Ausbrand Pty Ltd v Vrahnos
[2006] NSWLC 46
•10/18/2006
Local Court of New South Wales
CITATION: Ausbrand Pty Ltd v Vrahnos [2006] NSWLC 46 JURISDICTION: Civil PARTIES: Ausbrand Pty Ltd
Nick VrahnosFILE NUMBER: 6956/05 PLACE OF HEARING: Downing Centre Local Court DATE OF DECISION:
10/18/2006MAGISTRATE: Magsitrate B A Lulham CATCHWORDS: Damages - Motor vehicle property damage claim - The measure of damages - Whether plaintiff who is paid cost of repairs is entitled to indemnity or whether onus is on plaintiff to prove cost of repairs are fair and reasonable - Evidence - Whether loss assessor employed by defendant falls within definition of expert witness - Whether loss assessor instead able to give expert evidence. LEGISLATION CITED: Uniform Civil Procedure Rules 2005. Rule 31.2(3)
Uniform Civil Procedure Rules 2005. Schedule 7CASES CITED: Darbishire v Warran (1953) 1 W.L.R 1067 (CA)
The London Corporation (1953) P 70 CA at 77
Harriton v Stephens (59NSWLR 694)
Kirch Communications Pty Ltd v gene Engineering Pty Ltd (2002) NSWSC 485
Collins Thompson v Clayton (2002) NSWSC 366
Makita Pty Ltd v Sprowles (2001) 51 NSWLR 705
ASIC v Rich (2005) NSWCA 152
Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd FC AFC 157REPRESENTATION: Plaintiff’s Counsel: Mr J. Gruzman
Plaintiff’s Solicitors:Mason Black
Defendant’s Counsel:Mr K.J. Manion
Defendant’s Solicitors:C.K.B. PartnersORDERS: Judgment for the plaintiff
1 Ausbrand Pty Ltd (hereinafter called ‘the plaintiff’) owned a Lexus RX330 Wagon which was damaged in an accident which occurred on 4 November 2004. The vehicle was stationary in traffic waiting to turn left when the rear right of the vehicle was struck by a vehicle being driven Craig Riethmuller (hereinafter called ‘the defendant’). The plaintiff’s vehicle was relatively new and was regarded in the motor vehicle repair industry as a ‘prestige vehicle’. The plaintiff’s vehicle was taken to North Shore Classic Autobody Repair Centre (hereinafter referred to as ‘North Shore Classic’) which held itself out as a repairer specialising in the repair of prestige vehicles. The plaintiff’s vehicle was comprehensively insured with NRMA, (formerly NRMA and referred to in this judgment as the NRMA).
2 On 6 November 2004 North Shore Classic prepared a quotation for the repair of the plaintiff’s vehicle in the sum of $9,708.30. The vehicle was inspected by Darren Kay, motor vehicle loss assessor for NRMA on 11 November 2004. He assessed the fair and reasonable cost of repairs to be $9,239.81. NRMA paid that amount to North Shore Classic in accordance with an authority from the plaintiff.
3 The defendant’s vehicle was comprehensively insured by AAMI. The plaintiff’s vehicle was inspected by AAMI inspectors Angelo Houliaras and Scott Matthews at North Shore Classic’s repair shop on 14 February 2006. Mr Matthews assessed the fair and reasonable cost of repairs to be $4,456.26. Mr Matthews’ report was tendered as Exh.3.
4 NRMA having paid the sum of $9,239.81 to the repairer, sought to recover that amount from AAMI. The proceedings were brought and defended pursuant to each insurer’s rights of subrogation in the names of the vehicles’ owners. However the real dispute was between the two publicly owned and listed insurance companies. The owner or drivers of the motor vehicles were not called, nor was the repairer. The only witnesses called were the loss assessors Mr Kay for the plaintiff and Mr Matthews and Mr Houliaras for the defendant. Generally I intend to regard the two insurance companies as the parties to the dispute.
5 The plaintiff’s Statement of Claim filed on 22 June 2005 claimed the sum of $9,239.81 plus costs and interest. The defendant’s Defence was filed on 12 July 2005. It admitted liability for the collision but denied the quantum of the plaintiff’s claim. The defendant also filed a Part Confession confessing to the sum of $6,549.24 plus costs and disbursements. The amount in dispute between the two insurance companies at that stage was $2,690.57. Mr Matthews’ report relied upon in evidence sought to reduce the plaintiff’s claim to $4,456.26. The amount in dispute between the parties was therefore $4,783.55.
6 This matter was typical of many matters before the court involving NRMA as insurer for the plaintiff against AAMI the insurer for the defendant. The disputes relate to the repair of prestige motor vehicles.
7 Mr Gruzman and Mr Manion, Counsel in this matter, made detailed submissions to me in relation to a previous matter of Lambros v Riethmuller. I delivered judgment in that matter on 4 October 2006. The submissions made by Mr Gruzman and Mr Manion in this matter were similar and went to the same issues. I propose to set out paragraphs 10 to 57 of my judgment in Lambros as I consider the findings which I made in relation to the measure of damages, the practices within the insurance industry – ‘Funny time-Funny money’ and the consideration of principles in relation to expert evidence to be similar, if not the same, as the issues in this case.
10. The measure of damages in a claim for the recovery of the cost of repairs to a motor vehicle has been regarded as being the reasonable cost of the repairs to put the car in the same condition as it was before the collision. The learned author of McGregor on Damages (15th Ed, para 1247) set out the principle as follows;
THE MEASURE OF DAMAGES
- The normal measure of damages is the amount by which the value of the goods damaged has been diminished. This, in the ship collision cases, has invariably been taken as the reasonable cost of repair. As Greer L.J. said in The London Corporation (1935) p.70, 77(C.A.) “Prima facie, the damage occasioned to a vessel is the cost of repairs – the cost of putting the vessel in the same condition as she was in before the collision, and to restore her in the hands of the owners to the same value as she would have had if the damage had never been done; and prima facie, the value of a damaged vessel is less by the cost of repairs than the value it would have if undamaged.” In the case of goods other than ships the cost of repair has now become established as prima facie the correct measure of the plaintiff’s loss. This has been accepted in a number of cases at first instance, and is confirmed by Darbishire v Warran (1963) 1W.L.R. 1067 (C.A.) where it was said by Harman L.J. that “it has come to be settled that in general the measure of damage is the cost of repairing the damaged article.” Moreover if, despite the repairs, the market value of the goods is less than before, the plaintiff should be entitled to such diminution in value in addition to the cost of repair. Thus in Payton v Brooks (1974) R.T.R. 169 (C.A.) Roskill L.J. said: “There are many cases … where the cost of repairs is a prima facie method of ascertaining the diminution in value. It is not, however, the only method of ascertaining the loss. In a case where the evidence justifies a finding that there has been, on top of the cost of repairs, some diminution in market value … I can see no reason why the plaintiff should be deprived of recovery under that head of damages also.”
12. For completeness I set out his written submissions on this point;
11. Mr Gruzman submitted that the principles referred to above from McGregor on Damages have as their bases the principle of ‘restitutio in integrum’ . Mr Gruzman went on to submit that it followed from that principle that the plaintiff was entitled to be put in the same position as though the damage had not happened and was therefore entitled to be indemnified by the defendant. Mr Gruzman, as I understand it, was submitting that if the plaintiff had paid the cost of the repairs to his vehicle then, unless it was proved that part of the amount claimed for repairs related to a procedure which was not necessary, or was a procedure not rendered necessary by the defendant’s negligence, then the plaintiff was entitled to succeed. As I understood his submission it was that the onus was not on the plaintiff to prove that the cost of the repairs were fair and reasonable, but that they were necessary and were required as a result of the defendant’s negligence.
- 7. The plaintiff contends that the normal measure of damages to which the plaintiff is entitled is the amount by which the value of the Mercedes has been diminished, which in the shipping cases, has been taken as the cost of putting a vessel in the same condition as she was in before a collision and to restore her in the hands of the owner to the same value as she would have had if the damage had not been done; prima facie this is the value of the repairs. ( The London Corporation ( 1935) P70 C.A. at 77)
- 8. The principle of restitutio in integrum is to be applied; that is the plaintiff is entitled to an indemnity in respect of its loss by virtue of the obligation to undertake a restitution.
- “The principle is that of restitutio in integrum, that is to say it ‘put the plaintiff in the same position as though the damage had not happened.’ (Derbyshire v Warran 1963) 3All E310 at 312)
- 9. As a true restitution cannot be achieved, the courts have identified the obligation of a defendant to put the plaintiff, so far as money can do it, into the same position as if the wrong had not been suffered. (Liesborsh Dreder v Eddison SS (1933) AC at 439).
- 10. Having incurred the sum of $15,054.76 the plaintiff says it is entitled to a verdict by way of an indemnity in that sum unless it is demonstrated that part of that amount relates to a procedure that was not necessary or a procedure that was not rendered necessary by the defendant’s negligence.
‘226 I would add that, for a period from the early part to about the middle of the last century, courts in England, particularly when referring to cases of damage to ships, made reference to the measure of damages as being the principle of restitutio in integrum: see for example the Admiralty Commissioners v SS Valeria [1922] 2 AC 242 AND THE Dredger, Liesbosh [1933] AC 449. This was later said to be incorrect terminology. Indeed, even in the Admiralty Commissioners v SS Valeria, Lord Dunedin criticised this usage by the Court of Appeal. He said (at 248):
- “… I agree with the Lords Justices in the Court of Appeal, but I cannot refrain from a slight criticism upon the use of the phrase ‘Restitutio in integrum.’ ‘Restitutio in integrum’ is a phrase which is properly applied when you wish to express the condition which is imposed upon a person seeking to rescind a contract. I do not think it can be properly applied to questions of tort.”
- This criticism was repeated in British Transport Commission v Gourley [1956] AC 185 by Earl Jowitt (at 197) and Lord Goddard (at 208). The criticism does not reflect on the compensatory principle itself, merely on the terminology used to describe it (see the discussion in McGregor, operation cit at 1-023).
- 227 In these cases the courts were applying the established compensation principle as stated in Livingstone v Rawyards Coal Co but were making the point that it is inappropriate to describe tortious damages as restitutio in integrum damages. This is because, in applying the established compensatory principle, the courts can only attempt to arrive at a fair estimate – true restitution not being possible. This approach is a reflection of the views of Lord Shaw in Watson Laidlaw (referred to by Kirby J in Cattanach v Melchoir ).
- “The plaintiff is not entitled to charge the defendant by way of damages any greater sum than that which he reasonably needs to expend for the purpose of making good the loss. In short, he is fully entitled to be as extravagant as he pleases, but not at the expense of the defendant.”
- ‘ The courts can only attempt to arrive at a fair estimate – true restoration not being possible.’
I am satisfied on the basis of the evidence in this case and adopting the statement of His Honour Ipp JA, that in relation to the repairs of motor vehicles in general, but particularly in the case of the repair of prestige motor vehicles, there may be a range of charges for repairs which might differ considerably but still come within the expression of ‘fair and reasonable’. That finding is re-enforced by the evidence which I will refer to in this case as to the approach and practices adopted by insurance companies in assessing vehicles which make the assessment of that ‘fair estimate' by the court, extraordinarily difficult.
16. Such difficulties can only extend the range of charges which will come within the definition of ‘fair and reasonable’.
17. Some assistance as to the extent of the range of charges which will come within the expression ‘fair and reasonable’ is gained from a consideration of the authorities. It is significant that Lord Lushington in The Pactolus in the quotation already set out (paragraph 6 hereof) referred to the need for extravagant charges to be lowered . True it is that he then approved a reduction by the Registrars, whose opinions were that the charges were high. Lord Pearson in Darbishire v Warran referred to the plaintiff not recovering expenses which were extravagant . In fact the damages sought to be recovered in Darbishire v Warran was an amount twice the replacement value of the vehicle where it was further found that the plaintiff had made no attempt to find a replacement vehicle.
19. Mr Gruzman relied on the decision of the Full Court of the Supreme of South Australia in Kostik v Giannakopoulos (Supreme Court South Australia, Full Court 2930 of 1988). I am not convinced that the case supports Mr Gruzman’s submission. Mr Manion, in his helpful submissions, also referred to the case of Kostik’s case. Although the case was dealing with a claim for damages for personal injuries and the matter in dispute related to a claim for part of the special damages being the cost for physiotherapy charges, nevertheless I found the case quite instructive and I set out the following excerpt;18. Mr Gruzman further submitted that as the plaintiff had paid the amount of the repairs, the sum claimed was therefore in the nature of ‘special damage’ which defined the plaintiff’s actual loss. Mr Gruzman submitted that the measure of damages should be approached in the same way as the court approaches the assessment of special damages in compensation cases, namely that the amount claimed and paid should be allowed unless the defendant calls evidence to prove that the amount claimed is not fair and reasonable.
- ‘Only one item of the special damages was attacked on appeal. That was the amount allowed for physiotherapy charges, namely $5,114. This was the amount charged by Mr A Minucci for his physiotherapy services. At the trial it was contended that the respondent had been grossly over-serviced in this regard. That contention was rejected by the learned trial judge and was not renewed upon the appeal. Counsel for the appellant contended, however, that the charges made were excessive.
- A plaintiff is entitled to recover only the reasonable cost of the treatment which he requires. A reasonable amount of latitude may properly be allowed in choosing professional advisers and providers of treatment and the cost of treatment need not be regarded as unreasonable simply because the treatment might have been obtained more cheaply elsewhere, Wyld v Bertram (1970) SASR 1. A plaintiff cannot recover, however, exorbitant charges made by those from whom he has obtained treatment. The onus is on the plaintiff to establish the reasonableness of the charges which he seeks to recover.
- In the generality of cases, of course, where no issue is taken with the reasonableness of the charges claimed, no evidence on this point is necessary. Where the reasonableness of the charges is challenged, it is necessary for the plaintiff to establish their reasonableness by evidence.
- The evidence called by the respondent to establish the reasonableness of physiotherapy charges was that of the physiotherapist, Mr Minucci, himself. Mr Minucci gave evidence that the charges which he made were substantially in excess of those recommended by the Australian Physiotherapists Association. Indeed if the charges were made in accordance with the fees recommended by the Australian Physiotherapists Association they would total not $5,114 as claimed but only $2,891`1.80. Mr Minucci’s only explanation of the higher charges was that “the Private Practitioners Group of South Australia, a special group of the Australian Physiotherapists Association, recommends that these fees be charged for third party claims unless the actual payment is made within 30 days when we revert back to recommended fees”. The justification put forward for charging higher fees was “because of the delays that we had experienced in the past with payment of accounts of up to 3 years, we sought our own legal advice and accounting advice which suggested that if the recommended fee should be thus at the point of contact, as long as the patient – there is a notice in our waiting room etc, to say that’s the case and all accounts should have had a slip that went with it to say that that’s the case, explaining the situation”.
- It was not suggested by Mr Minucci or on behalf of the respondent that the fees recommended by the Australian Physiotherapists Association were other than reasonable charges for the services rendered. I think that it is proper therefore to accept those recommended fees as the fair and reasonable cost of the treatment rendered. A defendant cannot reasonably be expected to pay by way of damages a surcharge imposed simply because there is a claim for damages. I think that it would be reasonable for a provider of treatment in such circumstances to stipulate with the patient for the payment of reasonable interest upon the charges during any period of delay in payment. If a plaintiff obligated himself in consequence of such a stipulation to pay interest, the treatment charges would no doubt form part of that component of an award of damages which would bear interest pursuant to s30c of the Supreme Court Act. No agreement to pay interest was proved in the present case. The reasonable cost of physiotherapy treatment as proved by the evidence was $2,811.80. The amount of special damages should be reduced by $2,302.20 to $7,206.’
- 1. The onus is on the plaintiff to establish the reasonableness of the charges which he seeks to recover.
- 2. The cost of treatment (or repair) need not be regarded as unreasonable simply because the treatment (or repair) might have been obtained more cheaply elsewhere.
- 3. Where the reasonableness of the charges is challenged, it is necessary for the plaintiff to establish their reasonableness by evidence.
- 4. In the particular facts of the case the court found that the reason for the higher charges (the delay usually encountered by physiotherapists in receiving payment in accident cases) was in the nature of a surcharge imposed simply because there is a claim for damages, and was not therefore fair and reasonable.
- ’14. In the absence of the defendant demonstrating that the work done was not rendered necessary by the collision or the charges were extravagant, exorbitant or grossly excessive, then the plaintiff should be awarded the sum of $15,054.76 for the repairs.’
1. The plaintiff has to prove that the work done was necessary (1) as a result of the damage caused by the defendant, and (2) to restore as close as possible the vehicle to its pre-accident condition.
- 2. It is for the plaintiff to prove that the costs of the repairs are fair and reasonable.
- 3. The court can only come to a fair estimate of the fair and reasonable costs indicating that there will a range of costs which will be fair and reasonable.
- 4. To be outside the range the costs would have to be exorbitant or extravagant or at least high.
- FUNNY TIME-FUNNY MONEY
24. I have received very helpful written submissions from the parties as follows;23. It was not argued in this case that the plaintiff had failed to mitigate his loss. In my view the defendant was not able to do so. The plaintiff took his vehicle to the Mercedes Benz authorised repairer. The repairs were assessed and approved by the NRMA. There could be no criticism of the actions of the plaintiff.
- Plaintiff: Mr Gruzman 9.6.2006
- In reply 6.9.2006
Defendant: Mr Manion 4.7.2006
I have considered carefully all of their submissions even though I may not specifically refer to them.
There was some delay in my preparing this judgment. Mr Manion used a tape of the proceedings to prepare his submissions and that necessitated me obtaining a copy of the transcript which originally I did intend to do.
26. The evidence indicated that the ‘hourly rate’ used as the basis for quotations and by assessors in estimating the fair and reasonable costs of repairs were as follows;25. Much of the evidence was directed towards the usual practice adopted by repairers in New South Wales. The evidence established that as a result of an earlier dispute as to the basis and fees charged by repairers, it was agreed that the Insurance Council would fix the hourly rate and that the Motor Traders’ Association (hereinafter referred to as ‘the MTA’) would fix the time to be allowed for the removal and repair of various parts of motor vehicles. Mr Matthew’s report stated that the MTA Guide was attached to the report. That was not done. Mr Gruzman called for the production of the Guide. The defendant’s solicitor produced a copy of the Guide, but it was not tendered. That was unfortunate as it means that in the preparation of this judgment, I have to rely on what the witnesses said as to what was in the Guide, rather than being able to refer to the Guide itself.
- ‘ MTA – A rate between $29 and $31
Perfect Autobody – referred to a unit charge of $30.90
27. Both assessors agreed that such figures although used almost universally in the repair industry, were fictitious. They did not represent the actual hourly rate charged by any repairers. The figure is fictitious and it is completely misleading to refer to that figure as an hourly rate. Both assessors agreed no repairers could do the work for $30.90 per hour. They would go out of business.
28. Mr Manion criticised Mr Wainwright severally and criticised the practice of Perfect Autobody because it does not refer to the figure it uses as an hourly rate, but simply as a unit worth $30.90. I found such criticism completely unwarranted. Perfect Autobody’s practice at least removed one fiction from the method used to calculate fair and reasonable repairs. I find that the move by Perfect Autobody to be proper and sensible.
29. I found Mr Manion’s criticism of Perfect Autobody’s practice surprising as the evidence of Mr Matthews was that AAMI has moved to a system whereby repairers preparing quotes for that company merely state the dollar amount quoted but on the basis that AAMI assess quotes on a unit fee or fictitious hourly charge of $30.00. Mr Manion’s report attached a copy of the quote received by AAMI for the repair of Mr Riethmuller’s car. It had a repair amount of $45.00. Mr Matthews said he assessed that quote on the basis of 1.5 fictional hours at $30.00 per fictional hour.
31. I note that Mr Matthews (AAMI’s Loss Assessor) agreed that the figure of $30.90 should not be referred to as an hourly rate, and said as follows (T02/05, p32,L5-10) in cross examination by Mr Gruzman;30. The practice for quotations to be based on the basis of a figure of $30.00 (or a figure close to it) was surprising, but I have to accept it. Apparently repairers and loss assessors have been preparing quotations on the basis of a price of $30.00 (fictitiously referred to as an hourly rate of $30.00) for so long, that both repairers and assessors now invariably quote and assess repairs on the basis of amounts of $30.00. I questioned both of the assessors. They both gave evidence that if asked to give an estimate for the repair of a certain part, say a bumper bar, both assessors said that they would calculate the fair and reasonable costs as being three units and therefore $90.00. Both said they would approach the task by considering how many units or fictitious hours of $30.00 the job would take. They would not assess the job in terms of real time or real money.
- Q. So the time when they quote time or hours it may as well be called a unit, because its not time, is it?
- Q. So when Perfect records something as a unit, they’re actually being more truthful about what’s going on by saying “this is not time, but it is a multiplier that we use”?.
- A. Maybe that’s the case, but..
- Q. You wouldn’t want to criticism them for that, would you”. They’re actually being truthful about how they’re going about preparing their document?
Funny time
FUNNY TIME-FUNNY MONEY
- Q. Were you able to compare the actual times that it was taking your enterprise to perform tasks to the MTA suggested times?
- Q. What was your experience overall?
A. They were carried out in much less time than the suggested MTA rate.
- Q. Is there any sort of average figure you are able to give us in relation to that time or range?
33. Mr Wainwright gave similar evidence. The result is that the MTA Guide might allow three hours for the repair of a certain part of the vehicle, and on that basis the appropriate cost would be three times the figure of $30.90, making the recommended quotation in accordance with the MTA Guide to be $92.70. However the work would not take three hours. It would take about one hour, so that the quotation would give the repairer a true hourly rate of $92.70.
34. Both loss assessors confirmed that no repairers or insurance companies access quotations based on real time and real money. As indicated previously the evidence was that using the figure of $30.90 as the basis of preparing quotations and assessing work is so entrenched, that it is universally used in the industry.
36. Moreover, during evidence confusion frequently arise as to whether questions are being asked on the basis of fictional or funny time or real time. In this matter submissions were made attacking the creditability of both witnesses based on apparently inconsistent answers. I am satisfied both witnesses were at times confused as to what basis the questions were asked and no real question of credit arose.35. The very considerable practical problem that such method of quoting and assessing repairs presents for the court is that, as in the example given above, when the assessors give evidence in court, they give evidence on the basis that three hours is a reasonable allowance for the work, and are cross examined on the basis that three hours is an excessive time to be allowed for the work. The assessors give their evidence both for the plaintiff and for the defence on the basis of the funny time, that is, three hours. The judicial officer, in my view not unreasonably, will normally be considering the matter in real time. The present method based on two frictions, makes it very considerably harder for judicial officers to understand and appreciate the evidence and to adjudicate between two experts witnesses as to what is the fair and reasonable cost of repairs.
EXPERT EVIDENCE
38. R3 31.2(3) of the Uniform Civil Procedure Rules provide as follows;37. Each assessor complied with the Expert Witness Code of Conduct. Both witnesses were cross examined as to alleged breaches of the code. It appeared to me during the hearing that to require the witnesses in this case, each being an employee of a party to the proceedings, to comply with the code, created an artificial and unreal situation. I am satisfied that for the purpose of this argument, I am entitled to treat the NRMA and AAMI as the two parties in dispute before the court. It was unrealistic to expect employees of parties giving the only evidence on behalf of their employer in the case, to be impartial and to owe a paramount duty to the court and not to their employer. I was concerned as to how I should treat those criticisms and cross examination in this judgment. I am now satisfied that neither witness was required to comply with the Expert Witness Code of Conduct.
- R31.2(3);
- 1. As soon as practicable after engaging an expert as a witness whether to give oral evidence or to provide an expert’s report, the party engaging the expert must provide the expert with a copy of the Code of Conduct.
- 2. Oral evidence may not be received from an expert witness unless:
- (a) he or she has acknowledge in writing whether in a report relating to the proposed evidence or otherwise in relation to the proceedings, that he or she has read the Code of Conduct and agrees to be bound by it, and
- (b) a copy of acknowledgement has been served on all parties affected by the evidence.
- 3. If an expert’s report does not contain an acknowledgement by the expert witness who prepared it, that he or she has read the Code of Conduct and agrees to be bound by it:
- (a) Service of the report by the party who engaged the expert witness is not valid service, and
- (b) the report is not admissible in evidence.
- 4. This rule applies unless the court otherwise orders.
- Uniform Civil Procedure Schedule 7
- EXPERT WITNESS CODE OF CONDUCT
- Application of code
- 1. This code of conduct applies to any expert engaged:
- a) to provide a report as to his or her opinion for use as evidence in proceedings, or
- b) give opinion evidence in proceedings or proposed proceedings.
- General duty to the Court
- 2.1 An expert witness has an overriding duty to assist the Court impartially on matters relevant to the expert’s area of expertise
- 2.2 An expert witness’s paramount duty is to the Court and not the person retaining the expert.
- 2.3 An expert witness is not an advocate for a party.
- The form of expert reports
- 3.1 A report by an expert witness must (in the body of the report or in an annexure) specify the following:
- a) the person’s qualifications as an expert,
- b) the facts, matters and assumptions on which the opinions in the report are based (a letter of instructions may be annexed),
- c) the reasons for each opinion expressed,
- d) if applicable – that a particular question or issue falls outside his or her field of expertise,
- e) any literature or other materials utilised in support of the opinions,
- f) any examinations, tests or other investigations on which he or she has relied including details of the qualifications of the person who carried them out.
- 3.2 If an expert witness who prepares a report believes that it may be incomplete or inaccurate without some qualifications, that qualification must be stated in the report.
- 3.3 If an expert witness considers that his or her opinion is not a concluded opinion because of insufficient data or for any other reason, this must be stated when the opinion is expressed.
- 3.4 An expert witness who, after communicating an opinion to the party engaging him or her (for that party’s legal representative), changes his or her opinion on a material matter must forthwith provide the engaging party (or that party’s legal representative) with a supplementary report to that effect which must contain such of the information referred to in sub-clause 1(b), (c), (d), (e) and (f) as is appropriate.
- 3.5 Where an expert witness is appointed by the Court, the preceding paragraph applies as if the Court were the engaging party.
- Experts’ conference
- 4.1 An expert witness must abide by any direction of the Court to:
- a) confer with any other expert witness, and
- b) endeavour to reach agreement on material matters for expert opinion, and
- c) provide the Court with a joint report specifying matters agreed and matters not agreed and the reasons for any non agreement.
- 4.2 An expert witness must exercise his or her independent, professional judgment in relation to such a conference and joint report, and must not act on any instruction or request to withhold or avoid agreement.
40. Whilst it may be of assistance to the court for the loss assessors to prepare their report generally in accordance with cl 3.1 of the Code, I consider it unrealistic to expert them as employees of the parties to comply with cl 2 and with cl 3.2, 3.2 and 3.4.
42. His Honour Campbell J, referred to the definition of ‘expert witness’ in r13(c) of the Supreme Court Rules (now pt 31.18 Uniform Civil Procedure Rules) as follows;41. In Kirch Communications Pty Ltd v Gene Engineering Pty Ltd (2002) NSWSC 485 a director of the defendant company prepared a report for the loss assessor regarding damage to a winch which included expert opinion. The director had expertise in relation to the matters in the report. The plaintiff objected to the tender of the report on the basis that it did not comply with the then equivalent of r31.2(3) because the director did not comply with the Expert’s Code of Conduct.
- ‘Expert witness’ means an expert engaged for the purpose of;
- Providing a report as to his or her opinion for use as evidence in proceedings or proposed proceedings, or giving opinion evidence in proceedings or proposed proceedings.
- “It does not seem to me that the definition of ‘expert witness’ is able to catch the situation involved here where an officer of a party, not engaged for any particular purpose, has at a time before court proceedings were contemplated, expressed an expert opinion in a report and that report is tendered in later proceedings.”
44. His Honour found that the report sought to be tendered did not have to comply with the requirements of r31.2(3) and the expert witness Code of Conduct.
45. I am satisfied that the same reasoning applied to the evidence of each loss assessor in this matter. The NRMA employed Mr Wainwright as a loss assessor. He assessed the quotation of Perfect Autobody quotation and inspected the plaintiff’s vehicle. Subsequently when court proceedings were commenced to recover the cost of the repairs from the defendant the NRMA sought to call Mr Wainwright to give expert evidence. However, Mr Wainwright did not become an ‘expert witness’ under the definition. He was not engaged by the plaintiff for that purpose. A party could not engage herself, himself or itself as an expert witness, although the party could if sufficiently qualified give an expert opinion. Mr Wainwright was able to give expert evidence but did not have to comply with r31.2(3) and the Expert Code of Conduct.
46. I am satisfied that the same principle applied to Mr Matthews. He inspected Mr Lambros’s vehicle as a loss assessor. His employer then sought to call him as a witness. He was not engaged by the defendant for that purpose. He did so as part of his duties as an employee. He could give expert evidence, but was not an ‘expert witness’ and did not have to comply with r31.2(3) .
47. I do not therefore propose to deal with submissions based on the failure of one or other of the witnesses to comply with the code. I indicate that such submissions were not in any event important as I find that they went only to minor matters of credit and I did not find them helpful to either party.
48. For completeness I should indicate that because each witness may not have been impartial or independent did not mean that their report was inadmissible. His Honour Judge Campbell came to that conclusion in Kirch Communications Pty Ltd v Gene Engineering Pty Ltd .
49. In Collins Thompson v Clayton (2002) NSWSC 366 His Honour Austen J came to the same conclusions in a very helpful and instructive decision.
51. Their evidence still had to comply with S79 of the Evidence Act. Mr Manion urged strongly that Mr Wainwright’s evidence should be given little or no weight because it did not satisfy the tests for admissibility as laid down by His Honour Justice Heydon in Makita Pty Ltd v Sprowles (2001) 52NSWLR 705. Justice Heydon summarised the applicable principles in the often quoted paragraph 85 as follows;50. It follows then that the evidence of the two loss assessors was admissible, although they did not have to comply with the requirements of r31.2(3) and the Expert Witness Code of Conduct. The fact that each was employed by a party to the proceedings, was a matter to be taken into account when assessing their credibility in the usual manner.
- “In short if evidence tendered as expert evidence is to be admissible:
- 1. It must be agreed or demonstrated that there is a field of ‘specialised knowledge’.
- 2. There must be an identified aspect of that field in which the witness demonstrates that by reason of specialised training, study or experience the witness has become an expert.
- 3. The opinion proffered must be ‘wholly or substantially based on the witness’s expert knowledge.
- 4. So far as the opinion is based on facts ‘observed by the expert’ they must be identified and admissibly proved by the expert, and
- 5. so far as the opinion is based on ‘assumed’ or ‘accepted facts’ they must be identified and proved in some other way.
- 6. It must be established that the facts on which the opinion is based form a proper foundation for it, and
- 7. the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached; that is the expert’s evidence must explain how the field of ‘specialised knowledge in which the witnesses is expert by reason of ‘training, study or experience’ and on which the opinion is ‘wholly or substantially based’ applies to the facts assumed or observed so as to produce the opinion propounded’.
- “If all of these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert’s specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible and, so far as it is admissible of diminished weight.”
- “The approach of Heydon J as set out above is, as it seems to me, to be understood as a council of perfection. As a reading of His Honour’s reasons for the judgment as a whole reveals, His Honour recognised that in the context of an actual trial the issue of admissibility of evidence tendered as expert evidence may not be able to be addressed in the way outlined in the above paragraph.”
54. Branson J also emphasised the need for an approach which tended to place more emphasis on questions of weight than on absolute compliance with the Makita test of admissibility. There is of course, the discretion for the court to exclude evidence that is unfairly prejudicial or misleading or confusing or wasteful of time (s135 of the Evidence Act). It seems to me that to require strict compliance with the principles of Makita in this matter would set the bar too high.
56. In Keller v R (2006) NSW CCA 2004 in a situation where a witness was expressing an opinion as to whether a speaker on a telephone was talking about drugs, His Honour Studdert J stated that for the evidence to be admissible;55. It is important to note that in Makita the independent expert was Professor Morton. He was not a participant or witness in the events of the accident in relation to which he was required to give expert evidence. That situation contrasts sharply with the position in this matter where the NRMA assessor Mr Wainwright was involved in assessing the quote and inspecting the plaintiff’s vehicle in the ordinary course of his work and AAMI’s assessor Mr Matthews was called upon to consider the fair and reasonable cost of the repairs in the ordinary course of his employment.
- “It is necessary that there be a manifest foundation for the evidence, namely;
- (i) That it should be made apparent that the opinion expressed ‘is wholly or substantially based’ upon the expert training, study or experience of the witness.’ (s79);
- (ii) That the reasoning process of the witness should be sufficiently exposed to enable an evaluation as to how the witness used his expertise in reaching his opinion.
8 I propose to deal at this point with the main submission made by Mr Manion that Mr Kay’s report failed to comply with the requirements of s79 of the Evidence Act. Mr Manion submitted Mr Kay’s report failed to set out the factual basis and reasoning process upon which his opinions were based. Mr Kay said he negotiated and agreed with the repairer on the amounts to be allowed for the repairs. He said he relied upon his experience, expertise and also upon an agreement reached between the NRMA and prestige repairers as to the amounts to be allowed.
9 The first point to be made is that if Mr Manion’s submission was correct, then the report should not have been allowed into evidence. It was in fact admitted without objection. I acknowledge that the findings which I have made in relation to the application of the principles in Makita’s case in Lambros v Riethmuller were not argued in that case and not argued in this case. I emphasise that if I applied the principles of Makita strictly, the result in Lambros v Riethmuller would not have been different. The same position applies in this case.
10 I reject Mr Manion’s submission in this matter that Mr Kay’s report in this matter does not comply with the requirements of s79 of the Evidence Act as explained in subsequent cases of Makita and ASIC v Rich (Court of Appeal 2005 NSWCA 152) and Hevi-Lift Pty Ltd v Etherington (2005) NSWCA 42.
11 I consider that Mr Manion’s submission was based too much on his cross examination of Mr Kay and ignored the actual basis of his report. I found Mr Manion’s cross examination of Mr Kay and similarly, Mr Gruzman’s cross examination of Mr Matthews on the funny time – funny money quotation and assessment practices to be of little assistance to me. I have already found in Lambros that such system based on two fictions, made it much more difficult for Magistrates to consider the evidence in these matters. This was particularly so in this matter. Moreover, the system being based on two fictions, led to detailed cross examination of the witnesses and to confusion not only of the witnesses, but also at times myself and certainly at times, of Counsel themselves.
12 To illustrate the point I am making, I refer to Mr Manion’s following cross examination of Mr Kay (T02/06,pp33-34,L55- pp35-36);
- MANION Q. Sir the roof racks?
- Q. Now I take it you’ve removed roof racks from a vehicle yourself from time to time?
- Q. Not a complicated operation?
A. No sir.
A. I said I can’t recall that far back sir.
Q. You’d agree with me wouldn’t you that any home driver who owns roof racks wouldn’t be able to remove it in 15 minutes let alone tradesmen?
A. I’m just trying to remember back on that vehicle I think that bolts from the roof sir, inside. I’m just trying to remember back onto that particular vehicle. I think they actually bolt through onto the inside of the car.
Q. I suggest to you that these roof racks in fact were supported by retaining screws, that’s right isn’t it?
A. I’m sure those roof racks on that vehicle bolts through the roof.
Q. You can’t recall that far?
A. Well nuts and screws if you like, or nuts.
Q. If they went through the roof they’d be supported by retaining screws wouldn’t they?
Q. And they would be cage nuts, you wouldn’t have to pull out the hold lining to get the roof racks off would you?
A. If they go through the turret yes you do, because they’re bolted on the inside.
A. Yes.
Q. Indeed you allowed an undisputed item five units or $154.50 for releasing and dropping the hood lining, correct item thirty one?
Q. So even if the hood lining had been previously released and dropped, any competent tradesman, I suggest to you would be able to remove and replace those roof racks within 15 minutes?
A. That’s fine, but we just don’t pay just 15 minutes for the cost of this. All right its funny money, funny time.A. Yes sir, that’s what it says.
Q. You’ve paid two units, is that right?
A. Yes sir.
Q. Which would be something then we would divide by three to get the hourly rate, to get the number of hours, is that right?
A. Is this to drop the hood lining?
Q. Well two hours is one hundred and 20 minutes, that would be 80 minutes real time, that would be 40 minutes real time sorry, 40 minutes real time you’ve allowed to do a job that you can see would take 15 minutes real time?
A. For the roof racks?
Q. The roof racks?
- A. You’ve got to understand we just don’t pay for 15 minutes. It’s because its funny money, funny time we come up with an agreement to get a fair and reasonable cost to repair these vehicles and strip these vehicles down.
HIS HONOUR: Q. But you see, I’ve got to decide it not in funny time, funny money. I want to know how long, and only I – Mr Manion has asked you now, in this one, you allowed two units. In real time that would be 40 m minutes?
A. Okay sir, sorry, yes.
Q. Do you understand?
- A. I understand, sir, sorry.
Q. And he’s making you how long in real time would it take, 15 minutes or 40 minutes?
A. Probably 15 minutes each side, sir.
Q. Fifteen minutes?
A. Each side.
- MANION: Q. I suggest to you, sir, 15 minutes the lot?
A. Okay, sir.
Q. To remove the roof racks. That’s right, isn’t it?
- A. I disagree because you need two people on it, one so it doesn’t scratch the roof. We don’t want to have to scratch the roof, so we use two people which is 15 minutes each side.
Q. To undo a couple of retaining screws--
- A. We still have to take the rack off the roof.
Q. Okay, you’ve got to take it off, you’ve got to take it away and put it back on, haven’t you?
A. That’s right.
Q. I’m suggesting to you, sir, that one person would loosen the screws and the second operator would only be required after the screws were finger-tight to hold it as the last couple of threads were undone from the screws; that’s right, isn’t it?
A. That’s right.
Q. So the second person would only be involved in that operation each side, both on the removal side and on the replacement side, for a couple of minutes, correct?
A. That’s correct.
Q. And I suggest to you that for the first operator to loosen the screws and to replace the screws globally you’d be looking at eight to ten minutes maximum?
A. That’s correct.
Q. So even accounting for the double time when you’ve got the second operator, 15 minutes to remove, take them away and put them somewhere and then later on to put them back on the vehicle, 15 minutes in a repair shop which is set up with the proper tool and tradesmen who knew what they were doing, would be more than ample in real time to perform the operation?
A. Yes.
13 The question and answer in relation to the releasing and dropping of the hood lining in my view answered completely the argument which Mr Manion was making in relation to Mr Kay’s report and the requirements of s79 of the Evidence Act.
14 North Shore Classic’s quotation was based on an agreement between North Shore Classic and the NRMA as to the allowances to be made for prestige vehicles. It was however expressed in the very same form as practically every quotation used in the motor vehicle repair industry. It was expressed in units of $31. North Shore Classic did not use the fiction of that unit being an hourly rate, but used the figure as the unit upon which to base its quote. It did not matter that the item was referred to as a ‘unit’ or ‘fictional hourly rate’. The question and answer showed clearly that to release and drop the hood lining, Mr Kay allowed 5 units or $154.50 and Mr Matthews for AAMI agreed with that figure. On the basis used within the motor repair industry the quotation prepared by North Shore Classic clearly set out the factual basis and reasoning process upon which the quotation was prepared. Mr Matthews had no problem in understanding the factual basis and reasoning process. He sought to reduce some amounts allowed because he said such amounts exceeded what he considered to be reasonable, based on the allowances in the MTA Guide. On at least thirty occasions he agreed with Mr Kay’s assessment.
15 I am satisfied for the reasons given in Lambros v Riethmuller that Mr Kay and Mr Matthews are able to assist the court by giving expert evidence. They are not expert witnesses and I consider the appropriate principles to be applied are those which I set out and considered in Lambros v Riethmuller. There was nothing in Mr Manion’s submissions to dissuade me from that view.
16 The evidence in this matter confirmed that both the MTA, NRMA and AMMI all required repairs in relation to standard vehicles (that is vehicles referred to in the MTA Guide) to be quoted for and assessed in terms of an hourly rate or unit of about $30.00 or $30.90 and at a time allowance a little more generous in the MTA than allowed by the NRMA or AAMI. Although the evidence of Mr Kay in this matter was that he assessed and allowed North Shore Classic’s quotation using allowances agreed upon by the NRMA with prestige repairers, the quotation was in fact prepared in terms of units and a figure of $31.00 which allowed the quotation to be assessed in the same manner as quotations are ordinarily assessed in the industry. Indeed Mr Kay reduced the amount to $30.90 and Mr Matthews accepted that figure.
THE EVIDENCE IN THIS CASE
17 I propose to deal reasonably quickly with the evidence and cross examination of each of the witnesses.
Darren Kay
18 Mr Kay gave evidence that he had been employed as a qualified licensed panel beater since 1991. His period of employment included three years with Scientific Motor Body Works at Broadway where he worked on prestige motor vehicles. Since 2002 he was employed as a motor loss assessor with NRMA. At the time of this assessment he was assessing at North Shore Classic three times a week and on each visit would assess five or six cars. At the same time he was also assessing other prestige repairers and he estimated that he was assessing a further twenty cars per week during that period.
19 He assessed the plaintiff’s vehicle on 4 November 2004. There was no pre-accident damage. He said he allowed a three to one ratio to the hourly rate for repairs for North Shore Classic and other prestige repairers as the repairs of such vehicles required expensive equipment and prestige vehicles require more time and attention. He said the NRMA had its own guidelines for prestige vehicles. As they were not scheduled the assessors assessed the cost of repairs based on their knowledge of the guidelines and on their understanding of the vehicles. He stated that North Shore Classic to his knowledge charged the same whether the client was insured or a private client. He stated that North Shore Classic’s charges were comparable with other prestige repairers. Their quality of work was above industry standards. He said Lexus vehicles fell into the category of prestige vehicles. He said Lexus vehicles were not scheduled by either the NRMA or MTA.
CROSS EXAMINATION
20 Mr Kay said he did not use the MTA Guide, and hadn’t used it since he started quoting for NRMA. He said the NRMA had guidelines in place (but not in writing) for prestige repairers, but said the guidelines relied on the assessor’s experience and market charges. Mr Kay would not agree that NRMA rate for scheduled vehicles allowed a true hourly return of approximately three times the hourly rate, but then agreed they did (T02/06, p17,L55).
21 Mr Kay agreed that in this particular matter the NRMA had cash settled the case with the repairer. Mr Kay explained that the NRMA agreed to pay the repairer the assessed value of the repairs. It was then up to the insured to have the car repaired. He said there could still be a supplementary account for additional work or the repairer could agree to delete certain work and make a refund. Mr Kay agreed that in his assessment he had made an error when he ticked the box allowing for the use of recycled parts. He said that was a serious mistake. (There was as I understood it no suggestion that recycled parts were used). He agreed that he attended North Shore Classic with a manager because of OH&S issues with the proprietor of that firm. Mr Kay made it clear (T02/06, p22,L30) that the unit allowed at the rate of $30.90 was Funny money-Funny time.
22 He said it was NRMA policy to allow new badges and not to retape badges on new vehicles. He said that he had not seen a supplementary estimate from North Shore Classic. Mr Manion then put to Mr Kay that the replacement of certain items was a complete extravagance. Mr Kay disagreed. Mr Manion then cross examined Mr Kay in relation to the supplementary report. Mr Kay said he did not have regard to that. The evidence indicated that North Shore Classic put in a supplementary account claiming an additional $363.68 (excluding GST). That amount was not part of the claim. There was no evidence that it was paid by the plaintiff. The only significance would appear to be that it was an additional charge made by North Shore Classic that was not included in the claim. He gave evidence (T02/06,p30,L35) that he was at the time of this assessment assessing about fifteen prestige cars and three standard cars a week for North Shore Classic.
23 He gave evidence as to why he allowed the muffler and tail pipe to be removed and replaced.
24 In relation to the roof rack Mr Kay gave the evidence set out in para 12 hereof. I shall deal further with that evidence in this judgment.
25 Mr Kay was then cross examined in relation to various other items of repair. I propose to deal with those questions of evidence when assessing the damages.
Scott Matthews
EVIDENCE FOR DEFENDANT
26 The report for the defendant was in the joint names of Angelo Houliaras and Scott Matthews. I considered that was an error. I accept that Mr Matthews prepared the report himself, although Mr Houliaras was also present at the inspection of the plaintiff’s vehicle and took photographs. I propose to deal with the report on the basis that it was Mr Matthews report. Mr Matthews attached to the report his Curriculum Vitae, copy of the relevant extract from the Motor Traders’ Association Repair Times Manual, copy of the paint schedule time from the Motor Traders’ Association and ten photographs numbered 1 to 10 provided by North Shore Classic. He also referred to a repair quotation from North Shore Classic and an additional supplementary estimate and NRMA assessment report.
27 Significantly in his report, Mr Matthews stated that for the purposes of his report, he had used an hourly rate of $30.90 as adjusted by Mr Kay and also agreed to his authorised paint rate of $68.00.
28 Mr Matthews’ CV indicated that he obtained his panel beating trade certificate in 1995 and in 2000 obtained his spray painting certificate. He said he ran his own smash repair centre for two and a half years and was assistant manager at the NRMA Smash Repair Centre at Brookvale, where he was responsible for seventeen staff. He said he had been employed by AAMI for three years prior to 16 September 2005 and up until March 2005 he had worked in AAMI’s North Sydney office managing repair and reasonable process for the cost of third party repairs, including prestige and heavy vehicle repair costs.
29 His statement included a document in the nature of a Scott Schedule setting out the adjustments made to each of the items referred to in North Shore Classic’s quotation. I propose to attach a copy of that document and Mr Kay’s reply to this judgment. As previously stated, Mr Matthews’s report alleged the fair and reasonable costs of the repair of the vehicle to be $4,456.26.
EVIDENCE IN CHIEF
30 In evidence in chief Mr Matthews said that the report was prepared by himself. He said Mr Houliaras had attended the inspection and had taken photographs and removed certain items off the vehicle. He said the opinions set out in the report were his own. He said his report was prepared of allowing $30.90 an hour on the basis that the actual time would be about one third of the allowed time (that is the Funny time-Funny money basis). He agreed he made the handwritten notes in red ink on the quote. He said the air bags were above and not within the doors of the car.
CROSS EXAMINATION
31 Mr Matthews said he had not repaired a Lexus RX330. He agreed that the most opportune time to form views about the fair and reasonable costs of repair was to see the car in its damaged condition. He said the report was based on his own opinions and not those of Mr Houliaras. He said that they did have discussions during the inspection.
Mr Matthews agreed (T02/06,pp52-53,L50-55);
A. Agree.
Q. Do you agree with this proposition that in the repair industry no one works on a real time, real money basis?
A. No.
Q. It doesn’t happen does it?
A. No.
Q. You can’t make sense of, I would suggest to you, by trying to interpret them in real time, real money basis, can you?
He agreed (T02/06,p53,L20) that;
- Q. If its not real time, it doesn’t matter what you call it really, does it? Do you agree?
He agreed every repairer had a different charge out rate that it would have to apply to run its business.
32 The following evidence was given (T02/06,p54,L40);
- Q. And what I will suggest to you Sir is that knowing the real time of a particular task is not a relevant consideration, because it’s what the allowance is in the industry that is the relevant consideration?
- Q. Do you agreed with that?
33 Mr Matthews said (T02/06,p60,L35);
- “If you compare an MTA time with an NRMA schedule time, the MTA time would allow far more than the NRMA schedule time to carry out any operation at one time.”
34 He gave further evidence (T02/06,p61,L40);
- Q. …..but there is a number of repairers in Sydney that market themselves towards prestige cars?
- Q. I would suggest to you that their charge rates, or what the costs, the allowances that they claim the work are greater than the standard MTA Manual rates and the NRMA rate?
A. No that’s not correct and I mentioned that before. There are a group of assessors, or so called renegade, sorry repairers, renegade repairers out there that would like to charge more.
35 Mr Matthews agreed that he had prepared a pre-inspection report authorising payment by AAMI of an amount of $7,200 ($6,549.24 excluding GST). He said it was his belief as at the 2nd February 2005, but he hadn’t seen the vehicle.
36 Mr Matthews said he disallowed the allowance to disconnect the SRS airbags, but agreed that he would have allowed an hour to disconnect the computer system and that would disarm the airbags. He said that he did not make that allowance. He agreed that the door had been removed, but said he disagreed with the door being painted as a result of the accident.
37 Mr Matthews disagreed that it was necessary to paint the door to enable the paintwork of the damaged quarter panel to blend with the door. He agreed the person in the best position to make a decision as to whether the door should be painted would be the repairer. He adhered to his view that there was no need for the door to be repainted.
38 Mr Matthews was asked questions relating to his use of real time in the reasons for his reducing amounts as in, for example, item 17 where he said the real time would be fifteen minutes. It was put to him that repairers and assessors do not consider real time, and that he would not consider real time when doing assessments. He said (T11/07,p8,L30);
- “You can do the conversions, yeah.”
39 He gave the further evidence (T11/07,p9,L45);
- Gruzman Q. The concept of real time is the only reason for the purpose of preparing this report, hasn’t it?
40 Mr Matthews said he would allow the scheduled time for a scheduled car according to the MTA Guide, but then said that he would still keep it in mind how long it would take. However he said (T11/07,p13,L25) that if the MTA Manual allowed .5 (30 minutes) for a task, that he would allow the .5 even though in real time the work may have only taken two minutes.
41 Mr Matthews said that real time would not enter his mind and he would allow the time provided for in the manual.
42 Mr Matthews said he had disallowed Item 43 for paint stripping because he believed that was part of the repair process. He did not indicate where it was otherwise allowed. In relation to the repair and alignment of the rear bumper reinforcement he agreed that he had inspected the vehicle a year and a half after the repairers had been carried out. He said at p16 that he had not taken into account the proposition that the dirt and grime which was present, had been caused by fifteen months use of the vehicle since the repairs. He said there were no other signs of repair. He said he did not clean all the dirt and grime off, but he had a good look at it.
43 In relation to Item 58 which was the painting of the right side trough, he said that his inspection of it indicated that it had not been repainted. He said the trough was a long way from the damage.
44 In relation to repair and align items Mr Matthews said that they were difficult to assess and were assessed based on his experience. He said that he would generally allow a half or double the real time, so that if the real time was two hours, he would allow between three and four hours to repair it.
45 Mr Matthews (T11/07,p28,L35) that he basically used the MTA time to prepare his report;
- “With an allowance here and there for the fact that maybe the job was a little more difficult.”
RE-EXAMINATION
46 In re-examination Mr Matthews said he saw no evidence of any sanding to the alloy being the rear bumper reinforcement. He said it was not necessary for him to remove any dirt and grime to come to that conclusion. He said he was a qualified spray painter and his opinion was that the right side trough in item 58 had not been painted.
Angelo Houliaras
47 Mr Houliaras said he had assisted Scott Matthews in stripping parts off the vehicle and taking photographs and possibly recording some of the photographs on a piece of paper, but he said he did not have a role in the generation of the report.
48 In cross examination he said that he and Mr Matthews had discussions whilst they were inspecting the car, but he could not recall any specific questions that Mr Matthews had asked him subsequently.
49 That completes my summary of the evidence.
ASSESSMENT OF CREDIBILITY OF WITNESSES
50 I found the assessment of the credibility of Mr Kay and Mr Matthews a difficult task. I am satisfied each of them is a competent well qualified loss assessor. Each of them, when giving evidence, gave answers which conflicted with earlier evidence they had given. (In relation to Mr Kay see evidence at paragraph 12 hereof). I had some sympathy for each of them. They were each cross examined at length in relation to a method of preparing quotations and assessing quotations which relied on two fictions to get a result. I am satisfied each of them was at times confused. I considered they had reasonable cause to be confused. There were however some aspects of their evidence which concerned me.
51 I was surprised at Mr Kay’s stated ignorance of the MTA Schedule. I appreciate that he was employed by NRMA and it has its own Schedule, but as a busy loss assessor, I would have expected him to have a good working knowledge of the MTA Schedules. His denial of such knowledge concerned me. I gained the impression that he considered his denial of his knowledge of those guidelines might assist his employer’s case. It was an error for him to tick the box authorising the use of recycled parts. However, he admitted it readily and there was no evidence that recycled parts were used.
52 On reading the transcript carefully I have come to the view that Mr Kay at times agreed with propositions put by Mr Manion in cross examination without intending to agree to the truth of such propositions. There are several examples of that in my view in the transcript set out at paragraph 12 hereof (see answer “Okay sir” middle page 24).
53 It appeared to me that both Mr Kay and Mr Matthews had similar qualifications as panel beaters, but Mr Matthews had the additional qualification in spray painting. I note that Mr Kay stated that he was assessing cars at North Shore Classic during his three years as an assessor and said that he was assessing eighteen cars a week there, of which fifteen would be prestige vehicles (T02/06,p30). He was assessing a further twenty cars each week at other repairers.
54 There were some aspects of the evidence of Mr Matthews which also worried me. On several occasions he confirmed that when assessing vehicles, his practice and the practice of all assessors, was to assess the particular repairs in terms of how many fictitious hours or units of $30.90 each repair would take. On a scheduled car he would apply the schedule rate for the number of fictitious hours. However in this matter in his Scott Schedule he kept referring the scheduled hours back to actual time. I was concerned that he kept doing so, because his evidence otherwise was that that was not how repairers and assessors approached the preparation of quotes and the assessment of quotes. He agreed that he referred back to real time only for the purposes of the report (see paragraph 39).
55 I was satisfied that each of the witnesses was not impartial and was doing his best to put forward the position relied upon by each employer. I am satisfied that Mr Kay had more practical experience in the assessment of prestige vehicles but that Mr Matthews had the better experience in relation to spray painting.
SUBMISSIONS
56 I received the following helpful submissions from Counsel:
- Mr Gruzman for the plaintiff dated 27 September 2006
- Mr Manion for the defendant dated 17 September 2006
- Mr Gruzman – Plaintiff’s submissions in reply dated 3 October 2006.
57 I do not propose to go through all the submissions seriatim. I have taken them all into account. I do however propose to deal with some submissions specifically.
58 At paragraph 21 of his submissions Mr Manion submitted that Mr Kay had;
- “Put forward no rational basis for allowing a new badge. He could not adequately defend his position and his answers were irrelevant or unconvincing.”
59 I reject that submission. Mr Kay said the practice in relation to prestige vehicles was to allow a new badge at a cost of $85.00. He said that cost was always allowed. He relied on his knowledge of the practice and his experience. Mr Matthews for the defendant allowed the cost of $85.00 for a new badge. He agreed with Mr Kay’s allowance. Mr Manion’s submission was wrong.
60 At paragraph 22 Mr Manion criticised Mr Kay’s evidence that he would have allowed one unit or one fictitious hour to disconnect the computer system in relation to the airbags. Mr Manion criticised him severally on the basis that he alleged the job would take two minutes. Such criticism exemplified the fallacy in many of the attacks made on the evidence of Mr Kay based on real time. He said he would make an allowance of one unit or fictitious hour. He was criticised for that. Mr Matthews in evidence conceded that he would allow one fictitious hour, or one unit of time, or $30.90 for exactly the same job. It was evident from the evidence that some allowances for some jobs are generous, but that is what the industry allows in relation to both the badge and the disconnection of the airbags. Both witnesses said that they would make the same allowance, yet Mr Manion sought to criticise Mr Kay severally in relation to such allowance.
61 At paragraph 14 Mr Manion criticised Mr Kay for his failure to consider the supplementary quote. Mr Kay assessed the repairs for the vehicle at $9,239.81 and that was the amount claimed in the Statement of Claim. The repairer submitted a supplementary quote claiming an additional $363.68. There was no evidence that that amount was paid and it was not part of the claim. In those circumstances in my view Mr Kay was entitled to ignore the repairers claim for additional charges.
62 In paragraph 50 of his submissions Mr Manion deal with the question of GST. The amount of the repairers assessed account was $9,239.81. He charged GST of $923.08. The GST did not form part of the plaintiff’s claim. I do not understand Mr Manion’s submission.
63 I reject his submission in paragraph 19 for the reasons I have already given and I am satisfied Mr Kay was entitled to disregard the supplementary quote.
64 I do not accept Mr Gruzman’s submissions as to the correct basis for assessing damages.
65 The defendant’s report should have been in the name of Mr Matthews only. I am satisfied not much turns on the fact that it was signed by both Mr Matthews and Mr Houliaras. I accept their explanation.
66 I do not accept that the Mr Matthews’ report has assumed that the units quoted by North Shore Classic were in actual time. In his report Mr Matthews under ‘inspection of vehicle’ confirmed that he had used an hourly rate of $30.90 as adjusted by the NRMA assessor. I am satisfied that he meant $30.90 per fictitious hour and his report was prepared on that basis. I accept that at times in his reasons in the Scott Schedule, he indicated otherwise, but I am satisfied that was an error on his part.
67 I will take the further submissions of each Counsel into account when giving my reasons and decision.
CONCLUSION AND REASONS
68 For the reasons which I have given I did not find the cross examination of each witness based on non-compliance with the code helpful. I did not find that the lengthy cross examination of each witness as to the basis on which they assessed the vehicle particularly helpful.
69 I accept the evidence of Mr Kay that NRMA have additional allowances which it allows for prestige vehicles because of the additional skill and care required to restore such vehicles as close as possible to their pre-accident condition. It did not assist the plaintiff’s claim that the additional allowances made by NRMA had not been reduced to writing. I find it most unusual and unsatisfactory that the allowances which it is prepared to make for prestige vehicles has not been produced in a written schedule. However, the fact that the repairers quote was prepared on the basis of using units of $30.90 allowed the quotation to be assessed by Mr Matthews, in the very same manner by which all quotations are assessed. Clearly the unit of $30.90 and the fictitious hour of $30.90 form the same purpose.
70 I gained the strong impression that Mr Matthews did not agree that prestige vehicles required additional care, skill and time to repair. It would appear he regarded North Shore Classic as one of the renegade repairers seeking to charge more (see paragraph 34 hereof). I preferred the evidence of Mr Kay and the fact that the MTA did not regard the Lexus as a standard vehicle.
71 I am satisfied that the Lexus is not a scheduled vehicle and is not included in the MTA Schedule. It is not included because it is regarded as a prestige vehicle and I am satisfied that the MTA Schedule does not apply to prestige vehicles. The fact that it does not apply, in my view is a recognition by the Motor Traders’ Association that prestige vehicles do require additional care, skill and time. I am satisfied that the Motor Traders’ Association recommend that repairers should negotiate with loss assessors to agree upon a fair and reasonable cost for repairs to prestige vehicles.
72 The evidence indicates that was exactly what happened in his matter. The repair quotation of North Shore Classic was originally for an amount of $9,708.30. It was assessed down by Mr Kay to $9,239.81.
73 Mr Kay gave evidence that he was familiar with the basis on which North Shore Classic assessed other prestige vehicles. The evidence was that he was assessing fifteen prestige vehicles for that repairer each week. He said that the basis on which North Shore Classic prepared the quotation in this matter was the same as that used in relation to other prestige vehicles. Mr Kay said that based on his opinion, the basis on which the quotation in this matter was prepared, was the same whether the vehicle being repaired was covered by insurance or not.
74 It was not suggested to Mr Kay that he would assess a vehicle on a more generous basis if he was aware that the NRMA was able to recover the cost of the repairs from a third party. I am not satisfied that he did so.
75 I am satisfied that Mr Kay was clearly in the best position to be able to assess the fair and reasonable costs of the repair of the vehicle, because he inspected it in its damaged condition. Mr Matthews fairly conceded that the loss assessor who is able to inspect the vehicle in its damaged condition is in the best position. Mr Matthews did not inspect the vehicle until approximately fifteen months after the repairs had been carried out.
76 Mr Matthews did not at first recall that he had prepared an assessment of North Shore Classic’s quotation on 11 February 2005. His failure to recollect making such assessment concerned me, as it was certainly something which I would have expected him to recall. He assessed the fair and reasonable costs of repair, excluding GST, at $6,549.24. His assessment was the same amount as the figure included in the Notice of Part Confession. When he made that assessment Mr Matthews had the benefit of the repair photographs prepared by North Shore Classic. The report indicates that AAMI were aware at that time that North Shore Classic’s account had been cash settled. I was not satisfied that Mr Matthews satisfactorily explained the difference between that assessment and his subsequent assessment in the sum of $4,456.26. I accept that the latter assessment was made after the inspection on 14 February 2006, but my examination of the reasons set out the Scott Schedule did not in my opinion justify the further considerable reduction to North Shore Classic’s account.
77 I have already indicated the difficulty that I have in assessing the fair and reasonable cost of repairs based on the evidence of the two assessors. The practise adopted by the repair industry of preparing quotes and assessing quotes on the basis of two fictions, makes it extraordinarily difficult. The evidence in this matter added further to those problems. Mr Matthews agreed that if assessing a scheduled vehicle he would allow the MTA Schedule allowance, even if he was aware that the allowance was even more generous than the three hours of fictional time equalling one hour of real time. He agreed that he would allow the one hour of fictional time, or $30.90 to disconnect the computer system for the airbags, even though the evidence seemed to indicate that the real time for such task might be six minutes. That example exemplified the further difficulty the court faced. I am satisfied on the evidence in this matter that vehicles are assessed on an allowance basis, apparently almost on a ‘swings and roundabout’ approach. I accept Mr Gruzman’s submission that this factor makes it unhelpful to rely too heavily on cross examination as to the real time that some tasks might take. The evidence indicated clearly that the repair industry does not operate on that basis, and whatever else I do, I am required to assess the fair and reasonable costs of the repair of North Shore Classic’s repair account on the basis adopted and used in the repair industry.
78 It was only during the cross examination of Mr Matthews that the significance of quotes being prepared and assessed as allowances became apparent to me. I now realise that during the cross examination of Mr Kay some comments made by me as to the desirability of converting allowances back to real time were probably inappropriate (see para 12).
79 I am satisfied that the plaintiff took reasonable steps to mitigate its damages. It took its car to an apparently reputable prestige repairer and had its quotation assessed by a large public insurance company.
80 It seemed to me that Mr Kay and NRMA had nothing to gain by allowing over generous amounts to the repairer. It would appear that if amounts are disallowed from the repairs, then NRMA will have to bear the cost of the disallowances.
81 This case illustrates a further difficulty which the system adopted by the repair industry presents in considering the fair and reasonable costs of repair. The MTA Guide does not provide a guide for the cost of the repairs and align items. It provides a guide to the repair and replace items. In this matter the repair and align labour as assessed by Mr Kay was $2,620.50, more than the remove and replace items. There being no guide in the MTA Schedule, each assessor could only rely on his knowledge and experience to assess the reasonable costs of the repair labour. The repair and align items in this matter were significant. For the right to repair and align the right rear quarter panel Mr Kay allowed $1,174.20. Mr Matthews sought to allow $432.60. It did not assist me that there was no cross examination of either witness in relation to that matter or to other significant repair and align matters.
ASSESSMENT OF DAMGES
82 I now propose to make findings in relation to various items of repair. I intend to refer to the item numbers as shown on the helpful document which I referred to as a ‘Scott Schedule’ prepared by Mr Matthews, a copy of which is attached to this judgment as Attachment A and to Mr Kay’s replies which are annexed as Attachment B.
83 In coming to decisions in relation to specific items, I rely on the findings which I have set out previously including, but not limited to, findings that Mr Kay was in the best position to inspect the vehicle and that he had more experience in assessing prestige vehicles, that there will be a range of allowances, which may differ but will still be regarded as fair and reasonable. North Shore Classic’s account has been assessed by an experienced loss assessor and for amounts to be disallowed, I would need to be satisfied that the amount charged was not within a range which was fair and reasonable, but was exorbitant, extravagant or too high.
84 I propose to make the following variations;
Item 3 – Disallow $30.90. I have come to the view that I prefer the evidence of Mr Matthews that it was not necessary for the door to be removed for painting. I prefer the evidence that the airbags were not in the door.
Items 1 to 10 – Allowed. I am satisfied on the evidence that more skill, care and time is required to perform these tasks on a prestige vehicle such as the Lexus.
Item 15 – Allowed. I preferred the evidence of Mr Kay as to his reasons for removing the muffler, tail light and shield. I do not think it was appropriate for it to be left on and masked up.
Item 17 – Allowed. I prefer the evidence of Mr Kay as to the importance of moving the wiring harness right away from the repair area and I propose to allow the allowance.
Item 32 – Allowed. I propose to allow the item for rear seat and belt and pillar trims. Mr Matthews said the process would not take any longer than one hour. That one hour must be real time and would therefore equate to at least three units at $30.90 or $92.70. In view of the prestige nature of the car I consider the amount allowed reasonable.
Item 33 – Allowed. I propose to allow this item to remove and replace roof racks. There was considerable evidence in relation to this matter. I am satisfied that the work involved in removing the roof racks on this vehicle was much more complicated than that of the ordinary vehicle referred to by Mr Manion. In this vehicle the hood lining had to be released and dropped at an agreed charge of $154.50. I find the allowance of $62.80 reasonable.
Item 42 – Disallowed. Remove and replace right rear door. I have come to the view that it was not necessary to remove the right rear door and I propose to disallow the charge of $169.95.
Items 45 to 51 – I commented in my judgment as to my disappointment at the lack of cross examination in relation to these significant items. For the reasons which I have given, the court’s task in relation to these matters is even more difficult. I propose to make the following alterations:
Reduced - Repair and align right rear quarter panel
- Item 45 – The amount claimed $1,714.20 does appear to be excessive, even in relation to a prestige vehicle. I propose to disallow seven units or $216.30.
- Item 46 – Disallowed. Repair and align right rear inner quarter $92.70I prefer the evidence of Mr Matthews. I propose to disallow this item.
- Item 48 – Disallowed. Repair and align rear bumper enforcement $154.70 I prefer the evidence of Mr Matthews. I propose to disallow this item.
I propose to allow the other items.
Items 52 – 67 – I was satisfied that Mr Matthews had special qualifications as a spray painter. I have taken this into account. I am still of the view that some of the adjustments made by him do not recognise sufficiently the additional care, skill and time required especially in relation to the finishing of prestige vehicles.
Item 52 Reduced - Refinish liftgate $340.00. I propose to reduce the amount by one unit or $68.00.
Item 53 Disallowed - Refinish liftgate mould $68.00. I propose to disallow this item claim.
Item 60 Reduced - Refinish right rear quarter panel $408.00. I propose to reduce the allowance by $102.00.
Item 63 Disallowed - Refinish right rear door $306.00. I propose to delete the painting of the right rear door.
Item 64 Disallowed - Refinish right rear door would $68.00. I propose to delete the allowance for the painting of the right rear door mould.
Item 65 Disallowed – I propose to disallow the allowance for the painting of the right rear door outer handle of $68.00.
85 I do not propose to make any further charges.
86 I do not propose to consider the supplementary account. Its effect was to increase the amount of the repairs by an amount of approximately $363.68. That amount was not part of the claim.
87 I have disallowed various items where I have preferred the evidence of Mr Matthews as to whether or not some repairs were carried out. The fact that NRMA cashed out the repairs on the plaintiff’s vehicle and did not further inspect the vehicle during or after the repairs, did not assist its case in relation to those matters.
88 I have already highlighted the difficulties which I had in deciding this matter. In my view such difficulties will continue whilst ever the repair industry continue with Funny time – Funny money and also its practice of preparing and assessing quotations based on allowances, rather than real time. This matter took a very considerable amount of court time, about one and a half days. I had made orders pursuant to s62 of Uniform Civil Procedure Act limiting the time for cross examination of the witnesses. I was not able to enforce such time limits because of the apparent complexity of the matters during the hearing. I am not now so certain that the matters were so complex and the court would hope that similar matters in the future will not take so long.
89 I would urge the insurance companies involved in this matter to give consideration to adopting practices which would obviate the need for matters such as this to come before the court. It would seem to me that a practice whereby prestige vehicles were jointly inspected by a loss assessor from each insurance company before repairs were carried out may well lessen the number of cases coming before the court and save the insurance company very considerable sums in legal fees.
90 I calculate that I have disallowed from the repairs the sum of $1,344.55 and the following orders:
2. The plaintiff will be entitled to interest on that amount from 1 December 2004 to be calculated by the Registry.
1. There will be judgment for the plaintiff in the sum of $8,254.35.
I propose the following order for costs;
1. Costs follow the event. The defendant is to pay the plaintiff’s costs and disbursements on an ordinary basis as agreed. In default of agreement within 28 days the costs and disbursements are to be assessed under the Legal Profession Act.
91 I shall hear from the parties in relation to the proposed cost order.
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