| Published by Bruce Kent, Morgan Waters, Matthew Tennant
On 14 August 2014, Assessor Olischlager of the New South Wales Local Court handed down his judgment in a matter in which the Defendant’s insurer was disputing both the market rate and the duration of a credit hire vehicle sought to be recovered by the Plaintiff.
This decision signals a significant change in direction by the Local Court of New South Wales in assessment of damages in credit hire matters.
The case arises from motor vehicle collision which occurred on 24 August 2013 whereby the Defendant collided into the rear of a third party vehicle with sufficient force to cause the third party vehicle to collide into the rear of the Plaintiff’s vehicle. The Plaintiff’s vehicle was a 1996 Mitsubishi sedan with a pre-accident value of $1,690.00. Shortly after the accident, the Plaintiff contacted the credit hire company, Compass Claims, and on 27 August 2013 rented a Toyota Yaris at the daily rate of $124.10 (including GST).
The Plaintiff’s vehicle was declared a total loss. The Plaintiff was told that the vehicle was a total loss on 3 September 2013 by her smash repairer. The Plaintiff was ultimately paid $1,610.00 by the Defendant’s insurer for the total loss of her vehicle.
The Plaintiff rented the Toyota Yaris from Compass Claims for 87 days and an invoice was issued by Compass Claims for $9,579.25. In December 2013 the Defendant’s insurer made part payment for the hire car costs of $1,590.53. The Plaintiff then commenced proceedings seeking to recover the balance of the hire car costs of $8,006.72.
After considering the law in the area, Assessor Olischlager determined that:
The court is satisfied that it should depart from its previous practice and determine the market rate for replacement of the plaintiff’s vehicle instead of ascertaining whether the amount claimed by the plaintiff is a market rate.
Assessor Olischlager acknowledged that this approach represents a modification to the approach referred to in the decisions in Harb v Marchbank and Fang v Koumoukelis and that the determination of a market rate is a question of fact. Assessor Olischlager further confirmed that the court must have regard to the rates for vehicles which are similar to the make, model and age of the Plaintiff’s damaged motor vehicle, are close in time to the loss suffered and reasonably available to where the Plaintiff is located. Where there is a range of rates that are applicable, the court will determine a specific rate by reference to what represents a reasonable option to replace the Plaintiff’s vehicle.
The Defendant’s insurer put forward evidence that the appropriate market rate was from ‘Rent a Bomb’ with a Toyota or Hyundai at the approximate cost of $44.00 per day. The court heard other evidence on this issue from both parties but accepted that $44.00 per day was the appropriate market rate for the hire vehicle.
The Defendant’s insurer also submitted that once the Plaintiff was aware that her vehicle was a total loss on 3 September 2014, it was open to her to make arrangements for a permanent replacement of her vehicle. Unlike a number of the cases encountered in this area, there was no evidence to suggest that the Plaintiff was impecunious or otherwise unable to purchase a replacement vehicle in a reasonable period thereafter.
The court accepted the Defendant’s argument and considered that the Plaintiff could have purchased a replacement vehicle the following weekend. The Court determined that the Plaintiff was only entitled to a claim for loss of use for a period of 14 days from 27 August 2013 to 9 September 2013 at the rate of $44.00 per day. The total hire car claim was thereafter allowed at $616.00. In view of the payment already made by the Defendant’s insurer for the hire car costs, the court entered judgment in favour of the Defendant and ordered costs against the Plaintiff.
We are unaware as to whether the Plaintiff intends to appeal the decision.
This case is clearly an important change in direction by the New South Wales Local Court. While the decision is not binding on other cases in New South Wales or other states, it is nevertheless a persuasive argument in favour of insurers seeking to limit the cost of credit hire vehicles to that which represents a fair and reasonable market rate.
For further information and queries in relation to defending claims in relation to excessive credit hire costs please contact a member of the Insurance Team.