Case Note – The Measure of Damage for a Hire Vehicle
Nguyen -v- Cassim [2019] NSWSC 1130

The Supreme Court of New South Wales has again been called upon to deal with the issue of damages as they relate to hire vehicles. It is an issue which continued to occupy Local Court’s time as there is very little Australian authority on the issue of damages when it comes to replacement vehicles. What is of particular concern for insurers and the Courts alike is the consideration of damages in the context of hire vehicles provided free of charge to “not at fault” drivers who have ben involved in a collision. The Supreme Court on 3 September 2019 provided further clarity on this point for lower Courts and insurers and has considered the issue of rates for hire vehicles along with the award of non-compensable costs often sought as part of a claim for damages.

The matter was one of three matters which were dealt with in one hearing before his Honour Basten J on 27 August 2019. The present matter related to a hire by Mr. Cassim of a Nissan Infinity Q50 motor vehicle. The Nissan was hired as a replacement vehicle by Mr. Cassim from Right2Drive when his BMW 535i was damaged in a collision on 1 April 2017. Mr. Cassim hired the Nissan for a period of 84 days whilst his BMW was being repaired. The Court was asked to consider two issues:

1. Whether the expense of obtaining a replacement vehicle of a similar value or prestige is recoverable where a cheaper alternative would overcome the inconvenience arising from temporary unavailability of the damaged vehicle.

2. If it was accepted that the expense of obtaining a replacement vehicle of a similar value or prestige is recoverable: is the whole of the rental charges billed by the accident hire company recoverable?

It was argued before his Honour by the solicitors for Mr. Cassim that once he had established a need for a replacement vehicle while his damaged vehicle was being repaired, he was entitled to reasonable costs of obtaining a replacement vehicle. Further, it was argued that the replacement vehicle should be as close as reasonably practicable to the damage vehicle. It was also submitted that whilst Mr. Cassim may have been able to make do with a cheaper vehicle, there was no basis to require him to use a cheaper vehicle than that which he owned as this would be akin to penalising an innocent party for their decision to own a luxury vehicle.

In response, it was submitted that there was no doubt that a liable party would be responsible for the reasonable costs of a replacement vehicle, however, this would always be subject to evidence as to the use of the vehicle prior to the collision and the reasonable costs of meeting the temporary inconvenience of the loss of the vehicle. The solicitors for Mr. Nguyen argued that whilst evidence may be provided to substantiate the need for a prestige vehicle, such a vehicle would not ordinarily be required to meet the inconvenience of the usual social and domestic needs for which a motor vehicle is used.

Ultimately, his Honour came to the view (having been guided by prior authority in the Supreme Court such as Anthanasopoulos -v- Mosley, Droga -v- Cannon and Wong -v- Maroubra Automotive Refinishers Pty Ltd) that the purpose of compensation for the cost of a replacement vehicle was “to provide an appropriate sum in compensation to alleviate, so far as reasonably possible, the inconvenience resulting from the loss of use of the damaged vehicle; not to replace the owner’s vehicle with…another vehicle of equivalent value or prestige. Reasonable expenditure for that purpose provides a mechanism for assessing general damages resulting from inconvenience.”