Date of Hearing: 8 September 2021 Date of Judgment: 8 December 2021
S35/2021 & S36/2021
ORDER
Matter No S35/2021
1. Vary order 6 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 17 August 2020 by replacing "plaintiff's damages to be assessed in accordance with the reasons for judgment of the Court of Appeal" with "plaintiff's damages to be assessed in accordance with the reasons for judgment of the High Court of Australia and with the magistrate's reasons as to the credit hire costs".
2.Appeal otherwise dismissed.
3.The appellant to pay the costs of the respondent.
Matter No S36/2021
Appeal dismissed with costs.
On appeal from the Supreme Court of New South Wales
Representation
J T Gleeson SC with S Habib SC, K G Oliver and R J May for the appellant in each matter (instructed by MCK Lawyers)
B W Walker SC with J L Gruzman, G E S Ng and W R Richey for the respondent in each matter (instructed by Spectre Law)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Arsalan v Rixon Nguyen v Cassim
Damages – Torts – Negligence – Damage to chattels – Consequential loss – Physical inconvenience and loss of amenity of use – Where respondents owned prestige vehicles – Where prestige vehicles negligently damaged and unavailable during periods of repair – Where appellants liable for costs of repairing vehicles – Where respondents deprived of use of prestige vehicles including enjoyment of various functions – Where respondents incurred costs of hiring replacement vehicles of equivalent value to damaged vehicles – Whether costs of hiring replacement vehicles recoverable as damages – Whether respondents required to prove need for prestige replacement vehicles – Whether hiring replacement vehicles of equivalent value constitutes acts taken to mitigate loss – Whether hiring replacement vehicles of equivalent value unreasonable.
Words and phrases – "act in mitigation", "compensatory principle", "concept of need", "consequential loss", "costs incurred in mitigation", "costs of hire", "equivalent replacement vehicle", "equivalent value", "heads of damage", "loss of amenity of use ", "loss of pleasure or enjoyment", "luxury vehicle", "mitigation of loss", "negligent damage to a chattel", "physical inconvenience", "prestige vehicle", "proof of loss", "reasonable hire costs", "replacement vehicle".
KIEFEL CJ, GAGELER, KEANE, EDELMAN AND STEWARD JJ.
Introduction
Mr Rixon and Mr Cassim, the respondents, were involved in car accidents. The appellants, by their insurers, admitted liability for the accidents. The appellants are liable for the costs of repairing Mr Rixon's and Mr Cassim's damaged cars, respectively an Audi A3 sedan and a 2012 BMW 535i sedan. These appeals concern further liability of the appellants for Mr Rixon's and Mr…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Arsalan v Rixon [2021] HCA 40
Case
[2021] HCA 40
Decision Date
CaseChat Overview and Summary
These appeals concerned the recoverability of costs incurred by plaintiffs in hiring replacement vehicles after their own prestige vehicles were negligently damaged. The primary dispute revolved around whether the plaintiffs were entitled to recover the full cost of hiring replacement vehicles of equivalent value and luxury to their damaged cars, or if their recovery should be limited to the cost of hiring a more basic, functional vehicle. The High Court of Australia was required to determine the principles governing the assessment of damages for loss of use and amenity of a chattel, particularly in the context of mitigation of loss.
The legal issues before the High Court included whether the cost of hiring a replacement vehicle of equivalent value to a damaged prestige vehicle is recoverable as damages, and whether a plaintiff must prove a specific "need" for a prestige replacement vehicle. The Court also considered whether hiring a replacement vehicle of equivalent value constitutes a reasonable act of mitigation, and under what circumstances such costs might be deemed unreasonable.
The High Court reasoned that while the compensatory principle aims to put a plaintiff in the position they would have been in had the tort not occurred, this must be balanced with the principle of mitigation. The Court held that it is not unreasonable for a plaintiff to mitigate physical inconvenience and loss of amenity of use by hiring a broadly equivalent substitute vehicle at a reasonable price. However, the extent to which the replacement vehicle is truly equivalent, whether credit hire charges are reasonable, and the overall quantum of hire costs are matters for assessment. In Mr Rixon's case, the Court varied the Court of Appeal's order to ensure the magistrate's reasons regarding credit hire costs were considered in the assessment of damages.
In the appeal of *Nguyen v Cassim*, the High Court dismissed the appeal with costs. In the appeal of *Arsalan v Rixon*, the High Court varied an order of the Court of Appeal of New South Wales, specifying that the plaintiff's damages were to be assessed in accordance with the reasons of the High Court and the magistrate's reasons as to credit hire costs, and otherwise dismissed the appeal with costs.
Orders
Orders of the court
Matter No S35/2021
1. Vary order 6 of the orders of the Court of Appeal of the Supreme Court of New South Wales made on 17 August 2020 by replacing "plaintiff's damages to be assessed in accordance with the reasons for judgment of the Court of Appeal" with "plaintiff's damages to be assessed in accordance with the reasons for judgment of the High Court of Australia and with the magistrate's reasons as to the credit hire costs".
2. Appeal otherwise dismissed.
3. The appellant to pay the costs of the respondent.
Matter No S36/2021
Appeal dismissed with costs.
Background
Background to the litigation
Although it will not usually be unreasonable for a plaintiff to mitigate physical inconvenience and loss of amenity of use by the hire of a broadly equivalent substitute vehicle at a reasonable price, there may be further consequential issues at the margins: the extent to which the vehicles are broadly equivalent; the extent to which particular hire expenses, such as credit hire charges, can be said to have been incurred in mitigation of the losses; and the extent to which the quantum of hire costs is otherwise shown to be unreasonable. None of those issues arises in these appeals.The facts and background to these appealsMr Rixon's case Mr Rixon owned an Audi A3 sedan which was damaged in a collision with a car driven negligently by Mr Arsalan. The repair of Mr Rixon's car took around two months. During that period of repair, Mr Rixon hired a replacement car of the same make and model. The hiring charge was $12,829.91. In the Local Court of New South Wales, the magistrate found that Mr Rixon needed a replacement car to travel to work, to drop off and collect a child at school, and for general errands. Mr Rixon also gave evidence that he needed a European car for reasons of safety but the magistrate found that Mr Rixon's safety concerns were a preference rather than a need. The magistrate also held that the hire costs incurred by Mr Rixon were based upon a credit hire rate which, it was said, did not represent the market rate of hire of the car. Mr Rixon was held to be entitled only to recover a hire charge of $4,226.25, which was the market rate of hiring a Toyota Corolla. An appeal by Mr Rixon to the Supreme Court of New South Wales was dismissed by Basten J. A majority of the Court of Appeal of the Supreme Court of New South Wales (White JA and Emmett A‑JA; Meagher JA dissenting) allowed a further appeal by Mr Rixon, concluding that Mr Rixon was entitled to the reasonable hire charges that he incurred. The matter was remitted to the Local Court for assessment of the reasonable hire charge in accordance with the reasons of the Court of Appeal.Mr Cassim's case Mr Cassim owned a BMW 535i sedan which was damaged in an accident caused by the negligence of Mr Nguyen. Mr Cassim's case was treated as involving a non‑income‑earning car, although in addition to the use of his car for social and domestic purposes he used it for his home business, which included transporting toilet seat samples. The repair of Mr Cassim's car took 143 days. For 84 days of that period, Mr Cassim hired a Nissan Infiniti Q50 car for $17,158.02. The magistrate found that Mr Cassim needed his car for ordinary domestic purposes, including shopping and taking his children to sporting engagements, and that the Nissan car he had hired was of slightly lower value than his BMW. Mr Cassim also gave evidence that he "wanted a nice, luxury car". He accepted that any car with five seats would likely have been "feasible" but said that he "preferred to have a car similar to [his own]". The magistrate also found that a Toyota Corolla would have met Mr Cassim's needs for a total hire cost of $7,476, but rejected the contention that Mr Cassim's claim for recovery should be limited to the market rate of hire for a Toyota Corolla on the basis that it was not a car of "equivalent value" to Mr Cassim's BMW. The magistrate awarded Mr Cassim as damages the full amount of hire costs that he had incurred.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
KIEFEL CJ, GAGELER, KEANE, EDELMAN AND STEWARD JJ
(dissent)
As to Mr Souaid, the decision of the magistrate in Souaid v Nahas, from which the appeals were dismissed, involved reasoning that Mr Souaid did not require or need a luxury car for his domestic, social, or family purposes. The magistrate accepted that Mr Souaid had told an officer of his insurer, in response to being asked whether he would have been "okay with just a Holden sedan or a Camry", that he would have been okay with "any car, just as long as I have a car there for my wife, for the kids and stuff", and that he "wasn't fussed at all"[44]. But none of this evidence was sufficient for the defendant to establish that it was unreasonable, in the objective sense required for expenses incurred in mitigation to be refused as damages, for Mr Souaid to prefer, for reasons of amenity that would otherwise be lost, a Lexus or BMW sedan that was equivalent to his damaged car.[44]Lee v Strelnicks (2020) 92 MVR 366 at 391 [106], 398 [137].Conclusion In the Nguyen v Cassim appeal, the appeal should be dismissed with costs. In the Arsalan v Rixon appeal, order 6 of the orders of the Court of Appeal made on 17 August 2020 in relation to remittal of the matter to the Local Court should be varied to replace the words "plaintiff's damages to be assessed in accordance with the reasons for judgment of the Court of Appeal" with "plaintiff's damages to be assessed in accordance with the reasons for judgment of the High Court of Australia and with the magistrate's reasons as to the credit hire costs", and otherwise the appeal should be dismissed with costs.