Roehlen v Mikhail
[2018] VSC 121
•22 March 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2017 02134
| BENJAMIN ROEHLEN | Appellant |
| V | |
| LUCY MIKHAIL | Respondent |
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JUDGE: | T FORREST J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 February 2018 |
DATE OF JUDGMENT: | 22 March 2018 |
CASE MAY BE CITED AS: | Roehlen v Mikhail |
MEDIUM NEUTRAL CITATION: | [2018] VSC 121 |
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APPEAL – Magistrates’ Court of Victoria – Whether magistrate erred in finding contract void for uncertainty – Whether magistrate erred in failing to find damages for compensable loss – Appeal allowed – Matter remitted to Magistrates’ Court.
CONTRACT – Whether contract void for uncertainty – Whether failure to agree on price is essential term – Whether court may imply term into contract – Contract enforceable – Court will strive to infer failure to agree on price not essential term – Australian and New Zealand Banking Group v Frost Holdings Pty Ltd [1989] VR 695 – May and Butcher Ltd v R [1934] 2 KB 17 – Moonlighting International Pty Ltd v International Lighting Pty Ltd [2000] FCA 41 – Wenning v Robinson [1964] NSWR 614.
DAMAGES – Whether plaintiff suffered compensable loss for loss of use of vehicle – Whether res inter alios acta applies – Whether distinction between direct loss and consequential loss – No distinction between direct loss and consequential loss in Australian common law – Anthanasopoulos v Moseley (2001) 52 NSWLR 262 – Burdis v Livsey [2002] EWCA Civ 510 – Dimond v Lovell [2000] 2 All ER 897 – Griffiths v Kerkemeyer (1977) 139 CLR 161 – Powercor Australia Ltd v Thomas [2012] VSCA 87 – Saric v Tehan (2011) 33 VR 632.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A. Klotz | Martin P Board & Associates |
| For the Respondent | Mr P. D. Crutchfield QC with Mr S. J. Ryan | Mills Oakley |
HIS HONOUR:
Overview
The appellant’s vehicle was damaged as a result of the negligent driving of the respondent. The property damage claim was resolved without litigation. The appellant’s claim for loss of use of his vehicle was the subject of an arbitration at the Broadmeadows Magistrates’ Court on 3 May 2017. In short, the appellant had entered into a hire car agreement with a third party (Right2Drive) for the supply of a vehicle while his Ford Flacon was being repaired.
The appellant argued that his loss of vehicle use was a compensable loss that should be calculated either at market rates or at the actual invoice cost of its temporary replacement. The respondent submitted that there was no actual loss to the appellant as his contract with Right2Drive was void for uncertainty. In these circumstances it was contended that because the loss claimed was a future or consequential loss (as opposed to a direct loss) it never actually crystallized. The loss was thus avoided and therefore not recoverable.
Her Honour found for the respondent, concluding (I infer) that because the hire contract with Right2Drive was void for uncertainty, then the appellant had suffered no compensable loss.
As the hearing was conducted as an arbitration, the proceedings were not required to be conducted in a formal manner.[1] The magistrate was bound by the rules of natural justice but not by the rules of evidence.[2] She was required to determine any question arising in the hearing ‘according to law’. She was not required to furnish reasons immediately, but if a party requested them within 28 days of the award, they had to be provided within a reasonable time.[3] In this case, her Honour provided short ex tempore reasons at the time of the award. It will become apparent that these reasons are inadequate and do not articulate a clear reasoning path. Notwithstanding this, the appellant does not rely on an ‘inadequacy of reasons’ ground. The appellant instead contends that her Honour erred in concluding that the Right2Drive contract was void for uncertainty and that the appellant suffered no compensable loss arising from the loss of use of his vehicle.
[1]Magistrates’ Court Act 1989 (Vic) s 103.
[2]Ibid.
[3]Ibid s 104
The grounds of appeal are as follows:
(1) In circumstances where the defendant conceded that:
(i) the plaintiff’s vehicle was damaged by the negligence of the defendant; and
(ii) the plaintiff needed a replacement vehicle while his own vehicle was being repaired,
the learned magistrate erred in law by failing to find that the plaintiff had suffered compensable loss for the loss of use of his vehicle while it was being repaired.
(2) The learned magistrate erred in law by failing to determine the measure of the plaintiff’s loss and quantify such loss.
(3) In circumstances where the defendant conceded that:
(i) the plaintiff’s vehicle was damaged by the negligence of the defendant; and
(ii) the plaintiff needed a replacement vehicle while his own vehicle was being repaired,
the learned magistrate erred in law by dismissing the plaintiff’s claim on the basis of having found that the rental agreement between the plaintiff and Right2Drive Pty Ltd for the hire of a replacement vehicle was void for uncertainty.
(4) The learned magistrate:
(a) in circumstances where the defendant conceded that:
(i) the plaintiff’s vehicle was damaged by the negligence of the defendant; and
(ii) the plaintiff needed a replacement vehicle
and
(b) having found that:
(i) the plaintiff acquired from Right2Drive Pty Ltd the use of a replacement vehicle while his own vehicle was being repaired; and
(ii) the plaintiff signed a rental agreement to hire such replacement vehicle from Right2Drive Pty Ltd for a fee that had not been agreed at the time the plaintiff signed the rental agreement;
erred in law by failing to find that the plaintiff had suffered compensable loss for the loss of use of his vehicle and that the measure of such loss was the fee due under the rental agreement, such fee having been determined by Right2Drive Pty Ltd by reference to market rates for the hire of a vehicle that satisfied the need of the plaintiff and was similar to his own vehicle.
(5) Alternatively to paragraph 4 above, the learned magistrate, in circumstances where the defendant conceded that:
(i) the plaintiff’s vehicle was damaged by the negligence of the defendant; and
(ii) the plaintiff needed a replacement vehicle while his own vehicle was being repaired,
erred in law by failing to find that the plaintiff had suffered compensable loss for the loss of use of his vehicle and that the measure of such loss was the market rate for hiring a replacement vehicle.
(6) Having found that the plaintiff signed a rental agreement to hire a replacement vehicle from Right2Drive Pty Ltd for a fee, the learned magistrate erred in law in finding that such rental agreement was void for uncertainty because of the absence of an agreed fee in the agreement at the time that it was signed by the plaintiff.
(7) Having found that the plaintiff signed a rental agreement to hire a replacement vehicle from Right2Drive Pty Ltd for a fee, the learned magistrate erred in law by failing to find that a court would give effect to, and enforce, the rental agreement by determining the car rental fee payable by reference to market rates for vehicle hire.
Whilst these grounds appear voluminous, in reality they raise only two substantive issues:
(a) Was the rental agreement between the appellant and Right2Drive void for uncertainty? If yes;
(b) Was it open to the magistrate to conclude that the appellant had not suffered a compensable loss for the loss of use of his vehicle?
Factual background
The following facts are undisputed:
· The appellant’s Ford Falcon was damaged by a vehicle being negligently driven by the respondent. Liability was admitted by the respondent.
· The Ford was taken to Essendon Smash Repairs (‘ESR’) for repair.
· ESR referred the appellant to Right2Drive car hire for a vehicle replacement. The appellant hired a Kia Sportage from Right2Drive. The appellant signed the hire documents prepared by Right2Drive on the day he took possession of the Kia.
· The hire documents did not set out details of the cost of vehicle hire and the appellant did not know what fees would be charged.[4]
[4]Transcript of Proceedings, Roehlen v Mikhail (Magistrates’ Court of Victoria, G13508631, 3 May 2017) 3.
· The appellant was told he would not have to pay for the car under any circumstances[5] and wasn’t made aware he would be liable for anything.[6] Right2Drive confirmed this.
[5]Ibid 9.
[6]Ibid 12.
· The charges in the rental agreement were inserted into the agreement after the appellant had signed it.[7]
[7]Ibid.
· Had he been paying for the hire charges, the appellant would have picked up his Ford from ESR two or three days earlier.[8]
[8]Ibid 16.
· The appellant signed the ‘authority to act’ form, giving Right2Drive authority to pursue recovery of hire charges.[9]
· The hire car charges were determined about ‘a week to two weeks’ after the return of the hire car.[10]
· The appellant ‘needed’ the use of a vehicle.[11]
[9]Exhibit HAB 7 in the proceedings of 3 May 2017.
[10]Transcript of Proceedings, Roehlen v Mikhail (Magistrates’ Court of Victoria, G13508631, 3 May 2017) 43.
[11]Ibid 3, 46.
The arbitration
The appellant gave evidence and was cross-examined, as was Mr Garrod, Right2Drive’s State Manager for Victoria. Their evidence provided most of the facts that I have set out above.
Submissions at the arbitration
Counsel for the defendant/respondent submitted the contract between the plaintiff/appellant and Right2Drive was void for uncertainty as no amounts were stipulated until well after it was signed, and it was a ‘sham’. In the event that the contract was not void, the plaintiff/appellant was entitled to compensation at market rates, not the invoice rates.
Counsel for the plaintiff/appellant submitted the contract was not void for uncertainty. Where a contract is entered into the common law strives to enforce the agreement. If an amount for services does not appear in the contract the current state of the law is that a court will impose a fair and reasonable cost for the services/items provided. To the defendant’s argument that the plaintiff has suffered no loss because his contract with Right2Drive was unenforceable, ‘that has been put to bed by Saric v Tehan.[12]’
[12](2011) 33 VR 632.
The magistrates’ reasons
I am conscious that the hearing proceeded as an arbitration and her Honour was not assisted by comprehensive submissions. In these circumstances, and with the considerable advantage of hindsight, in my view her Honour should have taken some time to assemble her thoughts rather than proceed directly to her ex tempore ruling. I shall set out the effect of the ruling.
Her Honour commenced by setting out a narrative of the evidence in the case.[13] She then pithily summarized counsel’s submissions. On the issue as to whether the contract was void for uncertainty, her Honour concluded ‘[e]ven if he [the appellant] did realise that he was signing a contract … it’s arguable that the contract would be void, in my view, due to its uncertainty.’[14] ‘The plaintiff, in my view, can’t agree to pay a figure that remains non-existent or at the very least uncertain, at the time of entering the agreement.’[15]
[13]Transcript of Proceedings, Roehlen v Mikhail (Magistrates’ Court of Victoria, G13508631, 3 May 2017) 57-61.
[14]Ibid 62.
[15]Ibid.
Her Honour considered it unnecessary to address the ancillary issues of whether the vehicle was appropriate, the rate reasonable and the nature of its use, ‘as I have agreed with the defendant that the contract must be considered to be void.’[16] After referring to Beamish v Kanakis[17] (a Western Australian District Court case dealing with replacement hire car rates), her Honour concluded:
That case itself arguably can be distinguished given it didn’t actually address whether the contract itself was enforceable or void and there was no challenge obviously also to the duration of the hire (of the) car. Accordingly I find in favour of the defendant and dismiss the claim.[18]
[16]Ibid 63.
[17][2017] WADC 33.
[18]Transcript of Proceedings, Roehlen v Mikhail (Magistrates’ Court of Victoria, G13508631, 3 May 2017) 63.
It is clear enough that her Honour ruled that her conclusion that the contract between the appellant and Right2Drive was void for uncertainty meant that the appellant failed in his claim against the respondent. Whilst her Honour did not spell out any reasoning path for this conclusion, both parties before me proceeded on the basis that her Honour’s reasoning was this:
(a) The contract between the appellant and Right2Drive was void for uncertainty.
(b) The appellant therefore had no obligation to pay Right2Drive for the 17 day use of their vehicle.
(c) The appellant therefore had suffered no compensable loss for which the respondent was liable.
Void for uncertainty
The Right2Drive rental agreement provides various boxes to be completed by one or other of the parties. It is undisputed that the box containing the rental charges was left empty at the time the appellant signed the hire agreement. As I have observed earlier in these reasons, the appellant was told that he would not have to pay for the hire car under any circumstances and the charges were determined some time after the Kia was returned.
It is a fundamental principle of contract law that ‘there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement between the parties’[19] as per Kaye J in Australian and New Zealand Banking Group v Frost Holdings Pty Ltd[20]. Later in that judgment, Kaye J adopted this general principal as expressed by Viscount Dunedin in May and Butcher Ltd v R:[21]
To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled by agreement between the parties. Of course it may have something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties. … Therefore you may very well agree that a certain part of the contract of sale, such as price, may be settled by someone else.[22]
Where price remains to be settled between the parties however there is no contract.[23]
[19]This passage from the dissenting judgment of Sugarman J in Goldberg v Thorby (NSW Supreme Court (Full Court)) was cited with approval by Menzies J (Owen J agreeing) in the subsequent High Court appeal (Thorby v Goldberg (1964) 112 CLR 597, 607). It was cited with approval by Kaye JA in Australian and New Zealand Banking Group v Frost Holdings Pty Ltd [1989] VR 695.
[20][1989] VR 695, 700.
[21][1934] 2 KB 17.
[22]Ibid 21.
[23]Australian and New Zealand Banking Group v Frost Holdings Pty Ltd [1989] VR 695, 701.
It follows that all the essentials of a contract must be settled before the contract is enforceable. What will constitute ‘essentials’ will depend on the particular contract under consideration and the surrounding circumstances. If, for instance, the contracting parties agree that an otherwise essential term such as price is left in abeyance to be agreed between them at some future date and in default of such agreement to be determined by a third party or by arbitration, then the agreement will be valid.[24]
[24]Foley v Classique Coaches Ltd [1934] 2 KB 1.
Both parties referred to the case of Moonlighting International Pty Ltd v International Lighting Pty Ltd.[25] In that case, which was an application for an interlocutory injunction, Finkelstein J said:
It is clear that there cannot be a contract if a material term is neither settled nor implied by law and the ‘contract’ contains no machinery for ascertaining it. … Price is a material matter in connection with a contract for the sale of any property. It is not, however, necessary for parties to a contract for the sale of goods to include in the contract a term as to price. In the absence of an agreement as to price or machinery for ascertaining it the law implies an obligation upon the buyer to pay a reasonable price.[26]
His Honour went on to cite Wenning v Robinson[27] as authority for this proposition. In written submissions the respondent submitted that this passage misstated the effect of Wenning v Robinson which was to construe a contractual term rather than to imply a term into the agreement. Whether or not this is the case is, in my view, immaterial. I regard the Finkelstein J passage quoted above as a correct statement of the current law. When there is evidence that parties have acted upon a written document, the courts will prefer to assume that the document embodies a definite intention to be bound and will strive to implement its terms.[28] Whether it can draw that inference will depend on the individual circumstances surrounding the agreement under consideration. Put another way, courts will more readily infer reasonable terms where, as in the present case, the contract has been executed.[29] If it is clear the parties have regarded the agreement as a concluded contract, the court will generally seek to give effect to that contract, even if there are terms to be resolved later.[30]
[25][2000] FCA 41.
[26]Ibid [19].
[27][1964] NSWR 614.
[28]Sweet and Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699.
[29]See for example Foley v Classique Coaches Ltd [1934] 2 KB 1.
[30]Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd (2000) 2 NZLR 219.
In my view, it was not open to her Honour to conclude that merely because the agreement was silent as to price, then the contract ‘must be considered void’[31]. Her Honour does not appear to have made an attempt to implement the terms of the contract. Her Honour ought to have considered whether the agreement between the plaintiff and Right2Drive evinced an intention by both parties to be bound by the agreement, notwithstanding that no price had been stipulated. I consider that her Honour needed to examine the executed nature of the agreement in assessing the intentions of the parties. On the evidence, in my view, it would have been open to her Honour to conclude that by leaving the agreement silent as to price and by executing the contract, the parties agreed that the price was to be fixed later and that, whatever the rates may have been, they would not have to be paid by the plaintiff but would have to be paid by a third party. In this circumstance, the elements of the contract, whilst unusual, would be certain between the parties.
[31]Transcript of Proceedings, Roehlen v Mikhail (Magistrates’ Court of Victoria, G13508631, 3 May 2017) 63.
I consider that her Honour’s failure to attempt to implement the terms of the contract caused her to fall into error and grounds of appeal 1, 3, 6 and 7 are made out in part. I have not found that it was not open to her Honour to conclude that the contract was void for uncertainty; I have found that she did not give that question proper consideration. In my view it is appropriate to remit the matter back to the Magistrates’ Court for that consideration by a different arbitrator.
Compensable loss
Was it open to the magistrate to conclude that the appellant had not suffered a compensable loss for the loss of use of his vehicle?
The short answer to this question is no. If the magistrate has not lawfully concluded that the agreement was void for uncertainty, then there was no basis for her conclusion that the appellant had suffered no compensable loss. In the event that I am incorrect on my conclusion on Question 1 and in deference to the excellent submissions from counsel, I propose to consider this question on the hypothetical basis that the agreement was, in fact, void for uncertainty.
The appellant contended that even if the agreement was void, this was irrelevant to the issue of the appellant’s compensable loss. Where the appellant by reason of need was required to hire a replacement car and the ‘need’ was created by the respondent’s negligence, the fact that a third party provided a hire car ultimately at no cost to the appellant did not extinguish the respondent’s liability to compensate the appellant for his ‘loss’. The appellant relied on a long line of authorities (most recently Anthanasopoulos v Moseley[32] (‘Anthanasopoulos’) that dealt with the principle of res inter alios acta.[33] Injury to property, the appellant argued, is compensable with damages and it is irrelevant that a third party may have provided some external form of compensation.
[32](2001) 52 NSWLR 262.
[33]Literally translated, ‘a thing done between others does not harm or benefit others’. A contract cannot adversely affect the rights of people not parties to that contract.
The respondent contended that Anthanasopoulos was distinguishable from the instant case, and at any event, modern law recognised a distinction between direct (immediate) loss (where res inter alios acta might apply) and consequential (future) loss. The respondent submitted that in cases like the present case, where a consequential property loss is suffered, that loss is unrecoverable if through external circumstances it is avoided. The respondent relied on recent English cases, such as Burdis v Livsey[34] and Dimond v Lovell,[35] which, it argued, are cited with approval in Powercor Australia Ltd v Thomas[36] and now represent the law in Australia.
[34][2002] EWCA Civ 510.
[35][2000] 2 All ER 897.
[36][2012] VSCA 87.
It is necessary to examine these authorities in a little detail. Anthanasopoulos was a decision of the New South Wales Court of Appeal. The owners of four motor vehicles sued for the cost of hiring replacement vehicles while their vehicles were under repair. The insurer provided courtesy cars that it had hired from a hire company. This arrangement was entirely independent of the owners. The provision of the hire car was a voluntary benefit provided by the insurer. Beazley JA reviewed a number of English cases including Giles v Thompson[37] and Dimond v Lovell.[38] At paragraph [58], after considering arguments based on the Griffiths v Kerkemeyer[39] principle,[40] his Honour said:
I consider the better solution is derived from the long line of authority traceable to The Greta Holme[41] to the effect that injury to property which deprives a party of the use of a thing is compensable.[42] It is irrelevant if a third party provides a substitute for the thing damaged and the principle res inter alios acta applied to make it irrelevant as to the basis upon which the third party provides the replacement.[43]
[37][1994] 1 AC 142.
[38][2000] 2 All ER 897.
[39](1977) 139 CLR 161.
[40]The Griffith v Kerkemeyer principle is, in short, that a negligently injured plaintiff can obtain compensation for the voluntary work of third parties (such as a spouse) who attend to needs created by the injury.
[41]Greta Holme, The; Owners of No 7 Steam Sand Pump Dredger v Owners of SS “Greta Holme” [1897] AC 596 (‘The Greta Holme’).
[42]Beazley JA at [26] to [60] reviewed a long line of shipping cases including The Greta Holme [1897] AC 596; The Mediana; Owners of Steamship “Mediana” v Owners, Master and Crew of Lightship “Comet” [1900] AC 113; Mersey Docks and Harbour Board v Owners of SS Marpessa [1907] AC 241; Admiralty Commissioners v SS Chekiang [1926] AC 637; Admiralty Commissioners v SS Susquehanna [1926] AC 655.
[43]Anthanasopoulos v Moseley (2001) 52 NSWLR 262 [58] (citations added).
Ipp JA agreed with Beazley JA.[44] He was fortified by two other sources of principle dealing with gratuitous services provided to a plaintiff claiming personal injury. The right to damages in this Griffiths v Kerkemeyer category of cases is, his Honour said, ‘based on need’. His Honour stated:
[A]s claims for damages to a non-income producing chattel and claims of the Griffiths and Kerkemeyer category are both based on need, the latter category of cases provides additional support for the proposition that the respondents are entitled to damages against the appellants.[45]
Ipp JA also was fortified in his conclusions by ‘the Espagne principle’, that the benefits of external benevolence to a plaintiff should not provide relief to a defendant.[46]
[44]Ibid [72]-[88].
[45]Ibid [81].
[46]See National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569.
In Anthanasopoulos and the earlier shipping authorities, no relevant distinction was drawn between direct loss (such as property damage) and consequential loss (such as loss of use of a chattel as a consequence of property damage).
In Dimond v Lovell,[47] the House of Lords determined that a hire agreement between the plaintiff and a car hire company was unenforceable. Thus, the plaintiff had received a hire car, in effect, free of charge. In those circumstances, their Lordships concluded that the plaintiff was not entitled to be compensated for the loss of use of her car because she had suffered no practical loss. Lord Hoffman stated that ‘[t]he courts have realised that a general principle of res inter alios acta which assumes that damages will be paid by “the wrongdoer” out of his own pocket is not in accordance with reality.’[48] Whilst the New South Wales Court of Appeal in Anthanasopoulos did not directly confront Dimond v Lovell, it is clear from the reasons of both Beazley JA and Ipp JA that they rejected Lord Hoffman’s approach and in fact embraced the res inter alios acta principle.
[47][2000] 2 All ER 897.
[48]Ibid 908.
In Burdis v Livsey,[49] the English Court of Appeal considered Dimond v Lovell and set out the distinction the courts in that country draw between direct and consequential loss. The cost of repairs, being a direct loss, was recoverable from the defendant despite the plaintiff having no liability to pay the cost of those repairs.[50] Insofar as a future or consequential loss was concerned, ‘the general rule is that to the extent that such a loss is in fact avoided, for whatever reason, it is a loss which is never suffered and which is accordingly irrecoverable for that reason.’[51] This line of authority has been followed on several occasions by superior courts in the United Kingdom and represents settled English law.[52]
[49][2002] EWCA Civ 510.
[50]The plaintiff entered into a credit repair agreement with a financier who paid for the cost of the repairs. The agreement was subsequently held to be unenforceable against the plaintiff.
[51]Burdis v Livsey [2002] EWCA Civ 510 [92].
[52]Dimond v Lovell [2000] 2 All ER 897; Burdis v Livsey [2002] EWCA Civ 510; see also Hunt v Severs [1994] 2 All ER 385.
The common law in Australia has not drawn the English distinction between direct loss and consequential loss. Anthanasopoulos remains authority in New South Wales for the proposition that a claimant may be compensated for the loss of use of his vehicle regardless of whether his need for the vehicle was productive of financial loss. As I have observed, in Anthanasopoulos, three foundations for this proposition were identified. First, The Greta Holme line of authorities dealing with loss of use of a non-income producing chattel; second, the principle that need should be the focus of a plaintiff’s compensable loss;[53] and third, the ‘Espagne principle’[54] that the benefits of external benevolence (or luck) to a plaintiff should not provide relief to a defendant.
[53]See Kars v Kars (1996) 187 CLR 354, 370. A court is required to focus on an injured plaintiff’s accident-caused ‘need’ and damages can compensate a plaintiff for the loss evidence by the need which need not be productive of financial loss. See also Anthanasopoulos v Moseley (2001) 52 NSWLR 262.
[54]National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569.
It was contended by the respondent that in Powercor Australia v Thomas[55] (‘Powercor’) the Victorian Court of Appeal had cited with approval passages from Dimond v Lovell and Burdis v Livsey, including a passage from Burdis v Livsey that reads:
In the case of potential future losses, on the other hand, the general rule is that to the extent that such a loss is in fact avoided, for whatever reason, it is a loss which is never suffered and which is accordingly irrecoverable for that reason.[56]
The Court of Appeal (in Powercor) observed that counsel for Powercor did not quarrel with this statement of principle but submitted that the obligation to compensate the property owner for his direct damage was subject to his duty to mitigate the damage suffered to fixtures at the time of the fire that razed his property. In Powercor, Mr Thomas’ loss was direct loss, not consequential loss. Burdis v Livsey and Dimond v Lovell were cited by the Court in Powercor to illustrate that the res inter alios acta principle survives insofar as direct losses are concerned. Other cases were also cited to illustrate this point, including Anthanasopoulos.[57] I do not understand the Powercor decision to have considered Anthanasopoulos and the preceding authorities in the light of the divergent English approach relating to future or consequential losses, nor do I understand any Australian intermediate appellate court to have concluded that Anthanasopoulos is plainly wrong.
[55][2012] VSCA 87.
[56]Ibid [45], quoting Burdis v Livsey [2002] EWCA Civ 510 [92].
[57](2001) 52 NSWLR 262.
In Saric v Tehan,[58] the Victorian Court of Appeal acknowledged the divergent approach taken by the English courts. There is nothing in Mandie JA’s leading judgment to suggest that, in relation to consequential loss, the ‘slightly different (English) approach’[59] is correct, let alone that the Anthanasopoulos approach is plainly wrong.
[58](2011) 33 VR 632.
[59]Ibid [62].
If Anthanasopoulos represents the current common law in New South Wales, then I must not depart from it unless I am convinced the decision is plainly wrong.[60] While, in my view, there is some practical merit to the ‘real world’ English approach, I am certainly not convinced that the relevant principle in Anthanasopoulos is plainly wrong.
[60]See Farah Constructions Pty Ltd & Ors v Say-Dee Pty Ltd (2007) 230 CLR 89 [135].
Assuming I am correct that Anthanasopoulos represents the common law in Victoria, I consider there is no relevant distinction between the facts in that case and the facts in this appeal. The four plaintiffs in Anthanasopoulos were effectively gifted the use of replacement vehicles during the time their vehicles were under repair. As I have observed, these gifts were voluntary benefits conferred by the insurance company who had hired them from a car hire company. Thus, the owners of the repaired cars had fortuitously come by a replacement car at no cost to them. The doctrine of res inter alios acta operated to preserve their entitlements to compensation for the loss of use of their chattels. It was not to the point that the damage was indirect or consequential. In the present case under consideration, the appellant received at no charge a replacement car for slightly longer than the period during which his car was under repair. There was no charge because (I have assumed for this exercise) the contract between the plaintiff and an external third party was void for uncertainty. Thus, through a stroke of good luck, the plaintiff was not contractually liable to the car hire company and he (as in Anthanasopoulos) had use of a replacement vehicle gratis. If the Anthanasopoulos plaintiffs remained entitled to damages for the consequential loss of use of their vehicles during their repairs, I can see no relevant distinction between their positions and the appellant’s position in this appeal. In both cases the appellant/plaintiffs received a replacement vehicle at no charge from a third party. In both cases the loss of use of the vehicles was consequential upon the damage to those vehicles. In both cases the appellant/plaintiffs had a need for a replacement vehicle while repairs were being effected.
It follows that I am of the view that even if the relevant hire contract was not enforceable against the appellant, he has still suffered compensable loss arising from the loss of use of his vehicle during the repairs.
For the reasons above, I consider appeal Grounds 1, 3, 6 and 7 are made out in part. Grounds 2, 4 and 5 contend that the compensable loss ought be calculated by this Court and quantified at the Right2Drive fee or alternatively at the market rate for hiring a replacement vehicle. I do not propose to accept this invitation. This is an appeal stricto sensu and not a rehearing. Her Honour, because of her findings, did not proceed to quantify the compensable loss. I propose to remit the matter back to the Magistrates’ Court for arbitration by a different arbitrator for a full hearing. I shall make the following orders:
1. That the appeal be allowed.
2. That the matter be remitted to the Magistrates’ Court for arbitration by an arbitrator other than the original magistrate.
I will hear the parties as to costs.
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