Up to now, insurers for a road accident vehicle-at-fault have resisted paying an innocent driver’s replacement vehicle hire charges unless the damaged vehicle was used in the course of a business.
The “mere” inconvenience of being without wheels, was insufficient – insurers have said – to put them to that expense.Such practice has finally been put to bed by the unanimous decision of the High Court of Australia which has ruled that an at-fault driver – or their insurer – is obliged to compensate in all cases for the inconvenience resulting from the unavailability of a damaged vehicle and for the loss of enjoyment of its use.
The HCA was considering an appeal against the decision of the NSW Court of Appeal that ruled insurers must pay – where a need for a substitute vehicle had been made out – not just for any car, but one of similar standard of luxury to that damaged in the collision.
Four not-at-fault owners whose cars were temporarily unavailable after road accidents had been given a replacement vehicle of the same quality to their own, by a “credit hire” company.No upfront charge was payable and the company claimed the full hire cost as damages on their behalf against the at-fault driver’s insurer.
At issue was whether the replacement vehicle hire charge should be referenced to a base model hatch or sedan or a superior model with equivalent luxury and prestige.
For the insurers, it was contended that a Toyota Corolla was a sufficient substitute for Azad Cassim’s damaged BMW 535i, Alex Rixon’s Audi Q3, Bilal Souaid’s Lexus IF 250 F Sport Prestige and Seung Lee’s Toyota Camray.
The Court of Appeal decided – by a majority – the owners had to be compensated for all the features of the vehicle’s use of which they were deprived, not just for the transportation value of their cars.
Thus the hire of luxury vehicles of the same model or a of a similar standard was reasonable in the case of Cassim and Rixon because of their preference for the highest safety standards and performance.
Not to be deterred – and signalling the impact of the issue on annual claim costs – the insurers appealed to the High Court where all five judges ruled that the compensable loss Cassim and Rixon had suffered included “intangible elements”,ie loss of pleasure or enjoyment as well as the inconvenience from being without their wheels.
“A loss of amenity … in the sense of loss of pleasure or enjoyment” is a recoverable head of damage in relation to the negligent damage to a chattel. The “concept of ‘need’ should be eschewed”.
“Compensation for the loss of the availability of a vehicle for use, is inadequate because it does not identify the manner or extent of any loss to a plaintiff,” they observed. “An assessment of consequential loss always requires the identification of the manner in which the loss of use of a chattel has adversely affected the plaintiff”.
Even Mr Souaid – who had failed in the Court of Appeal to recover the hire cost of a BMW 735i and did not appeal – should be allowed the full cost of hire of the luxury substitute.
Souaid’s statement that he would be “okay with just a Holden sedan or a Camry” was – in the judges’ view – insufficient to displace his entitlement to reimbursement of the full hire charges that would have provided him the amenity and luxury akin to that of his own damaged vehicle during the repair period.
Likewise Ms Lee – who failed in the Court of Appeal because she took up the use of the temporary replacement only “because the hiring company delivered the vehicle to her home address” and also did not appeal – should not have been disqualified from recovery when it was clear that she was deprived of the convenience of a car to visit family and friends and take her children to and from school.
The only qualification to the right to recover hire charges appears to be – particularly in relation to “credit hire” – that the hire charges incurred be within market rate parameters.
Although it might be inferred that “credit hire” fees would be greater than those in the conventional hire car market, the Court of Appeal noted the charges in all four cases it considered, were no greater or at least similar to rates charged by conventional hire car companies.
Not-at-fault parties in road accidents are therefore entitled to be paid the hire charges for a substitute vehicle of an equivalent standard at market rate, regardless of whether it is used for employment, business or simply for convenience. Hire charges must be paid for the entire period they are deprived of their own car’s use.
Categories: car accident