CLA Trading Pty Ltd trading as Europcar v Dahlen Lee
[2011] NSWLC 16
•26 May 2011
Local Court
New South Wales
Medium Neutral Citation: CLA Trading Pty Ltd trading as Europcar v Dahlen Lee [2011] NSWLC 16 Hearing dates: 12/05/2011 Decision date: 26 May 2011 Jurisdiction: Civil Before: Assessor Olischlager, Small Claims Division Decision: Verdict for the defendant and cross claimant. Cross claimant relieved from enforcement of provisions of clause 8.3(d) and (f) of the Rental Agreement.
Catchwords: CONTRACTS - misrepresentation - contracts review - car rental agreement - insurance Legislation Cited: Contracts Review Act 1980 (NSW)
Insurance Contracts Act 1984 (Cth)
Insurance Contracts Regulations (Cth)
Local Courts Act 2007 (NSW)
Trade Practices Act 1974 (Cth)Cases Cited: Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343
St Lukes Health Insurance v Medical Benefits Fund of Australia Ltd (1995) ATPR 41-428
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
West v AGC (Advances) Ltd (1986) 5 NSWLR 610Category: Principal judgment Parties: CLA Trading Pty Ltd t/a Europcar (plaintiff)
Dahlen Lee (defendant)Representation: Mr King (plaintiff)
Mr Chappell (defendant)
File Number(s): 2010/00381042
JUDGMENT
The plaintiff is a motor vehicle rental company trading under the name Europcar. On 18 March 2009 the plaintiff hired a Mitsubishi Canter Fuso truck to the defendant, Mr Dahlen Lee. While the truck was in the possession of Mr Lee the overhead section of the truck was damaged when it was driven through a McDonalds drive-through.
These proceedings are brought by Europcar to recover the cost of repairs to the truck together with an amount representing loss of use of the vehicle. The total claim is $7,553.50 Mr Lee has defended the claim on a number of grounds. Firstly, that at the time that he entered into the contract for the hire of the vehicle, the branch manager for Europcar, Ms Melissa Beh made a misrepresentation regarding his liability in the event of the vehicle being damaged. The defendant alleges the misrepresentation constitutes misleading and deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth). The defendant alleges a further misrepresentation by the plaintiff through the use of the term "Full Protection Package". Alternatively the defendant seeks relief in respect to certain exclusionary clauses within the contract of insurance pursuant to section 7(1) of the Contracts Review Act 1980 (NSW) or that the use of the term "Full Protection Package" was part of a policy of insurance within the meaning of the Insurance Contracts Act 1984 and the plaintiff was not entitled to recover damages pursuant to section 35(2) of that Act.
The Contract
The hire of the vehicle was subject to a rental agreement that was in writing. The agreement comprises Part A which is a single page document with three columns that outlines the particulars of the renter, the period of the rental term, the particulars of the rental vehicle and the particulars of the charges. In the third column there is provision for the renter to sign in three sections. The first section contains the heading "Special Conditions" and provides:
"Renter is responsible for vehicle and 3 rd party damage resulting from overhead, underbody & reversing contact driving on unsealed roads"
Mr Lees' signature appears immediately below these words.
The second section contains Renter acknowledges Renter Accepts "Full Protection Package". Mr Lee initialled this clause.
The third section contains the following words:
"I agree the Owner may charge all accounts incurred under the Rental Agreement to my credit card. Before signing the Renter ad any additional driver(s) acknowledge having received a copy of the document "Rental Agreement Part B Terms and Conditions" (hereinafter called "Part B") and that I/we understand and agree to be bound by this Rental Document called "Part A & Part B" which together constitute the rental agreement. I also consent to and accept the Europcar Privacy Policy."
Mr Lee's signature appears immediately underneath these words.
Part B of the agreement is a four page document containing standard terms and conditions. Liability in respect to damage to the rental vehicle is referred to in Clause 1 and Clause 8 of Part B. The relevant extracts from these clauses are as follows:
Clause 1.1 Definitions:
"Damage Liability Fee" or "DLF" means Your contribution to Europcar in the event of an accident or incident involving the Vehicle, subject to clause 8 below".
"FPP" (Full Protection Package) means the fee to reduce the Damage Liability Fee to zero and , if You accept FPP on Part A Y agree to pay the FPP fee."
"LDW" (Loss Damage Waiver/Reduction) means the fee to reduce the Damage Liability Fee and, if You accept LDW on Part A, You agree to pay the LDW Fee.
Clause 8.1
Except to the extent Europcar is liable at law and subject to this clause and in the case of New Zealand rentals also clause 11, You are liable:
(a) for the loss of, and all damage to, the Vehicle;
(b) the cost of towing, recovering and storing the Vehicle; and
(c) for all damage to Your property or the property of any person;
(i) which is caused or contributed to by You; and
(ii) which arises from the use of the Vehicle by You;
(d) appraisal or assessment fees;
(e) reasonable administrative fees and legal costs of recovery;
(f) a per day loss of use based n 75% of the daily rental rate as displayed in Part A of this Rental Agreement on the downtime of the Vehicle calculated after the vehicle is returned.
Clause 8.2
Subject to clause 8.3 and 8.4, and in the case of New Zealand rentals also clause 11, if You accept the Loss Damage Waiver ("LDW") option on Part A at the commencement of the Rental Period (or it is included in Your rate) and, where applicable, You pay the Damage Liability Fee shown on Part A for each separate event involving damage to or loss of the Vehicle or the property of any third party which is caused by the use of the Vehicle or the property of any third party which is caused by the use of the Vehicle by You or an Authorised Driver, Europcar will reduce Your liability under clause 8.1 for damage to the Vehicle or loss of the Vehicle.
Clause 8.3 You must always pay, and clause 8.2 does not cover:
...
(d) the cost of repairing any damage caused deliberately, carelessly or recklessly by
You
Any other driver of the vehicle; or
Any passenger carried during the Rental Period;
...
(f) the cost of repairing overhead or roof damage caused by contact between the Vehicle and objects overhanging or obstructing the path of the Vehicle or if damage is caused by persons placing objects on the roof of the vehicle;"
The plaintiff relies on clause 8 as the basis upon which it seeks to recover damages.
Oral Misrepresentation
Mr Lee alleges that at the time of entering into the contract for the rent of the vehicle an oral misrepresentation was made to him by Ms Beh regarding his potential liability under the rental contract.
Mr Lee in his statement refers to a conversation between himself and Ms Beh to the following effect.
Ms Beh: "Would you like to take out our full protection insurance package? It is $25.45 for the day?
Mr Lee: "Does taking out this insurance mean I don't have to pay a single dollar if I have an accident?"
Ms Beh: "That's right, you won't have to pay anything."
Mr Lee" "Ok, in that case I'll take the full protection insurance package".
Ms Beh states that the only statement that she recalls specifically with Mr Lee at the time of the rental agreement being entered into was a discussion that she would get the rental agreement ready for Mr Lee.
The Court made directions for the cross examination of both Mr Lee and Ms Beh. The Court is of the view that both witnesses were truthful and attempted to give an honest account of their recollections of the events surrounding the rental agreement.
Ms Beh clearly had no specific recollection of the discussion that took place between herself and Mr Lee at the time the agreement was entered into. She gave evidence that she dealt with approximately 30 customers each week. The circumstances surrounding the hire of this vehicle were not out of the ordinary. Given the lapse of time since the transaction it is unsurprising that Ms Beh has no real recollection of the discussions that took place. The evidence that Ms Beh was able to provide was based on her usual practice for executing rental agreements.
Mr Lee was also subject to cross examination. Mr Lee stated that he had a specific recollection of the conversation with Ms Beh. He remained adamant that he was advised that "I don't have to pay a dollar if I have an accident". Mr Lee hired the vehicle for the purpose of moving furniture. He does not hire vehicles regularly. In that context the transaction was not a common experience and it would be more likely that he would have a specific recollection of discussions. However, it was clear that his recollection of matters surrounding the hire of the vehicle was not infallible. In his statement he makes no reference to telephone calls being made by Ms Beh to Mr Lee after he returned the damaged vehicle. He only accepted that such telephone calls were made after being presented with evidence of telephone records produced on behalf of the plaintiff that contained his telephone number. The plaintiff submits that the first call for the purposes of raising an issue with the vehicle not being returned with a full petrol tank and secondly, a discussion regarding the damage to the vehicle. The telephone records are inconsistent with the conversations that Mr Lee states took place when he returned the vehicle. There is no explanation as to why these two telephone calls took place if Mr Lee had a discussion with a representative of the plaintiff when returning the vehicle.
Mr Lee's failure to properly recollect what occurred when the vehicle was returned undermines the weight that the court can place on his recollection of discussions that took place regarding liability for damages at the commencement of the rental agreement. The discussion between Mr Lee and Ms Beh took place more than two years earlier. It is understandable that there would be some uncertainty as to the exact details of the discussion that took place. The plaintiff has failed to satisfy the Court that there was a misrepresentation made by Ms Beh regarding the extent of the protection afforded under the "Full Protection Package".
Contractual Misrepesentation
The second limb of the defendant's argument regarding misrepresentation is the use of the term "Full Protection Package". The defendant submits that the use of this term had the consequence of misleading Mr Lee in that the label "Full Protection" implies coverage that is entire, complete, or maximum. The term "Full Protection Package" is defined in clause 1 of the standard terms and conditions, however, unhelpfully it is defined under the acronym "FPP". The acronym "FPP" does not appear in any other provision of the contract.
The defendant has submitted that the term "Full Protection" is misleading and deceptive within the meaning of the Trade Practices Act and the circumstances of the use of the term are analogous to those in St Lukes Health Insurance v Medical Benefits Fund of Australia Ltd (1995) ATPR 41-428 . In that case, MBF advertised health insurance cover for "dental, optical, pharmaceutical and physiotherapy for just $2.10 per week. With no excess to pay..." . The actual cover that was offered by MBF had quite marked limitations. Northrop J held:
"the advertisements are misleading and deceptive or likely to mislead or deceive in that a person seeing or hearing or reading the advertisements would form the view that the insurance cover granted would be such that there was no excess, nothing to be paid, by the insured in relation to costs incurred for those types of treatment".
The plaintiff submits that the circumstances of the present case are distinguishable from those referred to in St Lukes Health Insurance . The plaintiff submits that the term "Full Protection" could not be reasonably understood as meaning protection against damage in all circumstances. The plaintiff gives the example that a renter would not reasonably expect protection against liability for damage intentionally or recklessly caused by the renter.
The Court is of the view that the decision in St Lukes Health Insurance is distinguishable. In that case the Court was assessing whether an advertisement had the potential to mislead or deceive. In the present instance the court is considering the use of a term within a contract. The term of a contract cannot be considered in isolation. Rather it should be construed in the context of the contract as a whole.
The proper understanding of the "Full Protection Package" option is determined by reference to clauses 1 and 8 of Part B of the contract. Clause 8.1 provides that the Renter will be generally liable for damages occasioned to the Vehicle while in the possession of the Renter. Clause 8.2 limits the extent of the Renters liability to the amount referred to in Part A as the Damage Liability Fee where the Renter elects to pay the Damage Liability Waiver Fee. Where the Renter elects to accept the Full Protection Package clause 1 of the agreement provides that the Damage Liability fee is reduced to zero. However, by virtue of clause 8.3 the reduction of the Renters liability to the amount of the Damage Liability Fee does not apply in circumstances where the damages arise as a consequence of any of the circumstances listed in clause 8.3(a) to (l). The claim in relation to these proceedings relates to overhead damage referred to in clause 8.3(f) applies so that there is no reduction to the extent of the Renters liability arising in clause 8.1. The damage may also fall within the description of damage caused deliberately, carelessly or recklessly by the renter as referred to in clause 8.3(d).
The suggestion that the term "Full Protection Package" was a misrepresentation cannot be accepted. The contract defined what the package entailed, albeit in a complex and obscure manner. The extent of the protection afforded by the "Full Protection Package" was determined by operation of the express provisions of the contract including the exclusion clauses.
Contracts Review Act 1980
The defendant seeks relief under section 7 of the Contracts Review Act 1980. The Act provides the Court with the discretion to refuse to enforce any or all provisions of a contract in circumstances where the Court finds that the contract is unjust.
Section 32 of the Local Court Act 2007 provides this Court with jurisdiction to refuse to enforce any or all of the provisions of a contract under section 7(1)(a) of the Contracts Review Act 1980.
The Contracts Review Act confers beneficial rights to a person seeking relief from obligations under a contract that go beyond those provided by common law.
In Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343 at [87]; (2008) 252 ALR 55 at 75, the Court of Appeal (per Campbell JA) approved the following statement by Brereton J in Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 at [51] as to relief under the Contracts Review Act :
"Proceedings for relief under Contracts Review Act, s 7, involve two steps. The first is whether the contract was unjust in the circumstances in which it was made, having regard to the factors referred to in s 9. This is a conclusion of fact, albeit one of ultimate fact involving a broadly based value judgment...The second, which arises only if the first is resolved in the affirmative, is whether any and if so what relief should be granted; this involves the exercise of a judicial discretion..."
McHugh JA in West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at 620-622 stated that the circumstances giving rise to "unjustness" in a contract may involve substantive unjustness where the contract imposes an unreasonable burden upon a party or procedural unjustness where there is unfairness in the methods used to make the contract.
Section 9(2) of the Act outlines the following relevant matters to be taken into account by the Court when determining whether a contract is unjust:
(2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following:
(a) whether or not there was any material inequality in bargaining power between the parties to the contract,
(b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation,
(c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract,
(d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract,
(e) whether or not:
(i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or
(ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented,
because of his or her age or the state of his or her physical or mental capacity,
(f) the relative economic circumstances, educational background and literacy of:
(i) the parties to the contract (other than a corporation), and
(ii) any person who represented any of the parties to the contract,
(g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed,
(h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act,
(i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect,
(j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act:
(i) by any other party to the contract,
(ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or
(iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract,
(k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and
(l) the commercial or other setting, purpose and effect of the contract.
The Court is of the view that sections (9)(2)(a), (b), (c), (e)(i), (g), (i) and (j) are factors that are relevant to the existence of unjustness in the present case.
The use of the term "Full Protection Package", while not being a misrepresentation in the legal sense, has the potential to mislead an individual who does not carefully read the entire document. The circumstance in which this contract is formed, as outlined below, discourages the renter from thoroughly reading the document.
The contract is unreasonably complex. The contract consists of Part A which is a single document. Part B of the contract is 4 pages. The contract is long, contains provisions that are relevant only to a rental in New Zealand, is littered with acronyms that hinder rather than help the reader and for the lay person it would undoubtedly be confusing. It is written in language that is legalistic. Even for an experienced legal practitioner I would expect that it would be necessary to spend at least 20 minutes to read and fully comprehend the terms and conditions that apply. Notwithstanding this, it is a document that was required to be signed by Mr Lee at a service counter. The plaintiff creates an environment that is not conducive to a proper reading of a contract of this complexity.
The practice of pre booking of vehicles without providing notice of the precise terms of the contract places unfair pressure upon the renter who subsequently attends the rental office to accept whatever terms are offered. The terms and conditions of the contract are provided to the renter at the time when they attend Europcar's office to collect the vehicle. According to the evidence of Ms Beh, customers will often book the vehicle by telephone or by the internet ahead of time to ensure its availability. In the present case Ms Beh states that Mr Lee had already made a booking in relation to the vehicle. In the circumstances where the renter has made a booking to secure the availability of the vehicle and then attends to collect the vehicle there is already a high degree of commitment to proceed with the rental agreement by the renter. Often the hire is for a specific purpose that has been prearranged. In this instance, Mr Lee sought the rental vehicle to move personal furniture. No doubt it would have been difficult for him to back out of the transaction once he attended Europcar's office.
Part A of the contract contains a printout of the particulars of the rental charges and options selected by Mr Lee. It outlines the "Full Protection Package" daily fee of $25.45 per day. Mr Lee states that he elected to take the "Full Protection Package" during the process of completing the hire documentation. It is not clear what information was available to Mr Lee at the time of making these selections. It is unsatisfactory that Mr Lee was required to make decisions regarding the options available without first having the entire written contract terms available. Presenting the contract at the conclusion of the transaction discourages any renegotiation of the terms of the contract even if that was possible. Many renters, having nominated the "Full Protection Package" prior to seeing the final contract would no doubt simply assume that the written contract reflects whatever understanding they may have of the effect of this package.
In this context, a renter is unlikely to undertake more than a cursory review of the contract. A renter would likely to conclude, as Mr Lee did, that the term "Full Protection Package" would provide a complete or comprehensive coverage of insurance. That is the ordinary and natural connotation of the term.
The contract does not readily disavow the reader of any misunderstanding of the term "Full Protection Package". The term appears only once in Part B of the contract in clause 1. It does not appear in the provisions of clause 8. The special condition contained in Part A of the contract does nothing to clarify the issue of liability. The special condition contains the words "renter responsible for vehicle and 3 rd party damage resulting from overhead, underbody & reversing contact driving on unsealed roads". This sentence is poorly drafted and grammatically flawed. It verges on being nonsensical. In any event this condition is followed by the reference to the renter accepting the "Full Protection Package". I accept the defendant's submission that by placing reference to "Full Protection Package" under the Special Conditions, the rental agreement suggests that those special conditions are subject to any protection afforded by the "Full Protection Package".
The fee of $25.45 per day for the "Full Protection Package" is an additional amount paid in addition to the cost of hiring the vehicle. The fee equates to an annual fee of $9,289.25, an amount significantly higher than most private motor vehicle comprehensive insurance premiums. It is a substantial fee representing 25% of the daily hire cost and one that a renter would reasonably consider to be commensurate with substantial protection.
These are matters that give rise to procedural "unjustness". The use of the term "Full Protection Package" combined with the complexity of the document, the environment in which it is presented and the manner in which it is presented means that there is a high likelihood that the renter would either not read or, if the renter did, he or she be unlikely to understand the terms of the contract or the potential risk of liability to which they are exposed. Although Mr Lee was an educated person, who had undertaken some legal studies, the form of the contract and methods used to induce the agreement leads me to the view that all but the most prudent of renters would not query the extent of the risk to which they were exposed under the contract. I am satisfied in the present case that the factors unreasonably inhibited Mr Lee from making an informed decision to enter into the contract.
There also exists substantive injustice through the unreasonable burden imposed on the renter by the contract. Even if Mr Lee did know the extent of the exclusions that existed under the contract he is placed in a difficult position. At the late stage that he becomes aware of the risks associated with the hire he cannot arrange for such risk to be insured either by the plaintiff or through some alternative insurer. In cross examination Mr Lee admitted, with complete candour, that even had he known of the extent of his risk then he probably would have run the risk and proceeded with the rental agreement in any event. His comments in this regard reflect the lack of true bargaining power in the hands of Mr Lee. He is presented with a standard contract, where Europcar determines what type of damage is excluded from protection and the degree to which the renter may reduce their potential liability. Mr Lee has the choice to either take the limited protection offered by Europcar or cancel the transaction. He makes that choice without any details as to the maximum value of the damages that might arise in the event of a collision.
The burden of risk placed upon Mr Lee by the contract is substantial. In this instance, the cost of repairs to the roof damage is $6,666.00 not including GST. The cost to a potential renter could be higher if the roof was damaged beyond economic repair. He also bears the cost of Europcar being unable to obtain a profit from the vehicle whilst it is being repaired.
The contract does not provide protection against damage to the overhead section of the vehicle caused by overhanging objects. No doubt Europcar declines to offer protection to renters in these circumstances due to the high risk of this type of damage. Large vehicles, such as the Mitsubishi Canter hired by Mr Lee, are often hired to renters who are inexperienced with driving vehicles of this size and height. To make matters more difficult for the renter no details of the necessary height clearance of the vehicle appear in the contractual documents.
Even without reference to clause 8.3(f) Europcar carves out a substantially broader exclusion with respect to liability under clause 8.3(d). Under that subclause any damage caused "deliberately, carelessly or recklessly" by the renter, any other driver of the vehicle or a passenger within the vehicle renders the renter liable to the full extent of the damage.
The inclusion of the term "carelessly" effectively means that a renter remains wholly liable for any damage caused to the vehicle by reason of his own negligence irrespective of any loss damage waiver or "Full Protection Package". The protection offered by the loss damage waiver or "Full Protection Package" appears largely illusory. The protection seems to apply only in circumstances where damage is caused wholly by the act of a third party (not being a driver or passenger in the vehicle) and then only subject to the qualification that other exclusionary provisions of clause 8.3 do not apply.
Europcar formulates it contracts to pass to the renter the risk that it is unwilling to bear or to insure against. While Europcar more than adequately protects its own interest, the contract has little regard for the interests of the renter.
The renter of a vehicle is a bailee. As such, where damage occurs to the vehicle, the renter has no control over the decisions made in relation to repair of the vehicle. Whereas the owner responsible for repairs may make pragmatic decisions whether to fix minor cosmetic damage, or make arrangements for the most economic repairs, the renter has no such control. The renter bears both the risk of damage and the uncertainty as to the extent of liability.
Section 9(1) of the Contracts Review Act requires the Court to have regard to the issue of public policy when exercising the discretion provided under the Act. There is a strong public policy in Courts binding parties to the contracts that they sign. The High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 180-181 re-affirmed the importance of the act of signing a contractual document when determining the rights and liabilities of contracting parties. In a joint judgment the Court said at 42:
"Consistent with this objective approach to the determination of the rights and liabilities of contracting parties is the significance which the law attaches to the signature (or execution) of a contractual document. In Parker v South Eastern Railway Co (1877) 2CPD 416 at 421, Mellish LJ drew a significant distinction as follows:
'In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents. The parties may, however, reduce their agreement into writing, so that the writing constitutes the sole evidence of the agreement, without signing it; but in that case there must be evidence independently of the agreement itself to prove that the defendant has assented to it.'
A signature on a contract is a representation by the person signing of acceptance of the terms of the agreement. There is a strong policy consideration of ensuring that parties are bound by their signature to ensure certainty to commercial transactions. However, there is a countervailing public policy that signatures on contracts should be obtained through methods that are open, fair and reasonable. Where signatures are obtained through methods that discourage an understanding of the terms being accepted then the quality of the representation made by the signature is diminished.
The Court is of the view that from a public policy perspective, the circumstances in which Mr Lee signed the contract were unjust. The Court is satisfied that relief should be granted to the defendant under section 7(1)(a) of the Contracts Review Act by declining to enforce Clause 8.3 of the contract.
Insurance Contract Act
The defendant submits that the Full Protection Package accepted by Mr Lee under the rental agreement constituted a prescribed contact of insurance under section 34 of the Insurance Contracts Act 1984. Section 35(1) of the Act establishes a presumption that an insurer must not refuse to pay an amount equal to the minimum amount in relation to the claim by reason only that the effect of the contract was to exclude coverage in respect of an event that is the subject of the claim. Regulation 8 of the Insurance Contracts Regulation provides that the minimum amount is an amount sufficient to indemnify the person making the claim. The presumption is displaced if the insured is clearly informed in writing or reasonably ought to have known of the effect of the contract.
The plaintiff submits that the rental agreement does not constitute a contract of insurance within the meaning of the Insurance Contracts Act 1984.
Regulation 5 of the Insurance Contracts Regulations defines a "prescribed contract" to include contracts that provide insurance cover (whether or not the cover is limited or restricted in any way) in respect to the loss or damage to a motor vehicle. The parts of the rental agreement between the plaintiff and defendant that purport to indemnify the defendant of liability have the effect of insuring Mr Lee, at least to some extent, against liability for damage caused to the vehicle. The court is satisfied that the rental agreement is a "prescribed contract" for the purposes of Act and that therefore section 35 of the Act does apply. Having regard to what the Court has noted in respect to the claim under the Contracts Review Ac t the Court is not satisfied that Mr Lee either knew or ought to have known of the effect of the contract. Accordingly, the presumption in section 35(2) is not displaced and Europcar would not be entitled to refuse a claim on this basis.
The Court will enter a verdict and judgment for the defendant and cross claimant. The Court grants relief by not enforcing clause 8.3(d) and clause 8.3(f) of the Rental Agreement.
Stephen Olischlager
Local Court Assessor
Small Claims Division
Decision last updated: 06 June 2011
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