Khalif v Mullarvey
[2022] VMC 18
•7 July 2022
IN THE MAGISTRATES’ COURT OF VICTORIA
AT MELBOURNE
Case No. M10540882
| ADEN KHALIF | Plaintiff |
| v | |
| MICHAEL MULLARVEY | Defendant |
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MAGISTRATE: | Magistrate T. W. Greenway |
WHERE HELD: | Melbourne Magistrates’ Court (online) |
DATE OF HEARING: | 3 May 2022, 8 June 2022 and 30 June 2022 |
DATE OF DECISION: | 7 July 2022 |
CASE MAY BE CITED AS: | Khalif v Mullarvey |
MEDIUM NEUTRAL CITATION: | [2022] VMC 18 |
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TORTS – Motor vehicle collision – Whether costs of hiring a replacement vehicle recoverable as damages – Whether hiring replacement vehicle constitutes acts taken to mitigate loss – Impecuniosity – Unreasonableness.
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APPEARANCES: | COUNSEL | SOLICITORS |
| For the Plaintiff | Mr H. Friedman (trial) and Mr R. Fowler (submissions) | Neill Ogge Lawyers |
| For the Defendant | Mr S. Lowry | Turks Legal |
HIS HONOUR:
Introduction
At approximately 8:30 am on 19 January 2021, a motor vehicle collision occurred between Mr Aden Khalif (Khalif) and Mr Michael Mullarvey (Mullarvey) on Albert Street in Preston. Both parties have commenced proceedings in this Court alleging that the other was negligent and responsible for the collision.
A liability hearing was conducted on 3 May 2022. In ex-tempore reasons delivered on that day, the Court determined that liability for the collision be apportioned 20% to Khalif and 80% to Mullarvey. The proceedings were then adjourned for a quantum hearing on 8 June 2022.
For the purposes of assessing quantum, the parties have agreed that:
(a) the net loss of Khalif’s vehicle, a 2000 Holden Vectra (Vehicle), was $2,800;
(b) the assessment fee for the Vehicle was $440; and
(c) the net loss to Mullarvey’s vehicle, a 2014 Mazda CX5, was $2,466.86.
Accordingly, there will be judgment for Khalif in the sum of $2,592 and for Mullarvey in the sum of $493.37.
In addition, Khalif has sought the following damages:
(a) vehicle hire charges of $49,100 over the following periods (Hire Car Charges):
(i) 30 January 2021 to 21 October 2021 (264 days) @ $125 per day, totalling $33,000; and
(ii) 4 March 2022 to 6 June 2022 (92 days) @ $175 per day, totalling $16,100.
(b) a towing fee of $275.
In response, Mullarvey asserted that Khalif had not proven such losses. Four arguments were made in support of this contention:
(a) a car-hire and towing were not required as the Vehicle was capable of being driven safely after the collision;
(b) Khalif had unreasonably failed to purchase a replacement vehicle within a reasonable time after the collision;
(c) the totality of the Hire Car Charges was disproportionate and unreasonable; and
(d) Khalif had not established that the rate of the Hire Car Charges was reasonable.
Plaintiff’s Evidence
At the time of the collision, Khalif was employed as a customer services officer at a business in Essendon. To travel to and from work, Khalif routinely drove his car approximately 20 kilometres from his home in Preston. He also enjoyed the amenity of his car to visit friends, go shopping, and for other engagements.
Immediately after the collision, he drove to work and observed that the front of the car was wobbly, and the front passenger door could not be opened properly. Khalif drove the car home after work but did not drive it again.
Later that day, he googled ‘not at fault drivers’ and came across a company known as ‘TP Claims’. He telephoned the company and spoke to a person named Brad. Khalif said he needed someone to assist him with his claim, as Mullarvey was not returning his telephone calls.
TP Claims and Brad provided Khalif with a package that included organising an assessment of his Vehicle, a hire car, and towing and salvage of his Vehicle. Brad also referred him to solicitors. TP Claims itself did not provide any of these services.
At an unknown time on 19 January 2021,[1] Mr Tyson Munro (Munro), of Prestige Auto Assessing Services, carried out an inspection and assessment of Khalif’s vehicle. The inspection was at an unknown third-party location. Munro assessed the Vehicle as an economic write-off, with a pre-accident value of $2,800 and salvage at $155.
[1]The salvage requests were sent by the assessor at 12:31pm and 12:32pm on 19 January 2021.
On or around 21 January 2021, the Plaintiff’s solicitors, Neill Ogge Lawyers sent a letter of demand to Mullarvey, claiming:
(a) pre-accident value - $2,803.30;
(b) report - $440;
(c) towing - $275; and
(d) car hire - $2,755.[2]
[2]Exhibit P3 - Correspondence Bundle 1.
Khalif endeavoured to catch public transport to work after the collision, however this doubled his usual travel time and made it difficult for him to transport groceries and other items. He also contracted COVID-19 whilst using public transport. This caused his work colleagues and house mates to shun him as they considered him to be a health risk. Khalif found this exacted a significant toll on his mental health and exacerbated his symptoms of depression and anxiety.
Brad from TP Claims also organised for Khalif’s car to be towed away. Khalif agreed. His understanding was the Vehicle was being taken away “to the wreckers”. However, Khalif gave evidence that he was not home when the Vehicle was taken away.
A towing invoice dated 30 January 2021, in the name of Parker Quest Towing and Salvage (Parker Quest) recorded a towing from “Preston – Salvage” and charged Khalif $275.[3] The towing invoice does not disclose an entity providing the service, only an Australian Business Number. It also omits any bank account details for payment.
[3]Court Book 33 (‘CB’).
When asked why he had authorised the towing of his Vehicle valued at $155 thereby incurring a cost of $275, Khalif said he ‘clearly didn’t look at the numbers’.
A further document on Parker Quest letterhead, entitled “Vehicle Salvage Notice” recorded the following:
Vehicle Details
Holden Vectra | VIN: W0L0JBF19YL594542
Keys provided
WOVR Status Terms: No VIV // Repairable Write Off
Salvage Amount: Per settlement
Terms and Conditions
This Notice advises you that the vehicle has been salvaged.
The date of salvage is the date of this Notice.
You agree that you have read, understood and accepted the assessment compiled by Prestige Auto Assessing (PAA) a company independent of Parker Quest Towing & Salvage (PQTS).
You declare that you are the owner and have clear title to the salvaged vehicle.
Considerations for the salvage of your vehicle will be transferred to your nominated bank account per your settlement instructions.
Upon salvage, you agree to transfer ownership of the vehicle to PQTS and you also agree that PQTS shall have unfettered discretion to dispose of the vehicle in any manner and to whomever that PQTS sees fit.
Please note that the vehicle may be on-sold and/or transferred, used for parts or repaired and re-registered. [4]
[4]Exhibit D1 – Vehicle Salvage Notice dated 25 February 2021.
Khalif said that, while he had seen the salvage notice, he did not receive any money for the salvage of his Vehicle. From conversations with Brad, his expectation was that he would receive funds after the proceedings had concluded.
Sometime between 19 January 2021 and 30 January 2021, he was advised by Brad that he was entitled to a hire car which would be paid for by the ‘at fault’ party. On 30 January 2021, Khalif signed a document entitled ‘Car Hire Agreement’ (2021 Hire Agreement).[5] The letterhead of that document is in the name of ‘Your Ride’. There is no evidence if Your Ride is a business name, and if so, to whom it is registered.
[5]Exhibit P1 – Hire Agreement dated 30 January 2021.
The terms of the 2021 Hire Agreement were as follows:
1. I agree to pay the daily rate of $125.00;
2. I agree to be bound by the Your Ride Terms & Conditions which are available at: youride.com.au/terms-and-conditions/;
3. …
4. I hereby indemnify the Your Ride Discretionary Trust T/A Your Ride and its trustee, the Insurance Recoveries Discretionary Trust and its trustee and their agents, employees, officers and servants (collectively, “the hirer”) against all claims and counter claims and demands for injury, damage or loss arising out of the use of the hire car by me whether in respect of death or injury to person or damage to property and to further indemnify the hirer against all costs resulting from any breach of the Road Rules and relevant acts, legislation, regulations and by-laws and I am aware that I am liable for any damage caused to this rented vehicle and any other property. [6]
[6]Ibid.
Under the 2021 Hire Agreement, the vehicle to be hired was a Toyota Camry, registration number SQM864. At the time of hire, the Toyota Camry was registered to a person by the name of Hamza Saqib. This anomaly was unexplained.
Relevantly, the Your Ride Terms & Conditions provided for, inter alia, the following matters:
THE YOUR RIDE RENTAL AGREEMENT AND YOU
The Rental Agreement between you and Your Ride is made on the date which the rental Agreement is dated and signed by you. The Rental Agreement is made up of the Rental Agreement that you signed, any written representations made by any Your Ride employees and these Terms and Conditions
By entering into the Rental Agreement, you also agree to be bound by the terms and conditions in any policy of insurance affecting the rental vehicle which you have rented or any replacement thereof.
You authorise Your Ride to charge certain fees and charges without further consent from you, other than you signing the Rental Agreement are set out in the pricing schedule in Annexure B.
MEANINGS AND GLOSSARY
…
Your Ride and Us means the Your Ride Car Hire Discretionary Trust ABN 81 476 368 786, trading as “Your Ride”
You means the renter with whom the Rental Agreement is made
…
RETURNING THE VEHICLE
You must return the vehicle to us on the date and by the time as arranged with us at the time of rental.
…
PAYMENT
At the end of the rental period you permit us to debit any card we have on file or obtain payment in other way as agreed to between you and us. The minimum charge is for one day’s rental and we will notify you of all charges.
We may agree, at our sole discretion, to defer payment and allow you to claim payment from any tortfeasor and/or their subrogated insurer.
… [7]
[7]Your Ride Terms and Conditions (also found on the youride.com.au website).
On or around 21 April 2021, Khalif’s Complaint was served on Mullarvey’s insurer, RACV.[8] No explanation was provided as to why service was approximately three months after the collision.
[8]Exhibit P3 - Correspondence Bundle 2.
On 4 May 2021, RACV wrote a letter advising Neill Ogge Lawyers that it had granted indemnity and admitted liability.[9] The letter went on to request an inspection of the Vehicle to assess the damages sustained. RACV wrote numerous times to Neill Ogge Lawyers requesting an inspection. By email dated 8 July 2021, RACV advised:
Please confirm if your client intends to provide our office with an inspection opportunity because if they don’t we can save us both some time and just get this matter through for a defence. [10]
[9]Ibid 3–5.
[10]Ibid 17.
On 23 July 2021, Ms Vanessa Ash, solicitor, responded:
The vehicle can be inspected:-
From 8:30am Friday 30/7/21
Orion Smash Repairs
52 Smith Rd Springvale.[11]
[11]Ibid 16.
On 6 August 2021, RACV advised Neill Ogge Lawyers that the Vehicle was not made available for the inspection.[12] Vanessa Ash, solicitor, responded on 11 August 2011, advising that the Vehicle was available ‘last Friday however no one showed up’.[13]
[12]Ibid 26.
[13]Ibid 26.
On 8 September 2021, Mullarvey filed a defence denying liability for the Collision and alleging that Khalif’s negligence caused and/or contributed to the Collision.[14] A counterclaim seeking damages for the cost of repairs was filed on 22 September 2021.[15]
[14]CB 6.
[15]Ibid 10.
On 21 October 2021, Khalif returned the Toyota Corolla and flew to London to visit his friends and family. Khalif had originally planned to be overseas until April 2022 but returned to Australia in February 2022 as his savings were running low. As set out further below, Khalif had been saving for an overseas holiday during the hire-car period.
On 17 February 2022, Khalif commenced a new job working 30 to 37 hours a week as a customer services casual employee in Port Melbourne.
Upon his return to Australia, Khalif again contacted Brad from TP Claims, who informed him that he was entitled to another hire-car on the same terms as before. On 4 March 2022, Khalif signed a further Car Hire Agreement for a 2005 Toyota Corolla with registration IQW9NP at $175 per day.[16] That vehicle was registered in the name of Parker Quest Pty Ltd.
[16]Ibid 29.
Khalif said his intention was to purchase a replacement vehicle after he received the pay-out from the RACV. He remains in the Toyota Corolla.
Condition of Vehicle
The Munro Report recorded that the vehicle was in average condition and had travelled 183,123 km.[17] The brakes were assessed as “operational” and the steering as “pending”. Munro did not give evidence in the proceeding.
[17]Ibid 35-52 (Munro Report).
The Munro Report included the following photographs of damage to the Vehicle:
[18]
[18]Ibid.
In cross-examination it was put to Khalif that his Vehicle was driveable. Khalif’s response was:
To me it didn’t feel safe. I mean, the wheel wasn’t aligned properly, I drive a lot through the motor way going to work and doing 80kmhs in that car, it was an unnecessary risk I wasn’t willing to take.
When asked whether he would have kept driving the Vehicle, if it had been assessed as safe to drive, Khalif said:
To me safety came first. I’m not the expert, but the assessor’s said it was a write off and I took their word for it. To me it didn’t feel safe either, because it got hit on the wheel.
Khalif paid registration of the Vehicle in three-month intervals. It was due to expire on 30 March 2021.[19] He did not renew the registration after he disposed of the Vehicle on 30 January 2021. Nevertheless, the Department of Transport certificate for the Vehicle recorded that its registration continued in Khalif’s name until 6 April 2022.[20]
Rhys O’Dell
[19]Ibid.
[20]Exhibit D3 – Subpoenaed documents produced by VicRoads.
Mr Rhys O’Dell (O’Dell) is a vehicle assessor for Australian Accident Management Commercial (AAMC). O’Dell inspected the Vehicle on 3 November 2021 at Orion Prestige Smash Repairs. He produced an assessment report (O’Dell Report).[21]
[21]O’Dell Report.
The O’Dell Report included the following photographs of the damaged Vehicle:
[22]
[22]Ibid.
O’Dell considered the Vehicle was in average/normal condition for its age. He observed damage on the left-hand front panel but no impact or bulging damage to the front left-hand wheel.[23]
[23]Exhibit D2 - AAMC Report, 14.
The odometer of the Vehicle on 3 November 2021 recorded 195,530 km. From his inspection, O’Dell could not identify any reason why the vehicle was otherwise unsafe to drive. He gave evidence as follows:
I go and look at smashed cars, all day every day, roughly 8 cars a day, sometimes total loss sometimes repairable. When you go and look at a damaged car like this, normally the repairer, if it does have mechanical damage, they’ll have some sort of mechanical report on the vehicle, saying, to draw your eye to it, saying this car is mechanically damaged… undriveable.
O’Dell did not identify any mechanical or underlying damage to the vehicle. Nor did he sight any mechanical report or quotation. O’Dell went onto state:
Normally, if they’re going to write the panel quote, then obviously going to write a mechanical quote, which means it going to have to go to some mechanical shop for them to look at it, and then do some sort of report to it, before wouldn’t obviously carry out any work, but they’d let them know if the car was damaged or the car was damaged or not.
It was put to O’Dell in cross-examination that, where a vehicle was damaged beyond economical repair, there would be no mechanical report or quotation. O’Dell disagreed.
As to the condition of the Vehicle, O’Dell expressed his opinion as follows:
Looking at the car, the car looked driveable to me. There’s no physical impact to that front tyre. It looked like the damage was actually past the tyre and you can see it has travelled down the side of the car and obviously hit the side mirror. It doesn’t look like the wheel was impacted to me.
O’Dell agreed that he had not driven the Vehicle and did not dispute Khalif’s evidence of the vehicle’s driving condition post collision.
Submissions – Condition of the Vehicle
A key dispute between the parties related to the condition of the Vehicle after the collision.
On behalf of Khalif, it was submitted that the Court should conclude that the Vehicle was not in a driveable condition. To support that contention, Khalif relied upon his unchallenged evidence that the front of the Vehicle was wobbly, and the front left-hand passenger did not open properly. Further, he maintained that the collision impact occurred on the front left-hand passenger wheel and that the ‘wheel was not aligned properly’. The combination of these matters meant that driving the Vehicle didn’t feel safe.
Mullarvey contended that Khalif had failed to prove that his Vehicle was unavailable or ‘off the road’. Consequently, it was submitted that Khalif had failed to prove the ‘inconvenience of not having access to his car’ or deprivation of the ‘convenience and pleasure’ of its use.[24]
[24]Arsalanv Rixon [2021] HCA 40, 22–23.
On the contrary, Mullarvey submitted the following evidence disclosed that the Vehicle was driven after the collision:
(a) on 19 January 2021, Munro inspected the Vehicle and its odometer reading was 183,123;[25]
[25]Munro report.
(b) on 3 November 2021, O’Dell inspected the Vehicle at Orion Prestige Smash Repairs and the odometer reading was now 195,530;[26]
(c) the Department of Transport certificate showed that the registration of the Vehicle was renewed until its cancellation on 6 April 2022; [27] and
(d) O’Dell’s opinion that the Vehicle looked driveable due to impact damage being sustained behind the front left-hand door.
[26]O’Dell Report.
[27]The Munro Report shows the expiry of the registration as 30 March 2021.
Mullarvey highlighted that there was no evidence that any repairs had been carried out to the Vehicle post collision. In the above circumstances, the only available inference was that the Vehicle was driveable after the collision.
Applicable Legal Principles – Hiring a Replacement Vehicle
Damages for breach of tort are compensatory. The injured party should receive compensation in a sum which so far as money can do, to put that party in the same position as if the tort had not been committed.[28] Cognate with this concept is the rule that a plaintiff cannot recover more than they have lost. [29]
[28]Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185, 191.
[29]Haines v Bendall (1991) 172 CLR 60, 63.
Recently, in Arsalan v Rixon (Arsalan),[30] the High Court set out the legal principles applicable to consequential loss arising from a motor-vehicle collision. The plaintiffs in Arsalan were the owners of prestige vehicles that were damaged and required repair. It was common ground that the repairs would take some time to be completed, and during that time the plaintiffs would be deprived of the use of their vehicles.[31]
[30][2021] HCA 40 (Arsalan).
[31]Two months in the case of Mr Rixon or $12,829.91; 143 days for Mr Cassim, although hire car charges were claimed for 84 days, being $7,476.
In that context, the High Court posed the following question for determination:
For which, if any, substitute vehicles can victims of negligence recover hire costs incurred during the period that their vehicles are being repaired?[32]
[32]Arsalan 1 [1].
The High Court stated the simple answer was that:
A plaintiff will usually be able to recover from a negligent defendant the reasonable costs incurred in hiring, for the period of repair, a substitute vehicle that is broadly equivalent to their damaged vehicles.[33]
[33]Ibid 1 [2].
The basis for this answer was that:
…it will not usually be difficult for a plaintiff to prove loss against a negligent defendant who causes the plaintiff’s vehicle to be unavailable for a period of repair. [34]
[34]Ibid 1 [3].
The High Court then eschewed the concept of a ‘plaintiff’s need’ for a replacement vehicle in favour of losses measured by:
(a) physical inconvenience from the plaintiff’s inability to use the damaged vehicle during the period of repair; and
(b) loss of amenity or enjoyment of the use of the vehicle.[35]
[35]Ibid.
Both heads of damage may usually be inferred from the plaintiff’s ownership and past usage of the vehicle and, but for the damage, the plaintiff’s ability to continue to use the vehicle during the period of repair.[36]
[36]Ibid.
Damages by way of physical inconvenience and loss of amenity are therefore usually consequences of the plaintiff’s lost ability to use their vehicle – that is, their vehicle is unavailable to be driven as a result of a defendant’s negligence.
Nonetheless, the onus of proving such loss remains on the plaintiff.[37] The High Court stated:
Although a plaintiff must prove their loss, it will not usually be difficult for a plaintiff to establish heads of damage of physical inconvenience and loss of amenity of use consequential upon their lost ability to use their vehicle. There will, however, be exceptional cases where such loss to the plaintiff will be non‑existent or so slight that the hire of a replacement vehicle will not be accepted to be a step in mitigation. Such exceptional cases might include where the plaintiff was hospitalised or abroad during the relevant period of repair, or where the damaged vehicle could have been replaced from idle stock within the plaintiff's fleet of vehicles.[38]
(emphasis added)
[37]The High court made three references to the ‘plaintiff proving their loss’ at [3], [34] and [36].
[38]Arsalan 12-13 [34].
Determination – Condition of the Vehicle
The height of Khalif’s evidence was that the impact from the collision damaged the left-hand front wheel and passenger door. This damage caused the wheel to become wobbly and unaligned, rendering the Vehicle unsafe to drive. The front left-hand passenger door also did not open properly.
As stated above, Munro was not called to give evidence. The Munro Report, itself, did not carry out a mechanical assessment of the Vehicle.[39] There is nothing in the Munro Report to evidence any mechanical or underlying damage to the Vehicle. The only reference to potential mechanical damage is the notation “steering: pending”. Accordingly, I do not consider the Munro Report supports the contention that the Vehicle was not able to be driven.
[39]Munro Report.
Furthermore, I accept the opinion of O’Dell at paragraph [43] above that the impact from the collision did not damage the front left-hand passenger wheel.[40] The photographs set out in the Munro and O’Dell Report are consistent with that conclusion. Given the nature of the damage sustained, I do not consider the fact that O’Dell did not drive the Vehicle necessarily undermines his opinion.
[40]O’ Dell Report, 43.
There is also significant objective evidence that the Vehicle was driven after the collision. The odometer evidence establishes that the Vehicle travelled a further 12,407 km between 19 January 2021 and 3 November 2021. I consider that travelling such a distance is consistent with the Vehicle being in a driveable condition after the accident. Similarly, the registration of the Vehicle was renewed until 6 April 2022, presumably to facilitate continued driving.
Khalif and/or his agents led no evidence as to what happened to the Vehicle after he authorised it being towed for salvage. In fact, Khalif believed it had been salvaged as a wreck. Further, there is no evidence before the Court that the Vehicle was repaired post collision.
While the Vehicle may have been an ‘economic write-off’, there was no evidence that it was a ‘mechanical write-off’. I do not accept Khalif’s evidence that the Vehicle had a steering problem or was unsafe to drive. Considering the totality of the evidence, I find that the vehicle remained in a driveable state after the collision.
Consequently, I consider that Khalif has failed to prove loss in the form of the Hire-Car Charges. This conclusion is based upon the fact that Khalif did not suffer the ‘lost ability to use his Vehicle’ as a result of Mullarvey’s negligence. In particular, he suffered no physical inconvenience as the Vehicle could have been driven. While, he may have suffered the loss of amenity, in the form of driving a partially damaged vehicle for a period of time, no evidence was led as to this loss of amenity or enjoyment.
Furthermore, on 30 January 2021, Khalif authorised the salvage of his Vehicle for $155. On his evidence, he did so on the basis that he trusted the experts that his car was a ‘write-off’. However, as stated above, the Munro Report did not establish that the Vehicle was mechanically damaged or unroadworthy.[41] Khalif made no enquiries to satisfy himself as to the mechanical condition of the Vehicle before disposing of it. A reasonable person in Khalif’s position would make reasonable enquiries to ensure their vehicle was incapable of being driven safely before disposing of it.
[41]Munro Report.
While some degree of loss of amenity may be presumed, I consider the loss in the present case to be almost ‘non-existent or so slight that the hire of a replacement vehicle will not be accepted to be a step in mitigation’.[42]
[42]Arsalan 12 [34].
Not being satisfied that Khalif has proven loss in the form of physical inconvenience or loss of amenity, the hire of a replacement vehicle was not a reasonable step in mitigation. I therefore reject Khalif’s claim for the Hire Car Charges.
For similar reasons, I do not accept that the towing in fact took place. Khalif’s evidence was that while he authorised the towing, he was not home when the alleged towing took place. No representative of Parker Quest gave evidence regarding the towing.
Furthermore, the Vehicle was driven to an unknown location on 19 January 2021 to enable Munro to perform the assessment. Also, the towing invoice does not include a bank account for payment. In the absence of evidence explaining the Parker Quest invoice, I do not consider it supports the fact that a towing took place. Finally, given my finding that the Vehicle was driveable after the collision (and was driven), I am not satisfied that the towing occurred.
Unreasonableness
In the alternative,[43] Mullarvey submitted that Khalif acted unreasonably by failing to purchase a replacement Vehicle after the collision and thereby continued to accrue the Hire Car Charges. The rate of the Hire Car Charges was also disputed.
[43]If the Court determined that the Vehicle was unable to be driven.
In the event I am wrong regarding the condition of the Vehicle, I will set out my findings in relation to these issues.
Rate of Hire Car Charges
Khalif sought to establish the rate of the Hire Car Charges through the evidence of Mr Mark Duthie (Duthie).
Duthie has been a manager of Your Ride since approximately January 2022. Duthie’s role includes daily administration, processing, handling of claims and the setting of car-hire rates. He explained that Your Ride rates were calculated by reference to the aggregator website (Aggregator Website). This website shows hire-car rates of Avis, Budget, Eurocar, Hertz, Thrifty and GoRentals.
In support of the rates charged by Your Ride, Duthie produced two extracts from the Aggregator Website:
(a) one dated 27 April 2021 to 28 April 2021 at Melbourne Airport (2021 Extract); and
(b) the other dated 15 March 2022 to 16 March 2022 at Melbourne Airport (2022 Extract).[44]
[44]Exhibit P4 – Vroomvroomvroom documents dated 20 April 2021 and 9 February 2022.
Duthie agreed that he was not employed with Your Ride at the time of the 2021 Hire Agreement and did not set the rate of $125 for the Toyota Camry. Accordingly, there was no evidence as to how the figure of $125 was calculated.
Ms Jeanette Dynon (Dynon), employee of Hertz, gave evidence on behalf of Mullarvey in relation to approximately thirty car rental invoices during the period of 30 January 2021 to 19 April 2022.[45] These invoices were Dynon’s assessment of the ‘closest available equivalent vehicles’.
[45]Exhibit D3 – Subpoenaed documents from Hertz.
Dynon considered that the Vehicle was in between a Toyota Corolla and a Toyota Camry. Invoices for a Skoda Octavia were also included, although Dynon classed this vehicle above a Corolla.
Dynon’s evidence was that the Hertz vehicles in the invoices were no more than 2 years old, i.e. 2019 model vehicles. This was an industry wide practice.
The Hertz invoices included several components. Both parties agreed[46] that the appropriate rate included the daily rental, an administration charge, a registration recovery fee, GST, and a credit card surcharge.
[46]The location surcharge and excess reduction were removed; Khalif’s submissions at 4, Mullarvey submissions, 35.
Mullarvey identified a Toyota Corolla AS SED 1.8L as the broadly equivalent replacement vehicle. Duthie agreed that a Corolla was the most appropriate comparison to Khalif’s Vehicle. Hybrid vehicles were not considered a suitable equivalent. The daily rates for a Toyota Corolla were:
(a) 19 to 23 February 2021 - $99.43;
(b) 22 April 2021 - $69.94; and
(c) 3 to 6 August 2021 - $99.42.[47]
[47]Exhibit D3 – Subpoenaed documents from Hertz.
Khalif considered the Skoda Octavia 110TSI WAG 1.4L a broadly equivalent vehicle. Its daily rates were:
(a) 12 February to 15 February 2021 - $92.69;
(b) 15 March to 17 March 2021 - $143.01;
(c) 27 March to 6 April 2021 - $93.76;
(d) 4 May 2021 to 5 May 2021 - $213.20;
(e) 24 September 2019 to 28 September 2021 - $132.14;
(f) 9 March 2022 to 14 March 2022 - $124.94;
(g) 23 March 2022 to 25 March 2022 - $241.81;
(h) 9 April 2022 to 13 April 2022 - $196.04;
(i) 10 April 2022 to 20 April 2022 - $144.26.[48]
[48]Ibid.
There were also invoices for a Toyota Camry Ascent Sed Hybrid 2.5L. Its daily rates were:
(a) 6 March 2021 to 9 March 2021 - $72.55;
(b) 19 April 2021 to 22 April 2021 - $143.22;
(c) 10 March 2022 to 14 March 2022 - $141.24;
(d) 11 April 2022 to 17 April 2022 - $172.60;
(e) 12 April 2022 - $287.34;
(f) 12 April 2022 to 15 April 2022 - $251.49.[49]
[49]Ibid.
In evidence, Duthie was also taken to the Hertz invoices. Duthie explained that Your Ride’s rates were very competitive and cited the rates charged by Hertz at between $182 and $188.
Duthie gave evidence that ‘Your Ride’ did not expect Khalif to pay for the Car-Hire Charges. His evidence was that ‘Your Ride’ would accept what the Court awarded and would not seek any additional sum from Khalif.
Relying upon a broader scope of vehicles, Khalif submitted that the average daily rate of the vehicles was more than $125 for the period of the 2021 Hire Agreement.
In relation to the 2022 Hire Agreement, it was submitted that the daily rate of $175 was reasonable. Duthie relied upon the 2022 Extract, which contained the following entries:
(a) KiaRio or similar (compact car) - $139/day;
(b) Suzuki Swift or similar (economy car) - $139.98/day;
(c) Hyundai I30 or similar (compact car) - $144.82/day;
(d) Toyota Corolla Hatch Hybrid or similar (compact car) - $151.47/day;
(e) Toyota Corolla Hatch or similar (intermediate car) - $155.00/day;
(f) Toyota Corolla Sedan or similar (standard car) - $166.00 to $166.20 /day
(g) Mitsubishi ASX or similar (compact SUV) - $169.00/day;
(h) Kia Sportage or similar (compact SUV) - $169.28/day;
(i) Toyota Camry or similar (full-size car) - $174.00 to $174.33/day;
(j) Nissan XTrail or similar (intermediate SUV) - $180.03/day
(k) Toyota Camry Hybrid or similar (full-size car) - $182.46/day;
(l) Subaru Forester or similar (intermediate SUV) - $188.44/day;
(m) Toyota Camry Hybrid or similar (full-size car) - $194.00/day;
(n) Toyota Rav4 Hybrid or similar (intermediate SUV) - $196.87 to $197.01/day;
(o) Audi Q2 or similar or similar (economy elite SUV) - $197.15 to $206.91/day; and
(p) Toyota Kluger or similar (full-size SUV) - $210.01/day.[50]
[50]Exhibit P4 - Vroomvroomvroom documents dated 20 April 2021 and 9 February 2022.
Applicable Legal Principles – Daily Rate of Hire
On the question of whether a plaintiff has taken unreasonable steps in mitigation of the loss, in Arsalan the High Court said:
Once a plaintiff has proved heads of damage of physical inconvenience and loss of amenity of use, it will usually be difficult for a defendant to prove that the plaintiff acted unreasonably by seeking to hire a replacement vehicle. In some cases, a defendant might instead seek to establish that the amount of the hire costs incurred was unreasonable for various reasons.[51]
[51]Arsalan 13 [36].
In particular, the High Court identified whether the replacement vehicle hired might fairly be regarded as equivalent to the damaged vehicle. Relevantly, in Lagden v O’Connor (Lagden), Lord Hope of Craighead stated:
The injured party cannot claim reimbursement for expenditure by way of mitigation that is unreasonable. If it is reasonable for him to hire a substitute, he must minimise his loss by spending no more on the hire than he needs to do in order to obtain a substitute vehicle. If the defendant can show that the cost that was incurred was more than was reasonable – if, for example, a larger or more powerful car was hired although vehicles equivalent to the damaged car were reasonably available at less cost – the amount expended on the hire must be reduced to the amount that would have been needed to hire the equivalent.[52]
[52]Lagden v O’Connor [2004] 1 AC 1067, 1077-1078 [27] (Lagden).
I accept the evidence of Dynon and Duthie that a Toyota Corolla was the most equivalent car to Plaintiff’s Vehicle.
Furthermore, I also accept that amongst the mainstream hire-car providers, the vehicles are likely to be newer models, i.e. between 2 years old and new.
Mullarvey pointed out that the vehicles actually hired to Khalif were much older models - a 2003 Toyota Camry and a 2005 Toyota Corolla. However, Mullarvey did not lead daily rate evidence of an equivalent 2003 or 2005 vehicle.
In accordance with the principles of mitigation set out in Arsalan and Lagden, Mullarvey bears the onus of establishing that equivalent vehicles were available at less cost than incurred by Khalif.
The only evidence led by Mullarvey as to the appropriate daily rate was the Hertz invoices. Those invoices show the daily rate for a Toyota Corolla was between $69.94 and $99.43.
In the circumstances, I consider a reasonable daily rate in the circumstances was $99.43. This rate was closest in time to the collision. It was also broadly corroborated by a very similar rate in August 2021.
Khalif’s Financial Position
Khalif gave evidence that he was unable to afford the cost of an equivalent replacement vehicle. In support of this contention, Khalif tendered evidence of four bank accounts:
(a) ANZ Online Saver account (ANZ Saver Account);
(b) ANZ Access Advantage account;
(c) Bankwest Easy Transaction account; and
(d) Bank of Melbourne Incentive Saver account (BOM Account).
At the time of the collision, the balance of the ANZ Saver Account was $2,095.46 and BOM Account had $4,003.40. The other two accounts were used by Khalif for everyday expenses.
Khalif was unable to identify the source of the $6,000 initial deposit for the BOM Account. He said he kept the BOM Account for the ‘things that come up in life’. On 19 May 2021, a further $2,000 was transferred into the BOM Account.
From around 15 January 2021 to 15 October 2021 Khalif earned a total of $35,957.61 calculated as follows:
(a) $3,794.33 a month from 15 January 2021 to 15 September 2021; and
(b) $5,602.97 on 14 October 2021.
Khalif’s major expense was rent in a share house of $150 per week.
Khalif’s evidence was that he was trying to save money to travel overseas to visit friends and family in London and Kenya. He said that he decided to purchase a non-refundable flight to Europe on or around 30 July 2021 for $2,500, as RACV had admitted liability.
Khalif’s evidence was that his efforts were concentrated on saving for that trip. When asked whether he had put away any funds for a replacement vehicle, Khalif said nothing. His main focus was that trip.
Khalif said he had turned his mind to purchasing a replacement vehicle and was hoping for a settlement to help him. Khalif gave evidence that he had looked around for a replacement vehicle, but he wanted to purchase a ‘decent vehicle’. From his searches of Facebook Marketplace and discussions with friends, Khalif assessed the price of such a vehicle as between $5,000 and $8,000.
Khalif was asked whether any portion of his salary was put towards purchasing a replacement vehicle. Khalif’s response was ‘no comment’.
On 21 October 2021, Khalif returned the Toyota Corolla and flew to London. Around the same time, he resigned from his employment. Khalif had saved the sum of $7,732.98 in the ANZ Saver Account.
On 17 January 2022, he commenced a new job working thirty (30) to thirty-seven (37) hours a week as a customer services casual employee in Port Melbourne. His weekly wage from February 2022 to April 2022 was between $764.70 and $1,083.88.[53]
[53]2022 Bank Statements.
Between 18 February 2022 to 14 April 2022, Khalif earned $9,328.42.
Applicable Legal Principles – Purchasing Replacement Vehicle
As stated in Arsalan, once a plaintiff acts to mitigate its loss (physical inconvenience and loss of amenity) by hiring a substitute vehicle, the onus of proof will lie upon the defendant to show that the costs incurred in mitigation were unreasonable.
The question of whether an innocent plaintiff should obtain a replacement vehicle in mitigation was considered in Fallon v Johnston (Fallon).[54]
[54]Fallon v Johnston [2018] VSC 273 (Fallon).
In that case, the plaintiff’s vehicle was ‘written-off’ due to the defendant’s negligence. While waiting for payment of the pre-accident value of the vehicle, the plaintiff hired a replacement car. The plaintiff was ultimately paid $5,460 for the pre-accident value. In the meantime, the plaintiff had incurred 52 days of hire-car fees, totalling $8,808. The defendant submitted that the plaintiff should have obtained a replacement vehicle approximately 14 days (or so) after the collision.
In Fallon, Justice Bell emphasised that a plaintiff must take reasonable steps to mitigate their loss. The test was an objective one.[55]
[55]Ibid 9 [23].
Further, the courts do not apply a high standard of reasonableness. Justice Bell cited Karacominakis v Big Country Developments Pty Ltd,[56] where it was said that:
A plaintiff who acts unreasonably in failing to minimise his loss from the defendant’s breach of contract will have his damages reduced to the extent to which, had he acted reasonably, his loss would have been less. This is often misleadingly referred to as a duty to mitigate, although the plaintiff is not under a positive duty. The plaintiff does not have to show that he has fulfilled his so-called duty, and the onus is on the defendant to show that he has not and the extent to which he has not. Since the defendant is a wrongdoer, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did.[57]
[56]Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313.
[57]Ibid 187.
In Fallon, the Court reinforced that ‘what is reasonable depends upon all of the circumstances’[58] of the case, including the impecuniosity of the injured party. The relevant circumstances identified included:
[58]Fallon 16 [38].
(a) the plaintiff was self-employed in a quasi-partnership
(b) the plaintiff used her vehicle to travel from Elwood to Hawthorn for her work;
(c) the defendant’s insurer had not agreed that the damaged vehicle was a write-off and had not made a settlement payment;
(d) the plaintiff’s bank account had about $27,000 in the business bank account;
(e) the cost of a replacement vehicle was approximately $6,000;
(f) she did not purchase a replacement vehicle because her income fluctuated and she required a contingency fund for her business;
(g) the purchase of a replacement vehicle would have placed the plaintiff under financial stress;
(h) the plaintiff made contact with the defendant’s insurer to talk about whether she could change hire-car companies. She was told ‘she didn’t have to’;
(i) no explanation was offered as to why it took 52 days for the defendant’s insurer to conclude that a vehicle worth less than $6,000 was a write-off and make the pay-out.[59]
[59]See Fallon.
In the above circumstances, the Court framed the question as follows:
The question was not whether Ms Johnston could have bought a replacement vehicle earlier but whether, in all the circumstances, including her business need for a reasonable contingency buffer, it was reasonable for her not to buy a replacement vehicle until after the write-off payment was made.[60]
[60]Ibid 12 [29].
The Court stressed that ‘unreasonableness was not established because less costly or burdensome measures by way of mitigation can be suggested with the wisdom of hindsight’.[61] The pros and cons of an alternative course of mitigatory action were not to be nicely weighed on the scales as if the Court were making a decision on the merits.
[61]Ibid 13 [30].
Justice Bell went on to state:
Of course, this does not mean that a person in Ms Johnston’s position is entitled to wait indefinitely in these circumstances [to purchase a replacement vehicle], running up unreasonable hire-car expenses in the meantime. The standard applied by the magistrate was whether, as the injured party, Ms Johnston had taken reasonable steps to mitigate her loss. Her entitlement to damages was circumscribed by that requirement because the purpose of damages is compensatory. An injured party is not entitled to recover from the wrong-doer more damages than the wrong actually caused, after the reasonable conduct of the injured party (as to which the onus is upon the wrong-doer) has been taken into account.[62]
[62]Ibid 14 [33].
Accordingly, the Court affirmed the Magistrate’s decision that the plaintiff’s decision to hire a replacement car for 52 days was not unreasonable.
On the specific question of impecuniosity, the Court stated:
Moreover, when courts apply the reasonableness standard in this context, it is recognised that impecuniosity is a relative concept. So in Mattocks v Mann, the Court of Appeal of England and Wales held that the innocent motorist was entitled to car-hire costs until the insurer paid for repairs because, having regard to the large sum involved, it was reasonable for her to wait. It is also recognised that, in the words of Lord Nicholls in Lagden, ‘[l]ack of financial means is, almost always, a question of priorities’. Reasonable judgments made by an injured party in relation to such questions are respected by the courts.[63]
[63]Ibid 15-16 [37] (citations omitted).
The full paragraph of Lord Nicholls in Lagden v O’Connor was as follows:
There remains the difficult point of what is meant by “impecunious” in the context of the present type of case. Lack of financial means is, almost always, a question of priorities. In the present context what it signifies is inability to pay car hire charges without making sacrifices the plaintiff could not reasonably be expected to make. I am fully conscious of the open-ended nature of this test. But fears that this will lead to increased litigation in small claims courts seems to me exaggerated. It is in the interests of all concerned to avoid litigation with its attendant costs and delay. Motor insurers and credit hire companies should be able to agree on standard enquiries, or some other means, which in practice can most readily give effect to this test of impecuniosity…[64]
Determination - Unreasonableness
[64]Lagden 1073 [9].
As identified by Fallon, every case must be determined on its particular circumstances.
Mullarvey submitted that Khalif was able to purchase a replacement vehicle. Such a purchase could have been made, applying Fallon and Lagden, ‘without making sacrifices that Khalif could not reasonably be expected to make’.
As set out above, Khalif’s bank statements disclose very modest personal funds. At the time of the collision, Khalif had total funds of $6,098.86. [65] His weekly income was $948.58.
[65]Total of the BOM Account and the ANZ Saver Account.
Evidence of Khalif’s expenses were somewhat incomplete. The only major expense identified was $150 per week in rental. However, the Court must make some allowance for utilities, food and other necessary items. Khalif had no dependents or other related expenditure.
As stated in Lagden, a lack of financial means is, almost always, a question of priorities.[66] Objectively considered, I consider Khalif’s use of his Vehicle to be a high priority. It was an important part of earning his weekly income, as he used it to drive to work. As he stated, public transport greatly increased his travel time. The COVID-19 pandemic provided a further reason why Khalif wishes to drive to work. I therefore consider it to be a priority expense after rent, food and other living expenses.
[66]Lagden 1073 [9] (Lord Nicholls).
In cross-examination, when asked whether he could have put away part of his salary to purchase a replacement vehicle, Khalif did not comment. Khalif’s evidence was that his primary focus was saving for a trip to London and Kenya to visit his friends and family.
Whilst no doubt important for personal reasons, I consider this reason was qualitatively different from Fallon. In that case, the plaintiff’s savings were ear-marked for business expenditure, tax liabilities and to even out cashflow.[67] In the absence of compelling evidence, saving funds for a personal holiday is more closely aligned to discretionary spending. Moreover, any such trip in the present case could have been postponed, and not cancelled.
[67]See Fallon.
A reasonable person in Khalif’s position would have also considered that they were incurring an ongoing personal liability of $875 per week or 92% of his weekly salary. Under the terms of the 2021 Hire Agreement that liability had the option of being deferred at the sole discretion of ‘Your Ride’. However, it remained a primary liability.
Having viewed the expenditure set out in Khalif’s bank statements for the period 19 January 2021 to May 2021,[68] I consider there is a high degree of repeated discretionary spending in the form of Deliveroo, ride share companies/taxis and other restaurants/eateries. No inherent criticism is made of these expenses. Rather, the Court must assess the relevant priorities of the expenditure incurred in the context of an ongoing liability for hire-car fees.
[68]There was no statement tendered for the BankWest account for March 2021 to April 2021.
Further, Khalif, through his agents, did not contact the RACV for several months after the collision. Khalif’s proceeding was commenced 57 days after the collision and 46 days after Khalif first incurred the Hire Car Charges. The Complaint was ultimately served on 21 April 2021.[69] This delay was unexplained, particularly given a letter of demand was sent by Khalif’s solicitors two days after the collision on 21 January 2021 and the assessment had been completed on 19 January 2021. In the circumstances, I consider the delay in filing the proceeding was unreasonable.
[69]Exhibit P3 - Correspondence Bundle pg 2.
The 21 January 2021 letter of demand also inexplicably sought car hire fees in the sum of $2,755. Even though, on Khalif’s own evidence, he entered the 2021 Hire Agreement over a week later, on 30 January 2021.
From 30 January 2021, Khalif was incurring a weekly fee of $875 for the car hire. By the time the Complaint was issued, Khalif had already incurred $5,750 or twice the known pre-accident value of the Vehicle.[70] Notwithstanding, the Complaint claimed the sum of $8,755 for the vehicle hire. As at the date of service, the hire-car fees had reached $11,625.[71]
[70]46 days x $125.
[71]93 days x $125.
While Khalif was not personally responsible for this delay, he is bound by the conduct of the solicitors as his authorised agent.
Secondly, for reasons unknown, Khalif’s solicitors only made the Vehicle available for inspection on 30 July 2021. It was clear, from 4 May 2021, that the RACV was requesting an inspection of the Vehicle. The correspondence evidences a delay from Khalif’s solicitors until 23 July 2021.
This conduct stands in stark contrast to Fallon, where the plaintiff prudently made contact with the defendant’s insurer.[72]
[72]See Fallon.
In all the above circumstances, I consider it unreasonable for Khalif to have taken no step to save for a replacement vehicle. In my view, saving for a replacement vehicle in this case was a higher priority than saving for the overseas holiday. Further, I consider there was reasonable scope within Khalif’s financial circumstances to put away a portion of his weekly salary to buy a replacement vehicle.
Considering the evidence tendered, I consider that a reasonable person in Khalif’s position would endeavour to save approximately $250 per week out of $950 per week (or 26.3%).
It follows that, in the circumstances of this case, I do not consider that the principles of mitigation required Khalif to purchase a replacement vehicle immediately after the collision. Given the very modest sums in question, Khalif was entitled to maintain a ‘contingency buffer’.
Having regard to the Munro Report and O’Dell Report, I assess the reasonable cost of a broadly equivalent replacement vehicle to be $2,800. At a saving of $250 per week, this equates to just over 11 weeks. I will round this up to 12 weeks to ensure that the total sum of $2,800 was accrued.
Accordingly, in the alternative case, I would have assessed the reasonable Hire Car fees at $8,352.12.[73]
[73]$99.43 x 7 x 12.
Conclusion
There will be judgment for Khalif in the sum of $2,592 and for Mullarvey in the sum of $493.37.
I otherwise do not accept Khalif’s claim for Hire Car Charges.
I will hear the parties on the questions of costs, interest and any consequential orders.
MAGISTRATE GREENWAY
7 July 2022
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