Anthanasopoulos v Moseley

[2001] NSWCA 266

Reported Decision: 52 NSWLR 262

New South Wales

Court of Appeal

CITATION:	Anthanasopoulos v Moseley [2001] NSWCA 266
FILE NUMBER(S):	CA 40332/01
HEARING DATE(S):	4 June 2001
JUDGMENT DATE:	27 August 2001
PARTIES :	Appellants: S Anthanasopoulos, Alexandra Smith, J O'Leary and Mark Attard Respondents: Hilton James Moseley, Emma van Miltenberg, W R Carveth and Richard Riles
JUDGMENT OF:	Handley JA at 1; Beazley JA at 2; Ipp AJA at 71

LOWER COURT JURISDICTION :	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S) :	11198/01
LOWER COURT JUDICIAL OFFICER :	Sully J

COUNSEL:	Appellant: M Cashion SC/T M Thawley Respondent: R S McColl SC/K J Manion
SOLICITORS:	Appellant: Shaw McDonald Respondent: Smith Partners
CATCHWORDS:	Damages - Gratuitously provided benefit - Application of Griffiths v Kerkemeyer in cases of property damage - Subrogation
LEGISLATION CITED:	Local Courts (Civil Claims) Act 1970 (NSW), s 69
CASES CITED:	Griffiths v Kerkemeyer (1977) 139 CLR 161 Dimond v Lovell [2000] 2 WLR 1121 King v Victoria Insurance Co Ltd (1896) AC 250 Sydney Turf Club v Crawley [1971] 1 NSWLR 724 The Owners of No 7 Steam Sand Pump Dredger v The Owners of SS 'Greta Holme' ('The Greta Holme') [1897] AC 596 The Owners of Steamship 'Mediana' v The Owners, Master and Crew of Lightship 'Comet' ('The Mediana') [1900] AC 113 Mersey Docks & Harbour Board v Owners of the SS Marpessa ('The Marpessa') [1907] AC 241 Commissioners for Executing Office of Lord High Admiral of the United Kingdom v Owners of Steamship Chekiang [1926] AC 637 Commissioners of Executing Office of Lord High Admiral of the United Kingdom v Owners of Steamship Susquehanna [1926] AC 655 Cosemar SA v Marimarna Shipping Co Ltd [1990] 2 Lloyds Rep 323 Browning v The War Office [1963] 1 QB 770 Harlow & Jones v Panex (International) Ltd [1967] 2 Lloyds Rep 509 Giles v Thompson [1994] 1 AC 142 Donnelly v Joyce [1974] QB 454 McAll v Brooks [1984] RTR 99 Hunt v Severs [1994] 2 AC 350 Kars v Kars (1996) 187 CLR 354 Van Gervan v Fenton (1992) 175 CLR 327 Grincelis v House (2000) 201 CLR 321 The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569 Redding v Lee (1983) 151 CLR 117 Woodside Petroleum Development Pty Limited v H&R - E&W Pty Limited (1999) 20 WAR 380
DECISION:	Summons dismissed with costs

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40332/01
CL 11198/01

HANDLEY JA
BEAZLEY JA
IPP AJA

Monday, 27 August 2001


ANTHANASOPOULOS & ORS v MOSELEY & ORS


FACTS

The respondents were plaintiffs in four separate actions commenced in the Local Court seeking to recover the costs of hiring a replacement vehicle whilst the respondent’s own vehicle was being repaired. The respondents’ vehicles were insured with NRMA. Each respondent, not being the driver at fault, was entitled to participate, at no cost, in the NRMA Courtesy Car Programme, which entitled them to a Hertz rental car for up to 14 days. NRMA bore the cost of the hire. The Programme was not part of the cover provided by the insurance policies. In each case the appellants were insured by AAMI and denied liability for the car hire costs.

The cases were heard by Dillon LCM and were treated as test cases as there are a large number of pending claims in the Local Court which raise the same issue. Dillon LCM found in favour of the respondents. The appellants appealed to the Supreme Court under s 69 of the Local Courts (Civil Claims) Act (1970) NSW. The summons came before Sully J who ordered that the proceedings be removed to the Court of Appeal for the determination of various questions. The primary point at issue was whether the principle enunciated in Griffiths v Kerkemeyer (1977) 139 CLR 161 in relation to the entitlement to recover damages for gratuitously provided services such as nursing or domestic assistance to a plaintiff in a personal injury case were applicable to a plaintiff’s loss of use of a non-income earning chattel.

HELD per Beazley JA (Handley JA and Ipp AJA agreeing)

(i) There was no need to consider the application of the Griffiths v Kerkemeyer principle. It is well established, pursuant to the line of authority commencing with ‘The Greta Holme’ [1897] AC 596, that injury to property which deprives a party of the use of a non-income earning chattel is compensable.

(ii) It is irrelevant that a third party provided a substitute for the chattel. The principle res inter alios acta applies.

(ii) Because the Courtesy Car Programme was not part of the cover provided by the insurance policies, NRMA was not entitled to be subrogated to the rights of the insured.

Per Ipp AJA (Handley and Beazley JJA agreeing)

(iii) The issue of subrogation was not pleaded by the appellants before Dillon LCM and therefore the learned magistrate was correct in determining that the issue was outside the scope of the case.

ORDERS

(i) Summons dismissed

(ii) Appellants to pay the respondents’ costs.

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40332/01
CLD 11198/01

HANDLEY JA
BEAZLEY JA
IPP AJA

Monday, 27 August 2001



ANTHANASOPOULOS & ORS v MOSELEY & ORS

JUDGMENT

: I agree with Beazley JA and Ipp AJA.

BEAZLEY JA: Introduction

2    The respondents were plaintiffs in four separate actions brought in the Local Court seeking to recover the cost of hiring a vehicle whilst the respondent’s own vehicle was being repaired after a collision with the defendant’s vehicle. There was no issue in the Local Court proceeding that each appellant was the party at fault in the collision.

3    Three of the four cases involved common issues of fact and raised a common point of principle. One case, Van Miltenburg, involved slightly different facts to which I shall refer, but the matter of principle remained common. The four cases were heard together.

4    Each respondent, except Ms Van Miltenberg, was insured with the NRMA under a comprehensive motor vehicle policy of insurance. In Ms Van Miltenberg’s case, whilst she was the owner of the vehicle, her father was the insured.

5    There were a number of exclusions from the cover provided by the policy, including the cost of hiring a vehicle whilst the insured’s damaged vehicle was being repaired. Notwithstanding this exclusion, the NRMA had in place a Courtesy Car Programme. Under this scheme, an insured was entitled to a courtesy car either at no cost to the insured for up to fourteen 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 the NRMA bore the cost of the hire for the fourteen day “courtesy” period. In either case, the scheme required the insured to have the damaged vehicle repaired by a “NRMA approved” repairer.

6    The “courtesy car” was a car hired from Hertz Australia Pty Limited. The insured entered into the Hertz Rental Agreement directly with Hertz but the NRMA was billed for the hire for the first fourteen day period.

7    In each case here, the respondent, not being the driver at fault, was entitled to participate in the programme at no cost for the fourteen day courtesy period. In the case of Ms Van Miltenberg, she hired a car for an additional two days and was directly responsible for the cost of the hire for those two days. Each of the respondents had demonstrated a need for the replacement vehicle during the repair period.

8    The appellant in each case was insured by AAMI and denied liability for the hire cost during the courtesy period.

9    The cases were heard by Dillon LCM and were treated as test cases as there are a large number of pending claims in the Local Court which raise the same issue.

The Claim

10    The respondent in each matter pleaded its claim as being for:

“the cost of renting an alternative vehicle whilst the plaintiff’s vehicle was being assessed and repaired and unavailable for the plaintiff’s use.”

11    The appellant denied liability, in each case pleading that:

“[The respondents were] provided with a vehicle by the plaintiff’s motor vehicle insurer, NRMA Insurance Ltd … pursuant to a scheme entitled ‘NRMA Courtesy Car’(sic), such scheme being a commercial arrangement between NRMA and Hertz Australia Pty Ltd … the cost of which was not a liability or loss incurred by the plaintiff.”

12    In the hearing before Dillon LCM, counsel for the respondents framed the issue raised by the pleadings in the following terms:

“[W]hether the law is that need is sufficient to establish the right to damages as the Griffiths v Kerkemeyer line suggests or whether the Hunt v Servers line in England has any validity in this country.”

13    He further explained the issue in these terms:

“[What] is the legal position where the insured is under no obligation to pay the insurer for the car … We want to find out what the law is in relation to gratuitous payments by insurers because the [NRMA Courtesy Car Programme] … allows the insureds to have the use of a vehicle for 14 days without incurring a personal liability to pay for the cost of the hire.”

Counsel informed Dillon LCM that the respondents did not “seek to prosecute [the] cases on any principle other than a gratuitous payment by the insurer” .

14    The appellants did not submit that it was unreasonable for the respondents to take advantage of the courtesy car programme. However, they argued that “need” was not the relevant criterion in assessing whether there was a recoverable loss. Rather, it was submitted, as this was a case of property damage, the respondents had to demonstrate they had incurred an actual loss which relevantly in this case, would have been the cost of hire of the courtesy car.

Dillon LCM found in favour of the respondents.

15 The appellants appealed from Dillon LCM’s decision pursuant to s 69 of the Local Courts (Civil Claims) Act 1970 (NSW) which limits the appeal to questions of law. The summons came before Sully J on 11 May 2001. His Honour ordered the proceedings be removed into this Court for the determination of the following four questions:

“i. Whether the principles enunciated in Griffiths v Kerkemeyer in relation to damages for needs caused by personal injury (domestic assistance) are applicable to a plaintiff’s loss of use of a non-income earning chattel.
ii Whether the learned Magistrate erred in concluding that the plaintiffs (in the Local Court proceedings) suffered any loss recoverable from the defendants [appellants].
iii Whether the learned Magistrate erred in concluding that, if there was no right of subrogation on the part of NRMA, the subrogation issue was ‘outside the scope of the case’.
iv Whether, in any event, the decision of the learned Magistrate should be affirmed on the grounds propounded in the defendants’ [respondents’] Notice of Contention.”

Case Argued Before the Magistrate

16    The respondent argued that they were entitled to recover from the appellants the cost of the hiring of the courtesy car on the basis of the principles in Griffiths v Kerkemeyer (1977) 139 CLR 161. In seeking to determine that issue Mr Dillon LCM posed the question “[w]as it reasonable for the plaintiff to use a courtesy car?”.

17    The appellants submitted, however, that the principle in Griffiths v Kerkemeyer was an exception to the general rule that there must be actual loss on the part of a plaintiff before a defendant was liable to pay damages and was confined to cases of personal injury and had not been extended to property claims. It was further submitted that the claim made here by the respondents for the cost of hiring the courtesy vehicle was expressly rejected by the House of Lords in Dimond v Lovell [2000] 2 WLR 1121.

18    After a lengthy examination of the law, Mr Dillon LCM considered that the principle in Griffiths v Kerkemeyer was not confined to personal injury cases. He also noted that in later decisions, the High Court adhered to the principle that “need” is the sole determinant as to whether or not a plaintiff has suffered loss. He held that each of the respondents had suffered a loss, namely the loss of use of the damaged vehicle, and each had established a need for the use of a replacement vehicle whilst the damaged vehicle was being repaired. The respondents were thus entitled to recover the cost of hire of the courtesy vehicle, even though that cost was borne by a third party, namely the NRMA.

19    Although the parties to each proceeding before Dillon LCM were the individual owners/insured of the vehicles involved in the collision, it was clear that the cases were being prosecuted in the interests of the respective insurers. In fact, as the respondent in each proceeding put the matter, NRMA was seeking “to recover for itself, pursuant to the doctrine of subrogation, the costs incurred in respect of the ‘courtesy cars’ … supplied under the [Programme]”. It should be noted, however, that subrogation as such was not pleaded.

20    Mr Dillon LCM considered that the question of subrogation was outside the scope of the actions before him. He was correct in that view. However, he considered the question in some detail because the parties had raised the question in the manner to which I have referred and he well understood the matter was likely to be the subject of an appeal. In dealing with the subrogation issue, Mr Dillon made a number of findings of fact. In particular, he rejected the argument that the respondents’ contracts of insurance had been extended or varied by the advertisement of the Courtesy Car Programme. Rather, it had offered the Programme for its own commercial objectives. He said:

“It seems to me that NRMA, probably in response to market forces, chose to offer a service not provided for in, but excluded from, its policy of insurance.
…
… the setting up of the scheme was almost certainly driven by its desire to retain and increase market share in that highly competitive market.”

21    He considered that had NRMA’s standard form policy not excluded indemnification in respect of the hire vehicles, NRMA “may well have been subrogated” to the respondent’s rights: see King v Victoria Insurance Co Ltd (1896) AC 250 at 256; Sydney Turf Club v Crawley [1971] 1 NSWLR 724 at 730. However, he held that the NRMA’s claim to be subrogated failed because, in bearing the cost of hire of the courtesy vehicles, it had made a “purely voluntary payment” to or in respect of the insured.

Questions Raised in the Summons

22    Although Sully J posed four questions for this Court’s determination, the second and fourth questions were subsidiary to the main issues which were raised in the first and third questions.

First Question on the Summons

23    The first question raised on the summons is whether the principles enunciated in Griffiths v Kerkemeyer in relation to damages for needs caused by personal injury are applicable to a plaintiff’s loss of use of a non-income earning chattel.

was a personal injuries case involving a claim for nursing assistance which had been provided gratuitously by members of the plaintiff’s family. The High Court held that a plaintiff was entitled “to recover damages for his accident-caused needs met by third party subventions…”: per Stephen J at 175. Mason J, in dealing with the particular claim made, said at 192:

“The [plaintiff’s] relevant loss is his incapacity to look after himself as demonstrated by the need for nursing services and this loss is to be quantified by reference to the value or cost of providing those services.”

25    As I have indicated, Mr Dillon LCM based his determination on the applicability of Griffiths v Kerkemeyer to the claims made. However, he was not referred to that line of authority commencing with The Owners of No 7 Steam Sand Pump Dredger v The Owners of SS ‘Greta Holme’ (‘The Greta Holme’) [1897] AC 596 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 injuries to property. Nor did counsel for either party refer to them in the written submissions filed in support of the appeal. At the conclusion of the appeal leave was given to submit further written submissions.

26    In the Greta Holme, the steamship of that name had collided with a dredger owned by the trustees of the Mersey Docks and Harbour Board. The dredge could not be used for a period of 15 weeks whilst it was under repair. Lord Halsbury LC, at 601, stated the principle governing the right of recovery of damages in such situation in the following terms:

“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.”

27    It had been argued that although the dredging work of the Board had been delayed, no “tangible pecuniary loss” had been sustained as the Board did not charge for its work, nor did it hire a replacement dredge. Lord Halsbury responded to that proposition at 602:

“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 what-ever. 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.”

28    In The Mediana a lightship owned by the Mersey Docks and Harbour Board was damaged by the steamship the Mediana. During the period of repair, the Board used another light ship owned by it and maintained for the purpose of being a replacement ship in the case of any such emergency.

29    The Earl of Halsbury LC considered that the case was covered by the principle stated in The Greta Holme. He said at 116:

“…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”.

30    The Lord Chancellor explained the operation of the relevant principle at 117:

“… by a wrongful act of the defendants the plaintiffs were deprived of their vessel. When I say deprived of the 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 …”

31    The next case where this issue arose was Mersey Docks & Harbour Board v Owners of the SS Marpessa [1907] AC 241 (‘The Marpessa’). That was another steamship/dredge collision case, in which the dredge was disabled for nine days. The dredge “earn[ed] nothing in money and [cost] a good deal, but [did] indispensable service in clearing away the sand”. The Board claimed damages for the nine days the dredge was out of service. Lord Loreburn (Lords Ashbourne, Macnaghten and Robertson agreeing) said at 244:

“[The Greta Holme] decided that in such a case general damages might be recovered as well as the cost of procuring another vessel to do the work; but it did not, and could not, lay down a rule of universal application for the ascertainment of the damages in each particular case.”

32    In Commissioners for Executing Office of Lord High Admiral of United Kingdom v Owners of Steamship Chekiang [1926] AC 637, the owners of the steamship ‘The Cairo’, which was damaged by ‘The Checkiang’, arranged for the annual refit of ‘The Cairo’ to be undertaken at the same time as the repairs that were necessary due to the damage caused by ‘The Checkiang’. They claimed damages for loss of use of ‘The Cairo’ for the period it was being repaired and refitted. The Registrar allowed for loss of time for twenty days, being the time it would have been in dry dock if only the repairs were undertaken. The question raised in the House of Lords was whether the Registrar was correct in allowing damages as for the total deprivation of the vessel for the period of twenty days during which the vessel was undergoing collision repairs, while at the same time, refit repairs were being undertaken.

33    Viscount Dunedin stated at 642:

“… inasmuch as it is found in fact that there was no necessity to make the refit, the Admiralty were entitled to take advantage of the vessel being in dry dock without being called on to contribute to the expense of docking or to forego the payments in full to which they were entitled as for the loss of the use of the vessel for the period of detention due to the collision during which the vessel was rendered unfit for her active service. This period, as already mentioned, was fixed at twenty days.”

34    And as Lord Sumner explained it at 645 - 6:

“… the present matter depends on the law relating to liability for damage caused by wrongdoing … that a tort-sufferer is not to go short of compensation for damage at a tortfeasor’s hands, merely because he does not trade for profit is well settled.”

35    In Commissioners for Executing Office of Lord High Admiral of the United Kingdom v Owners of Steamship Susquehanna [1926] AC 655, Viscount Dunedin again reviewed the authorities on the point, referring, first, to the Greta Holme. He said at 659:

“That case laid down that damages were due for the period during which a ship was rendered useless, even though the ship was not a ship of the kind which could secure commercial employment and earn consequent reward.”

36    Viscount Dunedin held at 662 that the owners were entitled to general damages for the loss of use of the vessel, notwithstanding they had suffered no pecuniary loss, and may have been able to “supply the gap made by the accident out of their resources”. Lord Blanesburgh pointed out at 668 that the claim was for general, not special damages.

37    On the basis of these authorities and without reference to Griffiths v Kerkemeyer, I am of the opinion that the respondents are entitled to damages for the loss of use of their vehicles. It is necessary however, to deal with the supplementary written submissions filed by both parties.

38    The appellants contended that the principle to be applied was as stated by Steyn J in Cosemar SA v Marimarna Shipping Co Ltd [1990] 2 Lloyd’s Rep 323. In Cosemar, Steyn J was, in so far as it is relevant to this case, dealing with an argument as to whether, as a third party had agreed with the owners of the vessel to fund certain voyage expenses, the hirer was thereby relieved from liability in respect of those expenses. The owners argued that the arrangement with the third party was res inter alios acta. Steyn J, assisted by dicta in Browning v The War Office [1963] 1 QB 750 and Harlow & Jonesv Panex (International) Ltd [1967] 2 Lloyd’s Rep 509, held at 328 that:

“The third party funding of the payment of the expenses is irrelevant in law … to the recoverability by the owners of sums which the time charterers ought to have paid.”

39    It was submitted that it follows from this statement that Cosemar contemplates that it is permissible to look at the true nature of the arrangements between a third party and a plaintiff to determine:

(i) whether the arrangement is one which is res inter alios acta ; and

(ii) if not, whether the arrangement is one which, properly construed, extinguished or does not extinguish the loss. For example, it might be an arrangement reached which, properly regarded, is one which goes in mitigation of damages.

40    I do not see that this submission advances the appellants’ case. In Cosemar the negligent defendant challenged the plaintiff’s entitlement to certain damages, claiming there was no loss because a third party had funded the claimed expenses. The Court was required to deal with that issue and held that the third party funding was “irrelevant in law” – in other words, it was res inter alios acta. That is precisely the position here, except for the factual difference that in Cosemar the third party funding was conditional upon the plaintiff paying the charges if they were recovered from the defendants, whereas the present cases involve gratuitous payments. That factual difference does not affect the application of the principle. I must also say, that I do not see any relevance in the appellants’ reference to mitigation. Mitigation, of its very nature, is not a matter which goes either to the question of entitlement to damages, which is the matter in issue here, or to extinguishment of loss.

41    The appellants next submitted that in Harlow & Jones v Panex, Roskill J concluded that an arrangement similar to that reached in Cosemar did not preclude the plaintiff from recovering the payment that had been made by the third party. Implicitly, so the argument was put by senior counsel for the appellants, Roskill J had concluded that the arrangement between the plaintiff and the third party was not res inter alios acta, that is, the arrangement could be looked at in fact to identify whether the plaintiff had truly extinguished the loss or whether the arrangement was one which contemplated repayment if the monies were recovered from the defendant. It was submitted that in the cases here there were no arrangements which required the respondents to pay to the NRMA the amount recovered, or any amount, for the hire of the courtesy car. Accordingly, the arrangement extinguished the loss.

42    In Harlow & Jones v Panex, the plaintiffs had an arrangement with the supplier of goods that the supplier would only claim storage charges for the goods the plaintiffs had contracted to sell to the defendants, if the plaintiffs recovered those charges from the defendants. The defendants had argued that such an arrangement barred the plaintiffs from recovering those costs. Roskill J said at 531:

“For my part I am unable to see why. The plaintiffs have – and this was not contested – apart from any agreement with the Russian sellers, a perfectly good claim for these storage charges. Why the plaintiffs should not make an arrangement with their own sellers, ‘We will claim these and hand the proceeds over to you if we recover provided you let us off it we do not’, I am unable to see. Nor do I see why the existence of such an arrangement should afford the defendants a defence which they would not otherwise possess. It seems to me an eminently sensible commercial arrangement. I think the storage charges are recoverable.

43    With respect to the appellants’ submission, this was a finding to the effect that the arrangement with the Russian sellers was res inter alio acta.

44    The respondents also filed further submissions. Again, no reference was made to the line of authorities referred to by the Court in argument. Rather, the Court’s attention was directed to Giles v Thompson [1994] 1 AC 142, and in particular the judgment of Lord Mustill. In Giles v Thompson, the plaintiff’s car had been damaged and she obtained a replacement hire vehicle. Under the hire agreement, the plaintiff was not required to pay the hire charges “until such time as damages … have been recovered from [the party at fault]”. It was a term of the hiring agreement that the plaintiff permit the hiring company’s solicitor to conduct the litigation against the party at fault. The initial issue which arose in that case was whether the hiring agreement was champertous and therefore unlawful. The agreement was found not to be champertous. Lord Mustill, with whom the other Law Lords agreed, then dealt with the question whether, given the terms of the hiring agreement, the plaintiff had suffered any loss for which she could recover. Lord Mustill held that there was a real liability for which the plaintiff was responsible under the hiring agreement, although suspended pending the recovery from the party at fault. He then raised the issue which was the subject of the respondent’s further written submissions, stating at 166:

“… 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 reconciliation of cases such as Harlow & Jones Ltd v Panex (International) Ltd [1967] 2 Lloyd’s Rep 509, Donnelly v Joyce [1974] QB 454, McAll v Brooks [1984] R.T.R 99 and CosemarS.A v Marimarna Shipping Co Ltd [1990] 2 Lloyd’s Rep 323.”

45    The question raised by Lord Mustill is, of course, the very matter in issue here and senior counsel for the respondents relied on the four cases referred to by Lord Mustill as an avenue to establishing that the principles in Griffiths v Kerkemeyer apply.

46    I have already referred to Harlow & Jones v Panex and Cosemar. In Donnelly v Joyce, a case dealing with gratuitously provided services for personal injury, the court held, at 460, that the loss to the provider of such services was the plaintiff’s loss for which there was an entitlement to recover. Megaw LJ, who delivered the decision of the English Court of Appeal, defined the loss as the existence of a need in the plaintiff for the service provided. He stated at 462:

“Hence it does not matter, so far as the defendant’s liability to the plaintiff is concerned, whether the needs have been supplied by the plaintiff out of his own pocket or by a charitable contribution to him from some other person whom we shall call the ‘provider’; it does not matter, for that purpose, whether the plaintiff has a legal liability, absolute or conditional, to repay to the provider what he has received, because of the general law or because of some private agreement between himself and the provider; it does not matter whether he has a moral obligation, however ascertained or defined, so to do. The question of legal liability to reimburse the provider may be very relevant to the question of the legal right of the provider to recover from the plaintiff. That may depend on the nature of the liability imposed by the general law or the particular agreement. But it is not a matter which affects the right of the plaintiff against the wrongdoer.”

47    In relation to the latter point, the court pointed out at 463:

“The defendant is not a party to the contract. He knows nothing of its making. It is res inter alios acta.”

48    The principle in Donnelly v Joyce was applied by the Court of Appeal in McAll v Brooks [1984] RTR 99, a case which involved property damage only. There the plaintiff held a policy of insurance negotiated by Lords Insurance Brokers Ltd. At the time of entry into the policy, the plaintiff accepted membership of a “motor club facility” offered by the broker at a small cost additional to the premium. The “benefit” conferred by membership was that if an insured’s motor vehicle was off the road following an incident covered by the policy, a replacement car was made available.

49    The plaintiff had an accident and exercised his entitlement to have a replacement car. The hiring cost of the vehicle supplied under the scheme was 328 pounds, although the plaintiff was not liable to pay that amount. Lawton LJ said at 103:

“… the plaintiff had a need for a replacement car. Lords Insurance Brokers satisfied that need. It is accepted that the charge of … 328 [pounds] was a reasonable charge having regard to all the circumstances. On the authority of Donnelly’s case that need had to be paid for by the defendant as the wrongdoer. It follows, therefore, that there should have been, in my judgment, an award of … 328 [pounds] to the plaintiff to cover that, unless it can be said that in some way the need and the insurance broker’s satisfying of it is tainted with illegality to which the plaintiff was a knowing party.”

50    The question of illegality arose because of an argument that the scheme constituted an insurance business and was being carried on without approval as required by the relevant statute. Lawton LJ held that even if the scheme was tainted by illegality that did not affect the plaintiff’s entitlement to recover from the defendant the “cost” of the replacement vehicle, because the plaintiff was unaware of any illegality.

51    Dillon LJ agreed, stating at 105:

“The plaintiff in this case has suffered an injury which deprived him of his car for several weeks and put him in a position in which it was reasonably necessary that he should have the use of a hired car while his own was not there. That is the injury for which he is compensated by the award of damages and it is an injury to him and not to the car hire firm or the insurance brokers. What he does with his money is his business and no concern of the court.”

52    Donnelly v Joyce was, of course, applied by the High Court in Griffiths v Kerkemeyer (see Stephen J at 173-5; Mason J at 192).

involved a similar factual situation to Giles v Thompson. However, the hire agreement in Dimond v Lovell was held to be unenforceable under the Consumer Credit Act 1974 (UK). The plaintiff’s claim for the cost of hire of the replacement vehicle was therefore held not to be recoverable. Lord Hoffman noted that in Hunt v Severs [1994] 2 AC 350, the House of Lords had rejected the broad res inter alios acta principle of Donnelly v Joyce. His Lordship stated at 1133-1134:

“The House treated the two cases mentioned by Lord Reid in Parry v Cleaver [1970] Act 1, 14 (‘the fruits of insurance which the plaintiff himself has provided’ and ‘the fruits of the benevolence of third parties’) as ‘apparent exceptions to the rule against double recovery’ … The House declined to create another exception for the case in which, as in Donnelly v Joyce … the plaintiff claims compensation for the reasonable cost of necessary services which have in fact been provided voluntarily by a third party. It decided that in such a case damages cannot be recovered for the plaintiff’s own benefit. He can sue only if he claims as trustee for the person who provided the services …
This case is of course far away from the gratuitous provision of services (usually by a relative) which was considered suitable for recovery as trustee in Hunt v Severs … If Mrs Dimond is allowed to sue Mr Lovell as trustee for 1st Automotive, the effect will be to confer legal rights upon 1st Automotive by virtue of an agreement which the Act of 1974 has declared to be unenforceable. This would be contrary to the intention of the Act. The only way, therefore, in which Mrs Dimond could recover damages for the notional cost of hiring a car which she has actually had for free is if your Lordships were willing to create another exception to the rule against double recovery. I can see no basis for doing so. The policy of the Act of 1974 is to penalise 1st Automotive for not entering into a properly executed agreement. A consequence is often to confer a benefit upon the debtor, but that is a consequence rather than the primary purpose. There is no reason of policy why the law should insist that Mrs Dimond should be able to retain that benefit and make a double recovery rather than that it should reduce the liability of Mr Lovell’s insurers.”

54    However, Lord Hobhouse of Woodborough noted at 1139-1140 that questions of loss of use of a chattel due to another’s negligence:

“… have long ago received authorative answers in cases concerning ships: The Glenfinlas (Note) [1918] P. 363; The Kingsway [1918] P. 344; The London Corporation [1935] P. 70. These cases also distinguish between the cost of the damage to the chattel and consequential losses to the owner of the chattel such as loss of revenue. However even where the chattel is non profit earning (as was Mrs Dimond’s car) there may still be scope for awarding general damages for loss of use: The Mediana [1900] AC 113; … Admiralty Commissioners v SS Chekiang [1926] AC 637; Admiralty Commissioners v SS Susquehanna [1926] AC 655.”

55    The appellants had contended that Donnelly v Joyce upon which Griffiths v Kerkemeyer was based was no longer good law. This submission was based upon the decision of the House of Lords in Hunt v Severs where it was held that an injured person who receives damages for services gratuitously provided by a third party “should hold [those damages] on trust for the voluntary carer”: per Lord Bridge of Harwich at 363.

56    The respondents submitted, however, that the four cases referred to by Lord Mustill in Giles v Thompson, including Donnelly v Joyce, “demonstrates that the principle reflected in Griffiths v Kerkemeyer is one of general application and is not confined to cases of personal injury”. They relied upon the High Court’s reiteration in Kars v Kars (1996) 187 CLR 354, that the principle in Griffiths v Kerkemeyer remained good law in Australia. To this must be added, of course, Van Gervan v Fenton (1992) 175 CLR 327 and Grincelis v House (2000) 201 CLR 321.

57    Further, the respondents pointed out that the High Court in Kars v Kars declined to follow Hunt v Severs, although the Court recognised that some aspects of the Griffiths v Kerkemeyer principle were unsatisfactory stating at 382:

“In the end, a choice must be made as to the least unsatisfactory solution to the problem.
The choice which we prefer reduces the anomalies and absurdities. It lays emphasis on the provision for the injured plaintiff’s needs which is the foundation of recovery in such a case. It avoids an effective windfall to a compulsory statutory insurer, which would depend on its taking advantage of the fulfilment by a family member (who happens to be the tortfeasor) of obligations derived from duty and affection. It measures to the full the plaintiff’s need for services. To the extent not already done, it requires their reflection in the premium costs of compulsory insurance levied on insureds as a whole. It reduces the risk of real injustice to a plaintiff should a court, discounting the damages for the plaintiff’s needs to be fulfilled by the tortfeasor, fail adequately to take into account the vicissitudes of life which could throw the plaintiff back on others, including commercial care givers, for services no longer provided by the tortfeasor.”

58    Some of those reasons are not, of course, directly applicable to the facts of the cases under consideration here. That is not, however, of particular significance as, notwithstanding that both parties tended to maintain the focus on the Griffiths v Kerkemeyer principle and the question of its application to cases of property damage, I consider that the better solution is derived from the long line of authority traceable to The Greta Holme, to the effect that injury to property which deprives a party of the use of the thing is compensable. It is irrelevant if a third party provides a substitute for the thing damaged and the principle res inter alios acta applies so as to make it irrelevant as to the basis upon which the third party provides the replacement.

59    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.

Conclusion on Griffiths v Kerkemeyer Question

60    Having regard to the approach to the question of recoverability which I favour, the first question raised in the summons does not strictly apply. The second question sufficiently covers the matter sought to be raised and given its form should be answered in the negative.

Third Question on the Summons

61    That leaves the question of subrogation. I have already referred to the manner in which this issue arose and the learned magistrate’s finding on the issue. Notwithstanding his view that the issue fell outside the scope of the action, the respondents have filed a Notice of Contention claiming that the NRMA had a right to be subrogated to the rights of the insured to recover the cost of the car hire from the defendant.

62    The principle of subrogation operates where there is a policy of insurance which indemnifies the insured. In this case the Courtesy Car Programme was held to be a benefit provided by the NRMA outside of the insurance policy.

63    Senior counsel for the respondents submitted that in order to be entitled to subrogation, it was not necessary to find a “contract in the strict terms of an accident insurance policy”. It was sufficient that there was an arrangement in the nature of an indemnity, which, it was submitted, was the case here. The agreement said to be constituted by the Courtesy Car Programme was such an arrangement.

64    There are a number of difficulties with the respondents’ case on this point, the most fundamental of which was that there was no evidence of any assignment of this part of the respondents’ claims to the NRMA, nor any evidence of any other relevant contractual arrangement.

65    The conclusion, therefore, seems inevitable. The Courtesy Car Programme was not part of the cover provided by the insurance policy. The nature of the arrangement reached between the insured and the NRMA is not established by any finding of Mr Dillon LCM nor is there any clear evidence to enable this Court to determine the point. In any event, as I have earlier indicated, and is more fully considered by Ipp AJA, the learned magistrate was correct in concluding that the issue fell outside the scope of the claim made by the respondents.

66    I consider, therefore, that the questions stated by Sully J should be answered as follows.

Question (1)

For the reasons given by me this question does not arise.

Question (2)

‘No’.

Question (3)

‘No’.

Question (4)

‘No’.

71    Accordingly, the summons should be dismissed with costs.

72    IPP AJA: I have had the benefit of reading the reasons for judgment to be published by Beazley JA. I agree with her Honour’s reasons and conclusions. I wish merely to add some additional comments of my own.

73    The respondents established that, like many other persons in this country, they are dependent on their motor vehicles to satisfy their daily transport needs (which do not involve the earning of income or profit). All (save, as explained by Beazley JA, for Ms Van Miltenberg) were insured with NRMA. The policies of insurance in question excluded the provision of replacement vehicles in the event of the vehicles of the insured being damaged. Nevertheless, NRMA gratuitously provided replacement motor vehicles to the respondents. The respondents sought to recover the cost of hiring replacement vehicles and the learned magistrate upheld their claim.

74    The appellants argue that the magistrate erred as, according to them, the law of negligence does not recognise a claim for compensation for the expense of incurring hire charges for non-income producing vehicles.

75    Without reference to authority, this argument is unattractive. A legal system, having the result for which the appellants contend, would, as Lord Nicholls remarked in Dimond v Lovell [2000] 2 WLR 1121 at 1125, “be sadly deficient”, as it would not “reflect the practicalities of the situation”. As Beazley JA has demonstrated, however, our law does indeed respond to the community’s need in this respect.

76    Her Honour has traced the line of cases since The Owners of No 7Steam Sand Pump Dredger v The Owners SS “Greta Holme” [1897] AC 596 which establishes a plaintiff’s right to damages for the loss of use of a non-income producing chattel. One of those cases, Admiralty Commissioners v SSSusquehanna [1926] AC 655, concerned damage to an oil tanker that would not have been chartered during the period that it was being repaired. The vessel “was not a ship of the kind which could secure commercial employment and earn consequent reward” (per Viscount Dunedin at 659). The House of Lords, following the Greta Holme, The Mediana [1900] AC 113 at 117-118 and Admiralty Commissioners v SS Chekiang [1926] AC 637, held that the claim was for general damage (and not special damage - see in particular at 667) and damages were payable. Lord Blanesburgh, in particular, made it plain that the decision was based not on some principle peculiar to Admiralty law but rested on the general principles of the common law.

77    Recently, in Dimond v Lovell, Lord Hobhouse at 1139 to 1140 accepted that where the chattel is non-income earning (as was Mrs Dimond’s car) “there may still be scope for awarding general damages for loss of use”. He, too, accepted that this followed from the general principles of the common law.

78    In the course of argument on appeal there was much discussion as to whether there was a relevant similarity between the respondents’ claims for damages for loss of use of their vehicles and Griffithsv Kerkemeyer (1977) 139 CLR 161 claims by injured plaintiffs in personal injury actions.

79    It is now well-established that the true basis of claims that fall into the latter category is the need of the plaintiff for such services, not the actual financial loss suffered by the plaintiff: Van Gervan v Fenton (1992) 175 CLR 327; Grincelis v House (2001) 201 CLR 321 at 327 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. The fact that the services are provided gratuitously does not affect the characterisation of the damages in question. The gratuitous nature of the services merely points up the fact that damages in respect thereof are based on need and not on actual financial loss, and also raises the question whether such services are to be regarded as res inter alios acta.

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.

81    Accordingly, in my view, as claims for damages to a non-income producing chattel and claims of the Griffithsv Kerkemeyer category are both based on need, the latter category of cases provides additional support for the proposition that the respondents are entitled to damages against the appellants.

82    In Griffiths v Kerkemeyer Stephen J (at 179) observed that, in the area of the law he was then considering, there is no substantive significance in the distinction between special and general damages. His Honour said:

“[I]f a plaintiff’s accident-caused need is the loss to be compensated, the reasonable cost of satisfying that need being only a means of quantifying the damages to be awarded, the distinction between these two kinds of damages becomes unreal. Apart from the use of special damage to describe that which a plaintiff must suffer in torts not actionable per se if he is to have a remedy and to distinguish, in contract, between losses arising naturally from breach and other losses, the term seems to serve little other useful purpose.”

In Kars v Kars (1996) 187 CLR 354 Dawson J at 359 reiterated these remarks.

83    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, or by reference to the income foregone by the provider of the services, but, generally, by reference to the market cost of providing them: Grincelis v House (2001) 201 CLR 321 at 327 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; Van Gervan v Fenton (1992) 175 CLR 327.

84    Similarly, in my opinion, in the case of claims for damages for injury to a non-income producing chattel, there is also no substantive significance in the distinction between special and general damages. Where, by reason of need, the plaintiff is required to hire a replacement chattel, the damages are to be measured by reference to the market rate of hiring the replacement: cf The Greta Holme at 605 per Lord Herschell; Dimond v Lovell at 1140 per Lord Hobhouse.

85    I now turn 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.

86    In The National Insurance Company of New Zealand Limited vEspagne (1961) 105 CLR 569, Dixon CJ at 573 referred to advantages which accrue to an injured plaintiff as a result of benevolence. His Honour said that these advantages:

“… are the product of a disposition in his favour intended for his enjoyment and not provided in relief of any liability in others fully to compensate him.”

Therefore, such advantages are to be regarded as collateral to the damage suffered by a plaintiff. The same approach was adopted by Windeyer J at 597 to 598 in concluding that “the benefits of benevolence do not reduce damages recoverable” . In answering the question why this is so, Windeyer J stated at 598:

“The most satisfying of the reasons that have been given for refusing to diminish damages because of voluntary gifts is that they are given for the benefit of the sufferer and not for the benefit of the wrongdoer.”

Thus, the intent of the provider will be determinative: see also Griffiths v Kerkemeyer at 175 to 176 per Stephen J; Kars v Kars per Dawson J at 179; Redding v Lee (1983) 151 CLR 117 per Mason and Dawson JJ.

87    In Kars, in applying the principles laid down in Espagne, Dawson J said at 363:

“There remains the problem whether such a test is capable of application where the benefit is in the form of gratuitous services provided by friend or relative who is the tortfeasor whose negligence caused the plaintiff’s injuries which, in turn, gave rise to the need for the services. I can see no relevant distinction between a financial benefit and a benefit in the form of services …”

In my opinion, there is no relevant distinction between a financial benefit, a benefit in the form of services, and a benefit in the form of a replacement vehicle provided to the owner of a vehicle damaged by the negligence of another.

88    In the circumstances, I agree with Beazley JA that the provision of a replacement vehicle by NRMA was collateral and res inter alios acta.

89    Finally, I turn to the question of subrogation. I agree that, as the courtesy car programme was not part of the cover provided by the insurance policies in question, NRMA was not entitled to be subrogated to the rights of its insured. The magistrate held that as there was no right of subrogation on the part of NRMA, the subrogation issue was “outside the scope of the case”.

90    I agree with Beazley JA that his Worship was correct in this respect. I would add however, that this consequence follows largely by reason of the omission on the part of the appellants in each case to raise subrogation as an issue at the trials of the four actions, the subject of this appeal.

91    Beazley JA has pointed out that, although the parties to each proceeding were the owners of the vehicles involved in the collisions, the cases were being prosecuted by NRMA, their insurer. NRMA was asserting that, pursuant to the doctrine of subrogation, it was entitled to recover the costs incurred in respect of the courtesy cars supplied by it. The involvement of NRMA in this way was not an issue that was raised, as an arguable defence, for consideration by the magistrate.

92    In Woodside Petroleum Development Pty Ltd v H & R - E &W Pty Ltd (1999) 20 WAR 380 I pointed out at 387 that:

“Although no allegation as to the right of subrogation has to be made in the statement of claim, the defendant may raise the absence or inadequacy of that right in its defence; it is then for the insurer to justify its right to proceed in the name of the assured.”

At the trial, it was perhaps open to the respondents to assert that, in reality, the cases were being brought by NRMA, and not the respondents themselves, and NRMA was not entitled to so prosecute the actions. I make no comment on the merits of such an argument, but merely point out that the issue, not having been raised at the trial, was an issue properly regarded by the magistrate as falling outside the scope of the case.

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