.

33 In many, perhaps most, markets and industries, there is no single “market cost” but a range within which competitors will offer their services or cease to remain competitive. In the plaintiff’s case, evidence was given by Mr Gregory Edmunds that, in the course of his negotiations with Mr Chong before Mr Chong hired a car from Simply Car Hire, he had produced quotations from two car hire companies in the market place: Thrifty Car Hire and Europcars. Both these companies charged more for their cars than Simply Car Hire. I treat this evidence in more detail below at [98]ff, but at this point it is sufficient to note that Thrifty’s daily rate for a small-medium four-cylinder sedan was quoted at $53.96 per day while the Europcar rate for a similar vehicle was $64.00.

34 Mr Oliver contended that the plaintiff’s evidence concerning the rates applied by Thrifty and Europcar was irrelevant or of such insubstantial weight that it should be ignored. Mr Hodges contended that the age of the vehicles was of no significance but that, rather, the primary question was the fact that various vehicles considered by Mr Chong in his discussion with Mr Edmunds were of similar type.

35 I disagree with both arguments. In my view, the evidence concerning the Thrifty and Europcar rates is relevant to the question of the rate that may provide a starting point for the assessment of damages for loss of the use of Mr Chong’s car in the pre-hire period.

36 For reasons I will come to below, it is questionable whether the Simply Car Hire rate can be regarded as a true market rate and, therefore, it is an equally questionable starting point for determining the current issue.

37 That said, however, the Thrifty and Europcar rates are unquestionably market rates and, by coincidence, they are close to the rate asserted by Mr Chong to be the daily value in money of the loss of his vehicle for the seven days he was without the use of one. Serendipitously, therefore, $55 appears to be a useful rough starting point for determining Mr Chong’s loss, despite the flaw in the plaintiff’s methodology of assessing his damages.

38 In the next section of this judgment I deal with an argument put by the defendant that the plaintiff bears the onus of proving that what is paid to a hire car company is a market rate and that this cannot be done merely by proving a single invoice or rate. The same argument, mutatis mutandis, might apply in relation to the pre-hire notional hire as well.

39 Be that as it may, absent a better or more precise figure, I propose to take it as my point of departure for the assessment and discount it by one-quarter for an owner’s profit. While I have no evidence of the actual margins applied by car hire companies, it seems to that 25 per cent is likely to be a reasonable figure. If I am incorrect in this assessment, I take shelter behind Lord Halsbury’s view that the question is one for a jury.

40 I will therefore allow the plaintiff $41.25 per day for the loss of use of his vehicle in the pre-hire period. That comes to a sum of $288.75.
The hire period
41 The defendant also argues that the plaintiff has not proven that the sums claimed in respect of the period during which he hired the vehicle from Simply Car Hire represent a proper quantification in money of the loss of use of his vehicle during that period.

42 Mr Oliver contends that, since the Court of Appeal’s decision in Athanasopoulos, where injured parties have hired replacement vehicles while theirs are being repaired, a tendency has emerged for plaintiffs or their legal representatives to approach the proof of motor vehicle demurrage claims as though they were liquidated claims. The statement of claim in this matter is an example of such an approach. This tendency, Mr Oliver argues, evidences “a pervasive mode of erroneous reasoning” by plaintiffs. He invites the court to correct it. Mr Hodges, for the plaintiff, conceded that the present statement of claim is flawed in this respect and does not disagree with Mr Oliver’s contention.

43 Mr Oliver argues that the conceptual error takes the form of an assumption — usually unstated but implicit in the manner in which the claims are pleaded and argued in the Small Claims Division — that all the plaintiff need do to quantify in money the defendant’s liability to compensate him is tender an invoice evidencing his own liability to a hire company for a corresponding sum.

44 He says that the unstated assumption that sustains this kind of pleading is to the effect that, once the plaintiff has proved the extent of his indebtedness for the cost of a replacement vehicle, he has made his case on quantum, that there is nothing more that he can be called upon to prove and that the onus then necessarily shifts onto the defendant to prove either that the replacement vehicle was not a reasonable substitute for the damaged one, or else that the conduct of the plaintiff in agreeing to pay the invoiced sum represented, in accordance with the principles that were articulated by Lord MacMillan in Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 and (perhaps more aptly for a tort case) by Lord Loreburn LC in Lodge Holes Colliery Co Ltd v Wednesbury Corporation [19081 AC 323, an “unreasonable” means of mitigation of loss.

45 In Banco de Portugal, Lord MacMillan said (at 506): The law is satisfied if the party placed in a difficult situation by reason of the breach of duty owed to him has acted reasonably in the adoption of remedial measures and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.

46 In Lodge Holes Colliery, Lord Loreburn said (at 325):
Now I think a court of justice ought to be very slow in countenancing any attempt by a wrongdoer to make captious objection to the methods by which those whom he has injured have sought to repair the injury … Errors of judgment may be committed in this as in other affairs of life. It would be intolerable if persons so situated could be called to account by the wrongdoer in a minute scrutiny of the expense as though he were his agents, for any mistake or miscalculation provided they acted honestly or reasonably. In judging whether they have acted reasonably I think a court should be very indulgent and always bear in mind who is to blame. Accordingly if the case of the plaintiffs had been that they had acted on the advice of competent advisors in the work of reparation and had chosen the course they were advised was necessary it would go a very long way with me: it would go the whole way unless it became clear that some quite unreasonable course had been adopted."

47 Mr Oliver submits that the error of principle that underpins the mode of reasoning some plaintiffs (or their representatives) tend to adopt proves on analysis to be an erroneous assimilation of the mode of proof of the quantum of the plaintiff's entitlement to damages to the mode of proof of the extent of the plaintiff’s damage as a constituent element of his or her cause of action. The damage of which the plaintiff relevantly complains is loss of use, and it is true that proof of the duration of the hire period necessarily quantifies the extent of that damage unless and until the defendant is able to prove that the period was, by some supervening cause, extended beyond the duration that would otherwise have been a direct consequence of the defendant's wrong.

48 But, says Mr Oliver, an invoice for hire charges is not universally serviceable to prove, even prima facie, the quantum of the damages that is required to compensate the plaintiff adequately for his damage. As a matter both of principle and authority, it is serviceable only upon proof or admission of certain additional matters, namely, need and proof that the damaged chattel has been temporarily replaced by another hired at a market rate.

49 It is accepted by both parties that the true measure of damages, where a replacement vehicle has been hired, is the market rate See Athanasopoulos v Moseley (2001) 52 NSWLR 262 at 277 [84] per Ipp AJA. or “spot rate” See Dimond v Lovell [2002] 1 AC 384 at 401. of hire for the relevant reasonable substitute vehicle in the nearest convenient market. Burdis v Livsey [2003] QB 36 at 86. In Radford v De Froberville [1977] 1WLR 1262, Oliver J (at 272) summarised the proper approach to the problem of assessing damages in such circumstances:
What the court does is use its common sense in measuring, in the case of the individual plaintiff and by reference to his particular circumstances, what he has lost by the breach… the measure of damages can be, very frequently, arrived at only by postulating and answering the question, what can this particular plaintiff reasonably do to alleviate his loss and what would be the cost to him of doing so at the time when he could reasonably be expected to do it? What this is may vary with individual circumstances. It may be that there is no exact substitute for what has been contracted to be supplied, so that the plaintiff’s loss is to be measured by the cost of providing the next best thing… It may be that the very commodity is immediately and readily available from other sources, in which case his loss is measured by the cost of obtaining it in the nearest available market.

50 In J&E Hall Ltd v Barclay [1937] 3 All ER 620, the English Court of Appeal emphasised that where a plaintiff has lost or damaged goods due to the fault of another, and where such goods are available in the market, he or she is never entitled to more than the cost in the market of an item similar to the lost or damaged chattel.

51 On these matters there is no dispute between the parties. The defendant, however, puts in issue that the sums particularised in the statement of claim, being the amounts stated in the Simply Car Hire invoice addressed to Mr Chong, quantify in money his loss. The defendant concedes that Mr Chong had a need to replace his vehicle while it was under repair and does not dispute that his choice of vehicle was reasonable. She (or her insurer), however, puts the plaintiff to proof on the question whether Mr Chong paid a market rate for the vehicle he hired from Simply Car Hire.

52 Mr Chong was entitled to go to the nearest convenient source for a replacement vehicle and the defendant does not dispute that he did so. (Its argument is principally to do with the rate of hire.) Moreover, as the defendant fairly concedes, rather than having to prove “the market rate” (as Ipp AJA put it in Athanasopoulos), a fact that, because of different or variable rates within the market may be incapable of proof, a plaintiff only has to prove that the rate he or she obtained is a market rate.

53 The Macquarie Dictionary Online edition: viewed 16 December 2007. defines a “market price” as “the price at which a commodity, security or service is selling in the open market” and defines “open market” in turn to mean “a market where there is free trade, and prices are determined by supply and demand, not fixed by some outside agency”. The term “market price” would seem to be synonymous to “market rate”.

54 Mr Oliver also fairly allowed that, in the ordinary case, a plaintiff will have no difficulty in discharging the onus of proving that the rate obtained is a market rate because all he or she would have to do is prove an arm’s length transaction in the nearest convenient market. An invoice from a hire car company will, generally speaking, be prima facie evidence of such a market transaction.

55 The defendant admits that, once a plaintiff produces an invoice, it will ordinarily be presumed that the price or rate evidenced by the invoice was determined by law of demand and supply, throwing an evidentiary onus upon the defendant. Mr Oliver submitted, however, that if the defendant adduces evidence that rebuts the presumption by suggesting that the transaction may not have been carried out at arm’s length, or that the price or rate struck may not have been determined by market forces, the onus remains on the plaintiff to demonstrate, on the balance of probabilities, that the sum claimed corresponds to a market rate.

56 Mr Oliver submitted that if a plaintiff were to be shown to have obtained a rate from a company controlled by him- or herself, or a family member, or a closely associated entity, the invoiced rate could not, without more, be accepted as prima facie evidence of a market rate. In Solomon Pacific Resources NL v Acacia Resources Ltd (1996) 19 ACSR 677, McLelland CJ in Eq (at 684) described the kind of transaction that can properly be described as a transaction at market rates as “an honest arms-length commercial transaction… [in which] it is not to be supposed that one party would be willing to acquire property for a consideration significantly greater than the perceived value to the acquirer of the property acquired.”

57 It is submitted by Mr Oliver – and the plaintiff does not disagree with the proposition – that where a transaction is shown not to have been conducted at arm’s length, the rate or price or consideration agreed upon cannot be regarded, without more, as a market rate.

58 Mr Oliver submits that even where a transaction is conducted at arm’s length, evidence that it was not “straightforward” is sufficient to cast the evidentiary burden back onto a plaintiff asserting a rate or a price obtained is a market rate. In Stanton v Drayton Commercial Investment Co [1983] 1 AC 501, the House of Lords, considering a question of the proper value to place on shares for the purposes of assessing capital gains, held that the Inland Revenue “was not entitled to go behind the agreed consideration in a case where … the transaction is not alleged to be dishonest or otherwise not straightforward.” At 512-513 per Lord Fraser of Tullybelton. Mr Oliver contends that this principle applies by analogy in relation to the present kind of transaction. Where there is a lack of straightforwardness, he argues, the plaintiff will bear the onus of proving that the rate of hire applied in the relevant transaction corresponded to a market rate.

59 It is important, however, not to widen the net of this concept too far. A transaction that lacks “straightforwardness” as between the plaintiff and the hirer would almost certainly be caught by the rubric, but where the lack of “straightforwardness” occurs elsewhere in the chain of the transaction, such as between the hire car company and the commission agent, it would be harsh and unjust to inflict an extra burden of proof upon the plaintiff. See the comments of Lord Loreburn in Lodge Holes Colliery [1908] AC 323 at 325 cited above at [44]. I will develop these views further below at [66] ff.

60 The defendant argues that Dimond v Lovell [2002] 1 AC 384 offers an example of the type of transaction that might be regarded as honest, conducted at arm’s length but nevertheless liable to be subjected to close scrutiny because “not straightforward”. In that case, the plaintiff, following an accident caused by the defendant, hired a car from a company that not only supplied a vehicle but the additional benefits of providing it on credit and assuming the burden and risk of pursuing the claim. A premium over and above market rates was charged by the accident hire company. Lord Hoffman, with whom the majority agreed, said (at 401- 403) that the plaintiff, notwithstanding the fact that she had acted reasonably in hiring the vehicle from the accident hire company, was not entitled to compensation for the additional costs of non-compensable benefits built into the accident hire company’s rate but was limited to recovering the market rate for the vehicle hired.

61 I note here that it is for the plaintiff to demonstrate that the sum claimed is in fact a market rate or to quantify a sum which does not include non-compensable expenditures. This is not a question of mitigation of damages but one of quantification of loss and therefore falls to the plaintiff to prove.

62 It is necessary, however, when considering Dimond v Lovell, also to note the decision of the House of Lords in Lagden v O’Connor [2004] 1 AC 1067 which distinguished Dimond v Lovell in considering a case of an impecunious plaintiff who had hired a car on credit, being unable to afford to pay the daily market rate of an ordinary car hire company in the market. It held that a tortfeasor must take the plaintiff as he or she found the victim and had to bear the reasonably foreseeable consequences. Those consequences included the additional costs of hiring a car on credit.

63 The point made by the defendant, however, is that Lagden emphasises that, where there is any deviation from a market rate transaction by the plaintiff, the burden of proof remains on the plaintiff to show that he or she is entitled to be compensated for the difference between his or her expenditure and the market rate.

64 The plaintiff does not contest these arguments of law in essence.

65 In Dimond v Lovell, the non-compensable benefits identified by Lord Hoffman were that the plaintiff had been provided with credit, had been relieved of having to manage her claim against the defendant and of any risk of having to bear irrecoverable costs. [2002] 1 AC 384 at 401.
66 The defendant suggests that another type of non-compensable expenditure to be taken into account may be commissions paid by hire care companies to brokers or commission agents, such as MVACARS, those commissions being built into the rates applied by, for example, Simply Car Hire.

67 It is not clear to me, however, that, where a car hire company pays a commission to a broker or commission agent, and builds such sums into its rates, those sums must be deducted from an award of damages (unless the plaintiff is impecunious). All sorts of overheads are built into rates charged by car hire companies. It may be that in transaction A a customer approaches the company directly and hires a car at $55 per day. The entire profit then goes to the car hire company. If customer B approaches a commission agent and, as result hires a car at $55 day, and the car hire company pays that agent, say, $8, this merely reduces the company’s profit by $8. The rate it charges the customer remains a market rate. The $8 is a cost to the company of doing business. It does not correspond with any additional non-compensable benefit received by the customer.

68 As I noted above at [57], the concept developed by Mr Oliver of transactional “lack of straightforwardness” needs to be considered with some care.

69 A market rate is said to be one arrived at in an open market where the law of demand and supply prevails. In a city like Sydney, there will ordinarily be several possible alternative sources of supply in the local area for a plaintiff needing a car. An assumption would usually be reasonably made that the car hire companies in that region are competitors. This assumption may be false. They may, in fact, be members of a price-fixing cartel, illegally setting non-competitive rates. This is not idle speculation. In recent times, two major Australian companies, QANTAS and Visy Industries (Amcor), have been the subject of much-publicised court cases in the United States and this country in which they have admitted price-fixing.

70 If the defendant’s argument is taken to its logical extremity, once evidence suggesting this kind of lack of “straightforwardness” was produced, a plaintiff who had otherwise acted reasonably and honestly in approaching a car hire company could have a significant difficulty establishing that the rate on the invoice he or she had paid in good faith was a market rate.

71 The general principle in relation to mitigation of damages and compensation is, to repeat, that a plaintiff must act reasonably and not extravagantly. See for example, Fung v Stocavaz [2006] NSWSC 1345; (2007) ANZ Insurance Cases 61-730. If a plaintiff is the unwitting and honest victim of price-fixing, or some other untoward conduct which distorts the fair and open operation of market forces, it seems to me that he or she is in a similar situation to that of the impecunious plaintiff. That is to say, he or she has no choice to exercise but one – whether to hire a car from the only operators in his local region or not. That plaintiff has no market power and cannot negotiate a different rate because, by definition, the rate is fixed.

72 In my view, in cases where no non-compensable benefits are received or in issue, what such a plaintiff is required to prove is that he or she acted reasonably, honestly and at arms’ length from the hire company. Whether the hire car company acts straightforwardly is irrelevant provided that the plaintiff is “straightforward”. He or she may even have knowledge of the price-fixing arrangement but have no choice but to accept it. It is quite conceivable that, for example, in a remote country town such as Bourke or Brewarrina, two car hire companies may, to the knowledge of locals, have a price-fixing arrangement between them. Is a person whose car is off the road in that region to be denied full compensation for the loss of his or her car when he or she cannot influence the conduct of the price-fixers? A victim of a tortfeasor’s wrongdoing ought not be twice harmed through no fault of his or her own when thrown into such a position by another’s breach of duty of care. Certainly, as Lord Loreburn put it, “captious objection” ought not be taken by wrongdoers. Lodge Holes Collliery v Wednesbury Corporation [1908] AC 323 at 325. There is no injustice to the defendant if full compensation is required to be paid because there is no unjust enrichment of the plaintiff. For the purposes of such a transaction, the price imposed (unless it included non-compensable benefits) ought be deemed to correspond to a market rate for the purpose, but only for the purpose, of assessing the plaintiff’s damages.

73 In general terms, however, I agree that where no non-compensable benefits are in issue, the plaintiff bears the onus of proving that he or she acted reasonably and the sums claimed for hire of a replacement vehicle correspond to a market rate.

74 Where non-compensable benefits have been obtained or are in issue the practical problems of proof become significantly more difficult, especially in the Small Claims Division of this court. In principle, it seems to me that, once the issue of non-compensable benefits has been raised by evidence, the burden of proof must lie on plaintiffs to quantify their true losses by bringing into account the additional benefits received. Lord Hoffman, in Dimond v Lovell (2002) 1 AC 384 (at 402), referred to the House of Lords decision in British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673. Quoting Lord Haldane LC in the latter case, he said:
Viscount Haldane LC distinguished, at p 691, cases in which the plaintiff had received benefits which ‘did not arise out of the transactions the subject matter of the contract’. These were res inter alios acta. But where ‘the person whose contract was broken took a reasonable and prudent course quite naturally arising out of the circumstances in which he was placed by the breach’ it was necessary to look at any additional benefits which he thereby acquired and to ‘balance loss and gain’.
75 Neither Lord Hoffman nor Lord Haldane appear to have been concerned with the question of the onus of proof but, as the onus of quantifying loss always lies on a plaintiff, there seems to me to be no question that, in principle, the plaintiff must demonstrate the true loss by accounting for the value of the additional benefits.

76 As noted above at [59], the situation in which a plaintiff receives additional, non-compensable benefits from a car hire company is to be distinguished from a case in which the defendant bears the onus of proving a failure to mitigate damages. In Dimond v Lovell, as we saw, the method proposed by Lord Hoffman for determining the value of the additional was to subtract the difference between the market rate and the sum paid by the plaintiff. (2002) 1 AC 394 at 402.

The Special Problems Of The Small Claims Division: A Short Excursus

77 Although this is the principled approach, application of the principles presents practical difficulties, at least in the Small Claims Division. For that reason only, I propose to digress briefly to consider the peculiarities of that jurisdiction. I am aware, and Mr Oliver and Mr Hodges, for the plaintiff, have both been fair and candid about this, that my comments in this decision are likely to be closely considered and may used as a persuasive authority in the Small Claims Division.

78 Section 70 of the Local Courts Act 1982 provides that proceedings “are to be conducted with as little formality and technicality as the proper consideration of the matter permits”, that “the rules of evidence do not apply”, that witnesses are generally not to be cross-examined and that Assessors and Magistrates “may inform [themselves] on any matter relating to proceedings being heard … in such manner as he or she thinks fit”.

79 The usual procedure is for the statements of both parties to be exchanged simultaneously, after which there is no automatic right for a party to improve its case by cross-examination of witnesses, or even to supplement it with further evidence. Mr Oliver points out that, this being case, a defendant does not know what case on quantum he or she is going to have to meet.

80 Moreover, a successful party may only obtain the scale costs allowed on entry of default judgment. Thus parties are under significant pressure to ensure that their evidence-gathering is cost-effective.

81 In cases such as this one, where quantum is the only issue, the defendant must, in most cases, rely on documentary evidence. Mr Oliver submits that when all that a defendant has is inferences that may be drawn from the documentary evidence of a disputed transaction, without the ability to cross-examine the plaintiff’s witnesses transaction, it is far more difficult to prove that the transaction was unreasonable than it is to cast into doubt the implied assertion that the transaction was conducted wholly at arms length and was in every way a straightforward one. Hence the importance of properly identifying the location of the onus of proof.

82 If so, that simply highlights one of the shortcomings of the procedures used in the Small Claims Division. Parliament, it may be presumed, took into account the fact that, if costs were to be kept low so as to increase access to justice, certain features of ordinary adversarial litigation, such as cross-examination, would have to eliminated. The utilitarian approach adopted by Parliament, seeking the greatest good for the greatest number, results in a less than optimal set of procedures. It might reasonably be argued that the system provides a rather “rough-and-ready” form of justice.

83 That could be a matter of considerable concern but for the protections built into the system, and in particular the rider in s.70 of the Local Courts Act that Assessors and Magistrates are entitled to inform themselves on any relevant matter in such a way as they see fit. And, as Mr Oliver observes, the quid pro quo for the summary regime in the Small Claims Division is that evidence not otherwise ordinarily admissible may be tendered and given such weight as the Court in its discretion is prepared to assign.

84 Mr Oliver argues that such the procedures of the Small Claims Division are designed to encourage candour and comprehensiveness of disclosure. The parties are encouraged to “lay all their cards on the table” in a single tender. He says that if, despite that encouragement, they omit to tender evidence that is, or would reasonably be assumed to be, readily available to them, they cannot complain of an adverse assessment of the extent to which they have discharged any applicable onus of proof or onus of adducing evidence.

85 In relation to represented parties, that argument carries significant weight. But this counsel of perfection cannot be expected to be applied with utmost vigour in the case of unrepresented parties.

86 He concedes that none of this could, of course, justify placing upon the plaintiff an onus that does not properly lie with him or her but contends that the correct location of the burden of proof, and the judicious application of evidentiary presumptions, is potentially crucial to ensuring that the Small Claims Division renders “rough justice” and not “rough injustice” in cases of the present kind.

87 He says that, therefore, a plaintiff cannot avoid the obligation to prove that he or she assumed liability to pay no more than a market rate for hire of the replacement vehicle by saying that any additional sum that he or she was liable to pay was pocketed by someone other than him- or herself. Such a submission relies upon “bootstraps” reasoning. Only if and when the court may presume, or the evidence has proved, that the rate of hire was in fact within the range of market rates, does the fact that the hiring charges may have encompassed recovery of a commission paid to a third party become res inter alios acta and hence irrelevant.

88 Where parties are represented in the Small Claims Division, the application of such principles would create few problems for them or Assessors and Magistrates. Well represented plaintiffs, being forewarned would presumably come to court forearmed. They would bring evidence from a number of sources of market rates and that would, presumably, settle the argument whether or not the hire charge in the particular case included a commission.

89 When, however, as may often be the case in that Division, plaintiffs, unrepresented and unschooled in the nuances of the law concerning evidence, negligence and damages, and having made the common sense assumption that the cost of the hire car corresponds exactly with the damages to which they are entitled for the loss of use of their cars, are confronted with a learned and skilful barrister briefed by an insurer, an Assessor or Magistrate may take a view that the problem of “rough injustice”, as Mr Oliver puts it, is potentially acute but for a reason other than that advanced by Mr Oliver.

90 If there is an answer to the potential problem of “rough injustice” to unrepresented plaintiffs, however, it is not to reverse the onus of proof, laying it upon defendants, but is to be found either in the administration of Small Claims at registry level or in the approach of Assessors and Magistrates to fact-finding or both.

91 As I understand it, at pre-trial reviews, Registrars routinely advise unrepresented parties that, for example, they must serve and file (or, at least, bring to court on the date of the trial) written statements of evidence and copies of any documents, such as contracts, invoices and so on, upon which they rely. There seems to me to be no reason in principle why Registrars could not routinely advise such plaintiffs that, if they are claiming for the loss of the use of their cars and the use of a replacement vehicle, they must demonstrate that they needed one and that they must prove that they hired it at market price.

92 As to the problem of assessment of damages, the onus of proof lies on a plaintiff to quantify his or her damages. If, by the presentation of evidence either from the plaintiff or the defendant, a question of non-compensable benefits arises, raising a doubt about the weight to be given to an invoice as proof of a market rate, an Assessor or Magistrate could either accept and rely upon evidence of a market rate tendered by the defendant (if he or she chose to do so) or make his or her own inquiries, giving the parties, of course, a right to be heard on the results.

93 The latter course presents its own difficulties. Typically, Small Claims matters are dealt with in high-volume courts in which Assessors and Magistrates do not have assistants to conduct research for them. Nor do they have the luxury of chamber time to conduct the research themselves. Time is of the essence if lists are to be kept moving. In my experience, Registrars usually estimate a hearing time of 30 minutes when listing Small Claims matters and, in the Downing Centre and other courts at which Assessors sit, the lists are always full.

94 That said, the procedures of the Small Claims Division would appear to allow for Assessors, and Magistrates sitting in that Division regularly, keeping a schedule or scale of market rates which could be regularly updated once commenced. The rates applied by car hire companies are ordinarily made publicly available on the internet.

95 To obtain and use information in this way is, I think, a last resort but one, as s.70 evidences, permitted by the Small Claims Division’s peculiar procedures. If an unrepresented plaintiff failed to prove a market rate or failed to bring into account non-compensable benefits, provided that parties were not denied natural justice but were given an opportunity to examine and comment upon such information held by Assessors before it was utilised in the ultimate decision, this may be an adequate fallback position, protecting both parties from “rough injustice”.
Assessing the evidence in relation to Mr Chong’s case

96 I turn back at this point to the present proceedings.

97 Mr Chong bears the onus of proving that the rate he paid to Simply Car Hire was a market rate.

98 In his evidence Mr Edmunds stated that when had first spoken to Mr Chong he had told Mr Chong that he would have to hire a replacement vehicle at market rates to be eligible to be compensated for the use of a replacement vehicle. He said that he had told Mr Chong that he would need quotations as evidence of market rates. He said that he had gone to the websites of the Thifty Car Hire and Europcar Hire companies. He had printed a quotation from Thrifty for a Mitsubishi Lancer and a quotation from Europcar for an “intermediate” vehicle, a Nissan Pulsar. Both vehicles are basic, four-cylinder sedans. The Thrifty rate was $53.96 per day with an collision damage waiver fee of $24 per day ($84.55). The Europcar rate was $64.00 per day with a waiver fee of $21.82 per day ($93.76).

99 The defendant tendered uncontradicted evidence that the cars offered for hire by Thrifty are generally kept for approximately 12 months or until they have travelled 50,000 kms. In any event, they are disposed after 15 months. Mr Anthony Delbaglivo, Thrifty’s National Manager of Pricing and Online Sales, gave expert evidence that most major car hire companies turned over cars in their fleets in no more than 24 months. It is common ground, however, that the car supplied to Mr Chong by Simply Car Hire was a 1999 Toyota Corolla.

100 Mr Edmunds also gave evidence that neither Thrifty nor Europcar offered to hire cars on credit. Indeed, his evidence was that it was very much the exception rather than the rule that car hire companies would hire on credit. Mr Chong, presented with the two quotations and the option of choosing a cheaper Simply Car Hire car on credit, made his decision.

101 In his case, the plaintiff also tendered invoices from two car hire companies from the northern regions of Sydney that hire out vehicles of vintages approximating that of the 1999 Simply Car Hire Toyota. Thirty six invoices from Aero Auto Rentals, based at Lane Cove, were presented. Thirty of them related to the hire of 1998 Nissan Pulsars in late 2005 and early 2006. It appears from those invoices that Aero applied a daily rate of $33 when a car was hired for one week or more. In addition, in some cases, a collision damage waiver fee of $10 per day was applied. For a 2001 Mitsubishi Magna, which, it is common knowledge, is a large six-cylinder car, a daily rate of $49 for one week applied with a waiver fee of $10 per day.

102 Records from Hills & Hornsby Car Rentals were also tendered by the plaintiff. They related to four vehicles: a 1995 Toyota Secca; a 1999 Nissan Pulsar; a 1999 Ford Festiva and a 2000 Daewoo Matiz. Thirteen relevant invoices were examined. The Toyota was apparently leased at a daily rate of $37.88 per day if hired for six days. (A weekly rate could not be ascertained from the records tendered.) Added to this was a waiver fee of $9 per day. The Nissan was hired out at daily rate of $35 for five days. (Once more a weekly rate was not available.) The waiver fee applied was $9 per day. The Ford was hired out at $30 per day for 14 days or more and, again, the waiver fee was $9 per day. The Daewoo’s rate appears to have been $40 for one day’s use; $35 for two days’ use; and $30 for three days’ use. The waiver fee was also $9 per day for that car. No weekly figure was available.

103 The “spot rate” or market rate for cars of the vintage of the 1999 Toyota Corolla hired by Mr Chong appears to have been about $35 per day when the car was hired for a week or more.

104 It follows from this evidence that the plaintiff’s contention that the Simply Car Hire rates are comparable with those of Thrifty and Europcar is not tenable. There appears to be a market for relatively new cars and another for relatively old cars and the rates are significantly different in each market. It is more likely than not that the Simply Car Hire rates are higher than those of Aero Auto Rentals and Hills & Hornsby Car Hire because they include non-compensable benefits offered to their clients.

105 If the approach taken by Lord Hoffman in Dimond v Lovell is correct, the non-compensable benefits supplied to Mr Chong can be quantified in the sum of about $20 per day, that being the difference between the rate of $55 per day offered by Simply Car Hire and the general market rate of about $35 per day for eight-year old, four-cylinder Japanese cars of the type hired by Mr Chong from Simply Car Hire.

106 Mr Chong is entitled only to compensation in respect of his actual loss which is measured by the market rate. He would have been within his rights to hire a car from, for example, Europcar at a rate of about $64 per day but to do so would have deprived him of the advantage offered by Simply Car Hire of deferring the payment. He is not permitted to better himself but is entitled only to his compensable loss, that being measured by the market rate for the type of car he hired, which was a reasonable substitute for his own damaged vehicle.

107 Although his actions in hiring from Simply Car Hire were reasonable and cannot be criticised, his non-compensable benefits – the credit offered by Simply Car Hire, the relief offered by MVACARS acting as his recovery agent especially – must be brought into account in assessing his damages. I would, therefore, allow him $35 per day for the period of 16 days, a sum of $560, in respect of his loss of the use of his own car while he had the use of the hire car.

The Excess Waiver Fee

108 The question whether the defendant in this case should be held liable to compensate the plaintiff for the cost of the excess waiver fee of $18 per day is also raised.

109 Section 5D of the Civil Liability Act 2002 sets out general principles to be applied in negligence cases. Section 5D(1) provides that, before a court may find that a party’s negligence had caused a particular harm, it must find the negligence “was a necessary condition of the occurrence of harm” and that “it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused.” The “but for” test is, therefore, the first limb of the court’s considerations. That is not in issue in this case.

110 The real question here is whether it is appropriate to extend the scope of the defendant’s liability to encompass the collision damage waiver fees of $18 per day paid by Mr Chong. Section 5D(4) requires that the court consider (among other relevant factors) “whether or not and why responsibility for the harm should be imposed on the negligent party.”

111 The defendant contends, for a number of reasons, which are, for the most part, variations on a theme, that the court should not find it appropriate to extend liability to the fees. First, the payment of the fee was not a pre-condition of the availability of the hired car. Mr Chong had the option of paying or not paying or assuming a greater or lesser part of the risk by paying one fee or another. It follows, according to the defendant, that the payment was not something done to mitigate a loss caused by the defendant, nor was it capable of mitigating any loss of which the defendant’s conduct was the cause because it was insurance against a potential loss, not one actually suffered in consequence of the defendant’s past conduct.

112 Second, Mr Oliver argues that any future loss that may occur as a consequence of any failure by the plaintiff to comply with her own duty of care will necessarily not have occurred as a direct consequence of any wrongful conduct on the part of the defendant. Accordingly, such potential losses are by definition too remote to be attributed to the wrongful conduct of the defendant. Mr Oliver says that the liability to pay an excess could be reasonably avoided by the plaintiff complying with his or her duty of care. If the potential future loss against which the plaintiff has insured himself is one in respect of which the defendant could not in the present proceeding be called upon to indemnify the plaintiff directly then, he submits, the defendant cannot logically be liable to compensate the plaintiff for the cost of obtaining a corresponding indemnity from a third party.

113 Third, Mr Oliver submits that even if, in general terms, the costs of the fees are not too remote to be recoverable, in the particular case of Mr Chong the court ought not award damages in respect of them because to do so would not be to restore him to his original position but would be to improve his pre-accident position. At the time of the accident, Mr Chong did not have comprehensive insurance. Mr Oliver argues that, therefore, there is no basis on which it could be suggested that, as a consequence of the defendant’s wrong, the plaintiff was deprived of the vested benefit of the indemnity that he had negotiated in respect of his own vehicle prior to the collision.

114 The plaintiff’s position is simple. He argues, first, that but for the accident and the defendant’s breach of duty he would not have been placed in the situation of needing a hire care. That is conceded by the defendant.

115 Second, he argues that it was reasonably foreseeable at the time of the accident that a replacement vehicle would be hired. That too is conceded.

116 Third, he argues that his conduct in opting to pay the excess waiver fee was reasonable and not extravagant. The defendant does not contest this.

117 Fourth, he argues that the payment of the excess waiver does in fact merely place him back in his original position. At the time of the accident, he had no obligation to protect the interests of Simply Car Hire. After he had hired the vehicle he had. By insuring to protect Simply Car Hire’s interests he had relieved himself of that burden (but for the potential $500 excess payment). At this point, the parties join issue.

118 This question of the scope of liability or the remoteness of damage in cases like the present one has been considered in a number of English cases.

119 In the unreported decision of the Court of Appeal in Marcic v Davies (Court of Appeal Unrep 20 Feb 1985): see Bee v Jenson [2006] EWHC 3359 (Comm) at [16] per Morison J., the court held that a plaintiff who had hired a replacement vehicle and paid a waiver fee to reduce the excess to nil, when his own excess had been ₤150, was entitled to recover the fee. Lord Justice Browne-Wilkinson said, “It was entirely reasonable that he should pay the waiver fee to cover himself against a contractual liability which he would otherwise never been under.” Cited in Bee v Jenson [2006] EWHC 3359 at [16]. In Bee v Jenson [2006] EWHC 3359 that decision was accepted without demur as correct and binding by Morison J in the Commercial Division of the High Court.

120 It is on this statement of principle that the plaintiff particularly relies for his claim concerning the waiver fee.

121 The defendant argues, however, the Marcic and Bee v Jenson ought not be followed and submits that another line of British authority is to be preferred.

122 In Alexander v Lang [1967] Scots LT (Sheriff Court R) 64, at the Sheriff Court of the Lothians and Peebles at Edinburgh, Sheriff-Substitute McIlwraith QC dealt with a case in which a “defender” (defendant) motorist (or his insurer) admitted liability to compensate the “pursuer” (plaintiff) for loss of the use of his vehicle and for the ₤10 excess he had had to pay his insurer, but disputed liability to pay for the loss of the value of the unexpired portion of the pursuer’s insurance policy, a sum of ₤4.1s.8d.

123 The pursuer had elected to claim in the first instance under his insurance policy rather than first exhaust his rights against the defender personally. The Sheriff-Substitute held that had he sued the defender directly he would have been paid the value of the loss of his car and of the car itself (which had been written off). His policy would not have been cancelled and he would have been able to claim the unexpired portion of his policy.

124 The court held that the claim should be dismissed because the pursuer had not only failed to mitigate his loss but had, in fact, created a further element of loss, and that the loss was too remote to be sheeted home to the defender.

125 The Scottish Sheriff Court stands in the Scottish hierarchy in approximately the equivalent position of the NSW District Court. Its decisions, like most British decisions since the abolition of appeals to the Privy Council, are of persuasive authority only. For my part, I do not find this decision persuasive for three reasons.

126 First, the finding of the Sheriff-Substitute that the pursuer “with equal reasonableness could have avoided this loss” by conducting the litigation himself in the first instance, rather than through his insurer, strikes me as surprising. One of the very reasons people insure themselves against vehicle property damage is because most do not have the skills or education or time or energy for this sort of activity whereas insurers are specialists in this field: that is part of the service insurers provide. Stringent as Scottish standards of personal responsibility may be, or may have been in the 1960s, and Australian standards may be now, I do not think it would be equally reasonable for an insured person to conduct his or her own litigation rather than placing the conduct of the litigation in the hands of the insurer whom he had paid for that very service.

127 Second, if the insurance policy provided that, in the event of the insured vehicle being written off, the policy would be cancelled, as it appears was the case in Alexander, that is not to be surprised at. The subject matter of the policy no longer existed as an insurable item. But that would have been the case whether or not the pursuer had commenced the action directly or through his insurer. It seems to me to be fallacious reasoning on the part of the Sheriff-Substitute to state that the policy would not have been cancelled and that the pursuer had increased rather than mitigated his loss.

128 Third, even if there is some merit in the decision, it seems to me to be distinguishable from this case. If the Sheriff-Substitute’s reasoning was correct, the pursuer’s contractual rights and liabilities in relation to his own insurer pre-existed the accident. In Marcic, Bee v Jenson and this case, they arose after the accident and would not have arisen but for the accident.

129 I am bolstered in these opinions by the English Court of Appeal’s decision in Patel v London Transport Executive [1981] RTR 29. In that case the court considered and rejected the approach taken in Alexander v Lang. In a case very similar to Alexander, the owner of a new car was run into by a London bus. The car was written off and the owner lost almost a year’s worth of insurance when his policy was cancelled. He claimed as part of his loss the unexpired portion of that policy, a sum of ₤218.47 or 51/52 of the value of the policy.

130 The Court of Appeal held that Mr Patel had acted reasonably in claiming on his policy and that it was a foreseeable consequence of the defendant’s breach of its duty of care. It decisively rejected an argument, based on Alexander, that the loss was too remote to be compensable.

131 The defendant seeks to distinguish Patel on the basis that loss in that case was foreseeable whereas it would have been readily apparent that a person in the position of Mr Chong could have avoided all liability for potential future damage to the relevant replacement vehicle at no pecuniary cost to anyone simply by complying at all times with his or her own duty of care and thereby ensuring that he or she were not at fault in any future accident that might cause damage to that vehicle.

132 In my view, while both Alexander and Patel are distinguishable in some respects from the current case, particularly because both concerned the plaintiff’s pre-accident contractual rights and liabilities, in Patel the concepts of reasonableness and foreseeability or remoteness were given, if I may put it this way, a more reasonable interpretation than in Alexander. For that reason, Patel, although not factually on all fours with the present case, is helpful and persuasive insofar as general principle is concerned.

133 Mr Oliver submits, however, that the factual distinction between Patel and this case is decisive. He argues, by notionally assuming a case in which the relevant replacement vehicle had in fact been damaged in a subsequent accident while under the plaintiff’s control, and the plaintiff had included the cost to him of repairing that damage in the statement of claim in the present proceedings, that the cost of the collision damage waiver fee is demonstrated to be too remote to be recoverable from the defendant.

134 He says that, to the extent that the subsequent accident had been caused or contributed to by the plaintiff, the present defendant would be able to defend the additional claim on the grounds of contributory negligence — a defence that goes not to mitigation of damage but to its causation. And to the extent that the subsequent accident had been caused, or contributed to, by drivers other than the plaintiff, the present defendant would be entitled to reduce her liability to nil on the basis of apportionment which is also computed by reference to contributions to causation of relevant damage.

135 He argues, therefore, that the only hypothetical circumstance in which the defendant could not, by these means, wholly avoid liability for a subsequent accident involving the replacement vehicle would be the very improbable case where the defendant had also been involved in that subsequent accident. In that case her liability to indemnify the plaintiff would obviously arise from the extent of her direct negligent responsibility for that accident, and not for the one that is ostensibly the subject matter of the present proceeding.

136 As superficially cogent as this argument, it seems to me to miss the fundamental point made by the plaintiff that, as a result of the defendant’s breach of her duty of care, Mr Chong was placed in a situation entirely different from his original position. At the time his car was damaged, he was, in respect of damage to his own vehicle, effectively self-insured. That was an option rationally open to him.

137 Once, however, he had suffered the loss of his own vehicle and, as a result, had need of a replacement vehicle, it was entirely reasonable to hire a car from a commercial company. In so doing, he took on risks additional to those borne by an ordinary car owner. The vehicle he hired was a commercial vehicle, a profit-making capital asset of Simply Car Hire. As a bailee of that car he was in a considerably more onerous position than he had been in respect of his own vehicle.

138 If his own car was damaged, as the owner and self-insurer of his own vehicle he had the option of not having the car repaired, of paying for the repairs himself, of carrying out repairs himself or, if it was damaged due to the fault of an identifiable wrongdoer, of having the car repaired at the expense of that person.

139 Cars, however, frequently receive minor or even major damage from unidentified drivers: car park collisions are an obvious example and, sadly, it seems to be the exception rather than the rule that such drivers identify themselves by, for example, leaving a note under the windscreen of the damaged car. In such a case, the injured owner usually has little choice but to bear the cost of the damage, or at least the cost of the excess, him- or herself.

140 A bailee of a hired car, however, has no such option. By hiring the car, he or she is required to assume the risk of paying the excess or the car will simply not be made available. Indeed, given the prevalence of car park collisions, sideswipes in the middle of the night and petty vandalism of cars, potential bailees must engage quickly in a rough-and-ready cost-benefit analysis of paying the optional waiver fee and the level of fee they are prepared or can afford to pay. In my view, it would be only the impecunious, the irrational and the insouciant who would decline the option of paying a waiver fee upon hiring a commercial vehicle. In this case the excess, if no waiver fee was paid, was $2700 (which seems to be a much higher rate than ordinary experience of the world suggests is the usual excess for domestic vehicles). After the accident, therefore, Mr Chong could not be regarded as having bettered his position by paying the waiver fee.

141 I am supported in reaching this conclusion by the observations of Morison J in Bee v Jenson who said (at [15]), adopting the submissions of counsel for the plaintiff:
The fallacy in [the Defendant's expert witness'] case on [collision waiver damage] is that whilst asserting the betterment of the nil excess, he disregards the detriment [Mr Bee] suffered by being placed in a car belonging to a hire company. He treats Mr Bee as if on receiving the hire car, he was in the same position after the accident as he was before it. Obviously, he was not. He was not in his own car; he was in somebody else’s. He was obliged to return the car in the same state as he received it. Were his own car damaged, he could defer repairs, perform amateur or temporary repairs or not bother with repairs. These would not be options with Helphire. Moreover, were [Mr Bee] to blame for damage to that vehicle, he would be subject not only to a claim for the cost of repair, but also for Helphire’s loss of profit whilst it was out of commission. In other words, by forcing [Mr Bee] into a hire vehicle, [the Defendant] was exposing him to risks which he did not previously face, such that his insurance needs were different. As such, it is impossible to portray the nil excess as a betterment. It was a reasonable arrangement, consequential on the tort.
142 When Bee v Jenson was considered on appeal by the English Court of Appeal, the court did not disturb this finding but upheld Morison J’s decision. [2007] 4 All ER 791, [2007] EWCA Civ 923.

143 Regarded this way, it seems to me that Marcic, Bee v Jenson and Patel all persuasively suggest that Mr Chong’s compensable loss included the collision excess waiver fee. It was, in my view, a foreseeable consequence of the defendant’s negligence, it had a close nexus with the need for a replacement vehicle and it was reasonable for Mr Chong to pay it as he was exposed to a material risk. For those reasons, it seems to me to be entirely appropriate that the scope of the defendant’s liability be extended to take it into account.

144 I will allow $18 per day for 16 days, a sum of $288.

Pre-Judgment Interest

145 The court has a general discretion to award pre-judgment interest pursuant to s.100 of the Civil Procedure Act 2005. The order may be made in respect of the whole or part of the amount for which judgment is entered and for the whole or part of the time from which the cause of action arose until judgment is entered. Interest maybe ordered only amounts of over $1000: UCPR 36.7(2).

146 The defendant contends that the court should not order pre-judgment interest. In cross-examination Mr Chong gave evidence that, although he had hired the car on credit, he had not agreed to pay interest. He also agreed that he had not paid a deposit on the hire of the car, notwithstanding his written agency agreement making it a term that he do so. That evidence was confirmed by Mr Edmunds. No question of subrogation arises as there is no evidence that MVACARS and Simply Car Hire are licensed insurers. There is no evidence that anyone indemnified Mr Chong from liability to pay the rental costs. Accordingly, it appears that Mr Chong has not been kept out of the sum claimed from the defendant except in relation to the collision damage waiver fee which he paid on his credit card.

147 I was referred to the decisions of the NSW Court of Appeal in Screenco Pty Ltd v RL Dew Pty Ltd (2003) 58 NSWLR 720 and the English Court of Appeal in Burdis v Livsey [2003] QB 36.

148 In Screenco, the Court of Appeal applied the decision of the House of Lords in Giles v Thompson [1994] 1 AC 142. In the latter case, the House of Lords rejected a claim for interest on the hiring charges of a replacement vehicle. Lord Mustill said (at 168):
[T]he power to award interest is discretionary and… the exercise of this power should correspond with reality. In the present case, although the motorist incurred a genuine liability for the hire charges day by day, it was not a liability capable of immediate enforcement by the hire company. In both practical and legal terms the financial position of the motorist was wholly unaffected by the defendant’s failure to make immediate payment, since the terms of the contract meant that until judgment was given she was not obliged to pay the hiring charges and also that as soon as the claim was “concluded” and the period of credit came to an end the damages provided the necessary funds. In reality she had not been “kept out of” any money of her own whilst the claim was being assessed and litigated.

149 In Fire and All Risks Insurance Co Ltd (1978) 140 CLR 427 (at 432[10]), the High Court, dealing with a personal injury case, said:
In the case of loss of earning capacity interest should, they concluded, be allowed only on that part of the damages awarded under that head which represents compensation for those detriments the practical impact of which, in terms of economic loss actually incurred, has already, at the date of judgment, been experienced by the plaintiff.

150 The Court of Appeal in Screenco, considering this decision, laid particular emphasis on the phrase “the practical impact”. [2003] 58 NSWLR 720 at 723 [9] per Handley JA. See also the High Court decision in Batchelor v Burke (1981) 148 CLR 448 to similar effect per Gibbs CJ at 451.

151 The only exception to the general approach taken in Giles v Thompson and the other cases referred to above will be where an issue of subrogation arises. See Burdis v Livsey [2003] QB 36 at 89 [161].

152 The plaintiff did not make any submissions in opposition to the general argument but simply allowed that the question was a discretionary one.

153 In my view, since Mr Chong by his own admission has not been “kept out of his money” except in relation to the sum he paid for the excess waiver fee, it is appropriate not to order pre-judgment interest in this particular case.


154 There will be a verdict for the plaintiff in the sum of $1136.75 and judgment accordingly.

155 I reserve the question of costs.

Hugh Dillon