Yehia v Williams

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST

S ECI 2020 03501

HASAN YEHIA	Appellant
v
ANDREW WILLIAMS	Respondent

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JUDGE:	Tsalamandris J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 & 17 March 2022
LAST WRITTEN SUBMISSIONS FILED:	24 March 2022
DATE OF JUDGMENT:	22 April 2022
CASE MAY BE CITED AS:	Yehia v Williams
MEDIUM NEUTRAL CITATION:	[2022] VSC 197

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JUDICIAL REVIEW AND APPEAL – Administrative law – Appeal from decision of magistrate – Procedural fairness – Whether magistrate erred in calculation of measure of damages – Whether magistrate erred in assessment of costs – Arsalan v Rixon, Nguyen v Cassim (2021) 395 ALR 390 – Section 109(1) Magistrates’ Court Act1989.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Peter Cawthorn QC with Trevor McLean	John Curtain & Associates Pty Ltd
For the Respondent	Francis Tiernan QC with Shaun Ryan	William Roberts Lawyers

HER HONOUR:

Preliminary

On 17 September 2019, Mr Yehia was driving his vehicle when it was struck by Mr Williams’ vehicle (‘the collision’). Thereafter, Mr Williams admitted liability for the collision but in Magistrates’ Court proceedings disputed the damages claimed by Mr Yehia. That case proceeded to trial over several days in July 2020 and judgment was delivered in August 2020.

The Magistrate made adverse findings in respect of Mr Yehia’s credit and awarded costs in the sum of $24, 842.11 for repair of the vehicle (as opposed to replacement of the vehicle), $345.20 for loss of use of the vehicle, $440 for Assessors Costs and $605 for towing and storing. The Magistrate refused Mr Yehia’s claim for ten months of car hire and did not order any interest on the damages. The Magistrate also ordered that Mr Yehia pay Mr Williams’ costs of the proceeding on an indemnity basis.

Mr Yehia now seeks to appeal the Magistrate’s decision and alleges numerous errors of law in the Magistrate’s judgment: that he was denied procedural fairness; that the Magistrate erred in his calculation of the measure of damages to be awarded; that he was entitled to the costs of car hire for a period of ten months; and that he was also entitled to interest on the judgment sum and costs of the proceedings.

Since this appeal was lodged, the High Court in a decision of Arsalan v Rixon, Nguyen v Cassim (‘Arsalan’)[1] held that a plaintiff will usually be able to recover reasonable costs incurred in hiring a substitute vehicle from a negligent defendant, and in so holding, rejected the concept of ‘need’ associated with such car hire. An issue between the parties in the present case is whether the principles enunciated in Arslan apply in this appeal.
[1] (2021) 395 ALR 390 (‘Arsalan’).

For the following reasons, I have determined this appeal on the state of the law as it was at the time of the trial and therefore, Arsalan does not apply. Further, I am not persuaded that the Magistrate made any errors of law and I dismiss Mr Yehia’s appeal.

Magistrates’ Court trial and judgment

The trial proceeded in the Magistrates’ Court, via Webex on 14, 16, 17, and 28 July 2020. It was the first civil hearing heard remotely in the Magistrates’ Court, in response to the COVID-19 pandemic.

To understand the numerous grounds of appeal relied upon by Mr Yehia, it is necessary to summarise relevant aspects of the evidence which were before the Magistrate, his analysis of such evidence, and his ultimate findings.

Mr Yehia purchased his vehicle in 2016. Prior to that, it had been placed on the Written-Off Vehicles Register (’WOVR’).[2]
[2]Road Safety Act 1986 (Vic), s 16D.

Mr Yehia said that he had made modifications to the vehicle, including the installation of a 6000cc engine, which he said cost in excess of $20,000.

Under the Road Safety (Vehicles) Regulations 2009 (‘the Regulations’)[3] a registered operator of a vehicle must notify the Roads Corporation, VicRoads of any changes made to the vehicle that affect its description as recorded in the VicRoads register. The vehicle cannot be used until such notification is given. A breach of this regulation attracts 2 penalty units.
[3] Regulation 56(2).

It was agreed between the parties that such a notification had not occurred at the time of the collision.

Following the collision, Mr Yehia’s vehicle was towed to Rapid Smash Repairs located at 3 Arunta Street, Reservoir, where Mr Yehia worked. Subsequently, the vehicle was moved to Testarossa Smash Repairs (‘Testarossa’), another vehicle repair workshop located a few doors down from Rapid Smash Repairs. Testarossa was owned and operated by Mr Joe Taleb.

On 18 September 2019, Mr Yehia claimed that he entered into a car rental agreement with City Wide Rentals (‘rental agreement’). Mr Yehia claimed that the rental agreement was arranged by Mr Taleb. The Rental Agreement and initial tax invoice in relation to this car hire referred to Australian Business Number (‘ABN’) 47 851 535 832, as the ABN for City Wide Rentals. This ABN was a number held by Mr Taleb. However, there was no evidence before the Magistrate that City Wide Rentals was registered as a business name used by Mr Taleb, and nor was there evidence City Wide Rentals was otherwise associated with that ABN.

The rental agreement stated that the cost of car hire was $120 per day, plus $35 per day excess reduction, with a 2% surcharge applied. Mr Yehia stated that he was assured by Mr Taleb that he would not be liable for the car hire costs, that payment would be accepted at the end of the claim, and that Mr Taleb would only take whatever sum was recovered in the proceedings.

On 23 September 2019, Mr Yehia’s vehicle was assessed by Mr Kostas Phivopoulos of Acclaim Auto Assessing. Mr Phivopoulos provided a tax invoice to Mr Yehia in the sum of $400 plus GST, in respect of this assessment. Mr Phivopoulos informed Mr Yehia that he considered the vehicle was a write off.

On 24 September 2019, Mr Yehia engaged solicitors to act on his behalf in respect of the property damage suffered in the collision.

According to Mr Yehia, on 27 September 2019, after negotiations had been conducted on his behalf by Mr Taleb, he sold his vehicle to AC Wrecking, for a sum of $3,505. Mr Yehia’s evidence was that he received this sum in cash at the time the vehicle was taken away by AC Wrecking.

AC Wrecking was located at 8 Malua Street in Reservoir, a property which Mr Taleb was the registered proprietor of.

There was evidence that Testarossa charged a fee of $150 (plus GST) to tow the vehicle from its premises to AC Wrecking on 27 September 2019. It was therefore unclear whether the vehicle was towed by AC Wrecking or Testarossa. The Magistrate noted this inconsistency and considered it either demonstrated a false tow charge by Testarossa or that Mr Yehia’s evidence as to the circumstances of the sale of the vehicle to AC Wrecking was false.

Mr Yehia stated that Mr Taleb had sought salvage prices from third parties and that the best salvage price he had obtained was $3,505. However, in cross examination, Mr Taleb gave evidence that he had obtained the salvage price figures from Mr Phivopoulos.

Mr Phivopoulos said that on or after 10 October 2019, he obtained two salvage prices for the vehicle, one for the sum of $1,050 from Manheim and the other in the sum of $3,503 from Pickles.

The Magistrate noted the inconsistency between Mr Yehia’s evidence on the source and timing of the salvage estimates. Further, the Magistrate considered the likelihood that the purported salvage price paid on 27 September 2019 was within two dollars of a salvage price given by Pickles on 10 October 2019 so remote that it should be rejected.

On 27 October 2019, Mr Phivopoulos emailed his undated assessment report (‘the Phivopoulos report’) to Mr Yehia’s solicitors, as well as Mr Taleb. In this report, Mr Phivopoulos assessed the vehicle as having a base value of $62,000 and declared the vehicle a write off. However, in expressing this opinion, Mr Phivopoulos did not assess what the cost of the repairs might have been. At the time of trial, Mr Phivopoulos stated that the photographs he had taken of the vehicle and the notes which he had made regarding his assessment, were no longer available. The Magistrate considered that there was no satisfactory explanation provided in respect of this.

On 28 October 2019, Mr Yehia’s solicitors served a copy of the Phivopoulos report on Mr Williams’ insurer.

On 11 November 2019, Mr Yehia’s solicitors informed Mr Williams’ insurer that Mr Yehia was no longer in possession of the vehicle and provided a salvage receipt from AC Wrecking in the sum of $3,505.

On 25 November 2019, Mr Williams’ solicitors served an offer on Mr Yehia in the sum of $44,440. This offer was said to be made in accordance with the principles outlined in Calderbank v Calderbank.[4]
[4] (1975) 3 All ER 333 (‘Calderbank’).

On 26 November 2019, Mr Yehia filed a complaint against Mr Williams in the Magistrates’ Court. In it, Mr Yehia claimed a net loss of $58,497, together with an assessment fee, stamp duty, towage, storage and car hire fees, totalling $76,310.10, plus additional car hire at a rate of $120 per day, together with legal costs and interest.

In his evidence at trial, Mr Yehia stated that he needed to hire a car to get his six children to and from school, and for him to get to and from work. He was not cross-examined on this aspect of his evidence.

On 9 December 2019, Mr Williams filed his defence in the Magistrates’ Court proceedings. In it, he admitted negligence but alleged that Mr Yehia had failed to mitigate his loss and damage and that the amounts claimed by him were excessive, extravagant, unfair and/or unreasonable. The defence also specifically disputed Mr Yehia’s claim in respect of car hire.

On or about 8 January 2020, records subpoenaed from VicRoads indicated that according to a Section 84(4A) Certificate, the vehicle had remained registered in Mr Yehia’s name until 5 June 2020. In his oral evidence, Mr Yehia initially said that his practice was to renew his registration every three months, but later in cross-examination stated that he did so every six months. The Magistrate noted that if the registration had indeed been paid every six months, the last registration fee renewal by Mr Yehia must have been paid on or about 5 December 2019. The Magistrate considered there was no adequate explanation given as to why AC Wrecking would have renewed the vehicle’s registration in Mr Yehia’s name.

At trial, the parties relied on expert evidence to assist the Magistrate in determining whether the vehicle was repairable or a write off.

Mr Yehia relied solely on the opinion of Mr Phivopoulos. He gave evidence that the vehicle had a base value of $62,000. Mr Phivopoulos stated that the vehicle’s listing on the WOVR register had no bearing on its value. In respect of the impact of the 6000cc engine, which rendered the vehicle unable to be used on Victorian roads, Mr Phivopoulos said that as it was a collectible vehicle, the value may be unaffected, as some people purchase such vehicles to keep in a garage or showroom. Mr Phivopoulos stated ’people do that’ and said that he had personally garaged a vintage car for years.

In respect of the repair costs, Mr Phivopoulos stated that the cost of repairs would exceed $50,000, but was unable to give a precise figure as he had not prepared an expert report to that effect and no longer had his notes from his assessment.

In respect of the salvage value, Mr Phivopoulos stated that he obtained the two prices referred to above at [21].

Mr Williams’ solicitors obtained an opinion from Mr Graeme Cuthbert of Cuthbert Automotive Consulting. In his report dated 3 March 2020 (‘Cuthbert report’), Mr Cuthbert stated that the base value of the vehicle was $60,000. However, he opined this base value was reduced by two factors:

(a)the vehicle had previously been listed on the WOVR register which he considered reduced its value by $15,000; and
(b)the vehicle had been fitted with a 6000cc engine. Mr Cuthbert considered that such an engine modification would require special dispensation before it could be driven on Victorian roads. He considered that this would negatively affect the vehicle’s value and reduce it to somewhere between $30,000 and $33,000.

Mr Cuthbert assessed the total costs of repairs as $24,402.11, but conceded in cross-examination that an additional sum of $440 should be allowed for the replacement of a damaged wheel. With this additional cost included, Mr Cuthbert conceded that on his figures, it would be uneconomical to repair the vehicle.

In respect of the salvage costs, Mr Cuthbert stated that he had expressly informed Pickles of the vehicle’s modified engine, and was subsequently informed by Pickles that it would pay $11,278 as a salvage price. This value was later reduced to $8,278 as the vehicle could no longer be registered.

The Magistrate stated that he was ‘generally impressed’ with Mr Cuthbert and that he was ‘across the detail of the matter, he was measured and was prepared to make concessions under cross examination where due’.

Mr Williams’ solicitors also relied upon an expert report from automotive engineer, Mr Phillip Dunn. Mr Dunn considered that the modifications to the vehicle required certification by a VASS engineer to ensure it complied with the National Code of Practice for Light Vehicle Construction and Modification (NCOP). Mr Dunn was of the opinion that given the weight of the vehicle was 1690 kg, the maximum recommended turbo charged engine size would be 5070cc, making the 6000cc engine unsuitable for the vehicle. Mr Dunn’s evidence was that Mr Yehia could have applied to VicRoads for an exemption, but he considered that because of the type and age of the vehicle, VicRoads ‘would be loath to grant such exemption’. When asked about this in cross-examination, Mr Dunn said that he considered it would be ‘an uphill battle’ to get an exemption for the 6000cc engine.

The evidence above led the Magistrate to find that Mr Yehia and Mr Taleb ‘contrived to pretend’ that the vehicle had been sold on 27 September 2019 for a salvage price which could not possibly have then been known to either of them. The Magistrate went on to state that it was ‘not clear whether the aim of that goal was to deny the Defendant an opportunity to inspect the vehicle, or to endeavour to lock-in the largest write-off claim possible against the Defendant, or for some other purpose or combination of purposes’.

Having made those factual findings, the Magistrate then asked and answered the following questions:

(a) What was the value of the vehicle on 17 September 2019? (V)
(b)What is the cost of the repair works necessary to rectify the damage to the vehicle? (R)
(c)What is the salvage value of the vehicle following the collision on 17 September 2019? (S)

(d) Is the vehicle a write off?

In respect of (a), the Magistrate found the value of Mr Yehia’s vehicle to be $45,000.00. This was in part based upon the Magistrate’s acceptance of Mr Cuthbert’s evidence that the previous listing of the vehicle on the WOVR would reduce its value to this level. The Magistrate found that the inability to lawfully drive the vehicle on Victorian roads would not further reduce its value, relying upon the evidence of Mr Phivopoulos.

In respect of (b) the Magistrate found the cost of the repair works necessary to rectify the damage to Mr Yehia’s vehicle to be $24,842.11, based upon his acceptance of the evidence of Mr Cuthbert.

In respect of (c), the Magistrate found the salvage value of Mr Yehia’s vehicle to be $11,278, based upon the initial quote which Mr Cuthbert had obtained, together with a consideration of the amount of money Mr Yehia had spent on the engine parts.

In answer to (d), whether Mr Yehia’s vehicle was a write-off, the Magistrate stated that the following formula applied: R > V – S. (‘the replacement versus repair calculation’). That is, if the repair cost was greater than the pre-collision value, less the salvage value, then it would be uneconomical to repair the vehicle, rendering it a write off. Having applied the above values to that calculation, the Magistrate concluded that the costs of repairs were less than the cost of writing the vehicle off.

The Magistrate went on to consider whether Mr Yehia was entitled to the costs of car hire and concluded that the hire agreement was enforceable. Further, he held the quantum of such a claim would be $120 a day for the car, plus $35 a day for excess reduction, for a period of 28 days to allow the vehicle to be repaired. However, the Magistrate held that Mr Yehia had no such entitlement for two reasons – he failed to establish a reasonable need for an interim replacement vehicle, and further, the vehicle he had at the time of the collision could not be lawfully driven on the road. Therefore, the Magistrate concluded that no replacement car should be awarded as damages.

In respect of the requirement of ‘need’ for a replacement car, the Magistrate considered Lee v Strelnicks and quoted extensively both the judgment of Wilson J at first instance,[5] and Emmett AJA and White JA in the Court of Appeal (‘Lee’).[6] In that case, Ms Lee’s car was damaged by Ms Strelnicks, and Ms Lee hired a replacement car for 15 days, whilst her own car was repaired. Ms Lee claimed that she required a car to travel to and from work, and to take her kids from place to place. Her claim for car hire was refused by a loss assessor on the basis that she had not established a ‘need’ for a replacement car. Ms Lee unsuccessfully appealed to the Supreme Court of New South Wales and was subsequently refused leave to appeal to the New South Wales Court of Appeal. At the time her leave application was heard and refused, the Court of Appeal considered applications in 3 other cases, which raised similar issues as to the requirement of need for a replacement vehicle; two of those cases involved the claims of Mr Nixon and Mr Cassim, the plaintiffs in the decision of Arsalan.[7]
[5] [2019] NSWSC 526.
[6][2020] NSWCA 115 (‘Lee’).
[7](n 1).

The Magistrate considered Mr Yehia’s evidence was general and non-specific in respect of his need for a replacement vehicle in the period during which his vehicle could have been repaired. Further, having made adverse credit findings against Mr Yehia, the Magistrate did not place much weight on the veracity of Mr Yehia’s evidence regarding his use of the vehicle. Mr Williams’ counsel did not cross-examine Mr Yehia in respect of this aspect of his evidence. The Magistrate considered this was because counsel had formed the view that Mr Yehia’s evidence ‘did not meet the required standard’. Therefore, the Magistrate concluded that Mr Yehia did not establish that he reasonably needed to hire the replacement car, noting that ‘the need for replacement car is not self-proving’.

It was not strictly necessary for the Magistrate to separately decide whether Mr Yehia was disentitled from claiming car hire costs in circumstances where his vehicle was not permitted to be driven on Victorian roads. Nevertheless, he did. The Magistrate accepted the evidence of Mr Dunn, as he was satisfied that the notification and certification by VicRoads was not likely to have occurred in the 28 days for which Mr Yehia claimed the car hire costs. Therefore, the Magistrate concluded that Mr Yehia should not be awarded any damages for loss of the vehicle, as to do so would have resulted in awarding damages for an unlawful use.

Instead of awarding car hire costs, the Magistrate awarded Mr Yehia damages for his loss as a percentage of the capital value of the vehicle. The Magistrate considered that these were the appropriate damages as, although the vehicle could not lawfully be driven, Mr Yehia was deprived enjoyment of his vehicle for the period during which it could have been repaired. The Magistrate based this on the vehicle’s pre-collision value of $45,000 and applied 10% interest for 28 days for repair.

In a Ruling delivered on 4 August 2020, the Magistrate determined that no interest should be paid in respect of the damages awarded to Mr Yehia, and ordered that Mr Yehia pay Mr Williams’ costs on an indemnity basis. The Magistrate considered that it was unreasonable for Mr Yehia to have rejected the previous offer of $44,440 in the circumstances and having regard to the principles set out in Hazeldene Chicken Farm Pty Ltd v Victorian WorkCover Authority (‘Hazeldene’).[8] The Magistrate noted that this offer was made pre-litigation, was open for 14 days, and was made at a time when Mr Yehia had knowledge of the following matters: he had not in fact sold his vehicle, the invoice from AC Wrecking was a sham document, and he was always intending to repair the vehicle and keep it.
[8][2005] VSCA 298, [25] (‘Hazeldene’).

For the same reasons, the Magistrate found it was unreasonable for Mr Yehia not to accept the offer from the outset, ‘which would have well exceeded the final figure that has ultimately been awarded’,[9] and therefore did not award interest on the damages.
[9]Transcript of Proceedings, Yehia v Williams (K13055474), Magistrate J.P. Foster (4 August 2020) Costs ruling, T347.

General Principles relevant to a section 109 appeal

An appeal from the Magistrates’ Court can only be made in respect of a question of law. It is an appeal in the strictest sense and not a rehearing.[10]
[10]Carter v Reid [1992] 1 VR 351, 363; Fiorelli Properties v Professional Fencemakers Pty Ltd & Anor [2011] VSC 661, [43].

Section 109(1) of the Magistrates’ Court Act1989, requires that the appellant identify the questions of law which arise in the appeal. The appeal is then confined to those questions, which must be precisely expressed.

The need for such clarity was explained by Pagone J in Hoe v Manningham City Council.[11] Although such comments were in respect of an appeal from the Victorian Civil and Administrative Tribunal, the same principles apply to an appeal from a Magistrate:

The court’s jurisdiction to hear an appeal depends upon there being a question of law in issue but it is only the question of law which the court is permitted by the statutory appeals jurisdiction to consider. The fact that a question of law may have been involved in a decision does not permit the whole of the decision to be agitated upon an appeal. The question of law is the trigger for an appeal but is also the entire subject matter of the appeal and for both purposes it is essential that the question of law said to have been erroneously decided is identified exactly.[12]

[11] [2011] VSC 37.

[12] Ibid, [4].

Further, as Zammit J stated in Guissine v Silver Top Taxi Service (no.2)[13] I must only allow the appeal if I am satisfied that the Magistrate:

acted on a wrong legal principle, misapprehended the facts or made a wholly erroneous assessment of the relevant issue. There is a strong presumption in favour of the correctness of the decision appealed from and the general rule is that the decision should be affirmed unless the court is satisfied that the decision is clearly wrong.[14]

[13] [2016] VSC 515.

[14] Ibid, [10].

As was noted by Davies J in Zogiannis v Stevens (‘Zogiannis’):

… this Court does not have jurisdiction to intervene with the decision below because it may take a different view of the facts. It is not sufficient in an appeal under s 109 of the Magistrates’ Court Act simply to demonstrate that it is open for this Court to come to a different conclusion on the evidence or even that the Magistrate made a wrong finding of fact.[15]
[15] [2012] VSC 264, [2] (‘Zogiannis’) (citations omitted).

Mr Yehia’s appeal

At the commencement of the hearing, Mr Yehia sought leave to further amend his further amended his Notice of Appeal. Mr Williams did not oppose this and leave was granted (‘Notice of Appeal’). Such further amendments simply clarified matters which had previously been pleaded and raised by Mr Yehia in his written submissions.

Although there were 13 Questions of Law and 15 Grounds of Appeal pleaded, Mr Williams objected to many of them on the basis that they were not genuine questions of law, but were rather questions of fact, or questions of mixed fact and law.

Mr Yehia referred me to the decision of the Full Federal Court in Haritos v Commissioner of Taxation,[16] where it said:

In our opinion, the issue must be approached as one of substance. In cases of doubt, the Court should consider the notice of appeal, the alleged … questions of law, the grounds raised, the statutory context and the Tribunal’s reasons for its decision, and having considered all these matters, satisfy itself there is in fact a question of law.[17]

[16] (2015) 233 FCR 315.

[17] Ibid, [94].

I was also taken to the decision in Kostas v HIA Insurance Services Pty Ltd,[18] in which the High Court said that:

A tribunal that decides a question of fact when there is “no evidence” in support of the finding makes an error of law. What amounts to material that could support a factual finding is ultimately a question for judicial decision. It is a question of law.[19]

[18] (2010) 241 CLR 390.

[19] Ibid, 418 [91] (citations omitted).

Mr Yehia submitted that consistent with the approach of Whelan JA in the Court of Appeal decision of Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd,[20] I could permit him to reframe some of the specific ‘questions of law’ contained in the Notice of Appeal, if I was satisfied that such questions were not properly framed.
[20] (2014) VR 771, 805 [166].

Notwithstanding such urging by Mr Yehia, I am not persuaded that I should adopt such a course. The focus of my enquiry is instead on ‘whether a question of law does in fact arise’[21] and many of the purported questions contained in the Notice of Appeal are not valid questions of law, howsoever framed.
[21]Ibid.

According to Davies J in Zogiannis:[22]

Questions of fact or questions of mixed fact and law are not turned into pure questions of law merely by embracing language that the Magistrate “erred in law” or by using formulaic language for grounds of judicial review.[23]

[22] (n 15).

[23] Ibid, [4].

Many of Mr Yehia’s questions of law fit the description above, and constitute attempts to have me revisit the evidence and take a different view of Mr Yehia’s case. This is impermissible in such an appeal and I shall not consider them in this judgment.

The questions of law and corresponding grounds of appeal that require determination can be summarised as follows:

(a)Did the Magistrate err in law and fail to afford Mr Yehia natural justice and procedural fairness?
(b)Did the Magistrate err in law in not awarding the cost of replacement of the vehicle and instead awarded the cost of repairs?
(c)Did the Magistrate err in law for finding that Mr Yehia had to prove a need for car hire, and that he failed to establish such a need? Further, and in the alternative, did the Magistrate err in law by finding that that the purported illegality of driving the vehicle on Victorian roads, barred recovery for car hire costs?
(d)Did the Magistrate err in law for not awarding interest on the judgment sum?
(e)Did the Magistrate err in law when he awarded indemnity costs against Mr Yehia?

Ground of Appeal 1A: Natural Justice and Procedural fairness

In his Notice of Appeal, Mr Yehia alleged that the Magistrate failed to accord him natural justice and procedural fairness in respect of two allegations:

(a)that his vehicle was economical to repair; and
(b)that his vehicle had not been sold.

However, in the course of oral submissions, Mr Yehia did not persist with a complaint that he was denied procedural fairness in respect of the first allegation.

Mr Yehia conceded that he knew the Magistrate was required to determine whether the vehicle should have been repaired or replaced. Indeed, in his counsel’s opening address to the Magistrate, it was stated that this was ‘the first threshold’ Mr Yehia had to surmount. Therefore, Mr Yehia could not contend on appeal that he was caught by surprise and denied procedural fairness in having to address that issue at trial.

The focus of the procedural fairness complaint before me was instead confined to an allegation that Mr Yehia had not sold his vehicle. Mr Yehia submitted that this should have been pleaded by Mr Williams, and as it was not, he was denied procedural fairness.

In support of Mr Yehia’s submission that this should have been pleaded, reference was made to Order 13.02(5) of the Magistrates’ Court General Civil Procedure Rules 2020 (‘the Rules’) which provide that any fact or matter must be stated specifically, with particulars, by the defendant in the defence, which:

(a)makes the claim of the plaintiff not maintainable; or
(b)if not stated specifically, might take the plaintiff by surprise; or
(c)raises questions of fact not arising out of the statement of claim.

Mr Yehia emphasised that the Magistrates’ Court complaint attached the Phivopoulos report and the salvage report from AC Wrecking. He submitted that as Mr Williams had such documents, if he intended to assert that the AC Wrecking receipt was a sham, he should have so pleaded in his defence and in accordance with the Rules.

Further, Mr Yehia submitted that the VicRoads subpoenaed documents accessed by Mr Williams’ solicitors on 8 January 2020 showed the name of the registered owner and the dates of reregistration of the vehicle. It was contended that Mr Williams relied upon such documents to suggest Mr Yehia still owned the vehicle, such that he had committed fraud. However, as this had not been pleaded, Mr Yehia alleged that he did not have an opportunity to prepare an answer to such an allegation at trial. It was said that he was ambushed and the trial was conducted in a manner that was unfair.

Mr Yehia contended that he had sought an adjournment at trial ’to enable him to call evidence about the disposal of the vehicle but the Magistrate rejected that request’. Further, it was stated that the Magistrate had made his position clear, such that counsel for Mr Yehia did not make any further attempt to seek an adjournment. Mr Yehia also complained that had he known this was going to be raised, arrangements could have been made to call a witness from AC Wrecking to support his claim that he had sold the vehicle.

In support of Mr Yehia’s submission that this alleged fraud should have been pleaded, I was taken to several authorities[24] including the High Court decision of Forrest v ASIC,[25] in which it was stated that ‘if a case of fraud is to be mounted, it should be pleaded specifically and with particularity…’.[26]
[24]Krakowski n Eurolynx Properties (1995) 183 CLR 563,573; Forrest v ASIC (2012) 247 CLR 486, (‘Forrest’); Nadinic vDrinkwater(2017) 94 NSWLR 518 (‘Nadinic’).
[25] (n 24).
[26] Ibid, 502 [26].

I was also taken to the New South Wales Court of Appeal decision in Nadinic v Drinkwater (‘Nadinic’),[27] a case involving an application to set aside a settlement deed in relation to a building development dispute. The proceedings were expedited and proceeded without pleadings. The trial judge held that one party had participated in a dishonest scheme to manipulate GST which was concealed from the other party, constituting a basis to set aside the settlement deed. However, on appeal it was held that an allegation of fraud must be pleaded specifically and particularised. [28] Further, it was stated that the ‘seriousness of a finding of dishonesty or reckless indifference to the truth will ordinarily mean that it may not be made without an opportunity being given to deal with the criticism’.[29]
[27] Nadinic (n 24).
[28] Ibid, 529 [45].
[29] Ibid, 530 [48].

In response to this ground of appeal, Mr Williams submitted that it was unnecessary to plead that the vehicle had not been sold, as such a finding was not a part of Mr Williams’ defence to the claim. The case had been defended on the basis that the costs of repair were less than the car’s value. This claim was able to be made irrespective of whether the vehicle had been sold, and therefore it was not a matter that required pleading.

Mr Williams contended that Nadinic was distinguishable on the basis that in that case the allegation of fraud was a crucial finding to the remedy sought.

Mr Williams also submitted that it was only during the course of the trial and in particular following the cross examination of Mr Yehia and Mr Taleb, that the doubt about the sale of the vehicle arose. Once it emerged as an issue, Mr Yehia was able to fairly respond. Mr Williams noted that Mr Yehia’s counsel at trial did not object to Mr Yehia being cross-examined in respect of the alleged fraud and further, he was re-examined about the sale of the vehicle.

In support of the claim that Mr Yehia had not been denied procedural fairness as this was an issue that emerged during the trial, Mr Williams relied on principles outlined in the High Court decision in Banque Commerciale S.A, on En Liquidation v Akhil Holdings Ltd (‘Banque Commerciale’).[30]The plaintiff in that case issued proceedings in respect of the procurement of some shares against two defendants, a bank and an individual. Those defendants separately raised limitations defences, claiming the proceedings were statute barred. The plaintiff filed a reply against the individual and alleged fraud, but did not make such an allegation about the bank. At trial, the bank did not appear. The plaintiff ultimately succeeded in the Court of Appeal on the basis that there had been fraud committed by both defendants. The High Court held that as the plaintiff had not pleaded fraud in its reply to the bank’s defence, it was not open to the Court of Appeal to find the bank guilty of fraud.
[30] (1990) 169 CLR 279 (‘Banque Commerciale’).

In the course of that judgment, Mason CJ and Gaudron J stated:

The function of pleadings is to state with sufficient clarity the case that must be met… In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party’s right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities….
Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference.[31]

Also in that judgment, Dawson J stated:
It is, of course, the purpose of pleadings to define the issues between the parties so that they may know the case which they have to meet and in order that the proceedings upon trial may be conducted in an orderly fashion by reference to those issues. The defined issues provide the basis upon which evidence may be ruled admissible or inadmissible upon the ground of relevance. But modern pleadings have never imposed such rigid a framework that if evidence which raises fresh issues is admitted without objection at trial, the case is to be decided upon a basis which does not embrace the real controversy between the parties. Special procedures apart, cases are determined on the evidence, not the pleadings.[32]
[31] Ibid 286-7.
[32] Ibid 296-7.

Analysis and findings

A failure by a court to accord procedural fairness gives rise to reviewable error.[33] In Kioa v West, Mason J stated:

It is a fundamental rule of the common law doctrine of natural justice expressed in traditional terms that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to made against him and to be given an opportunity of replying to it. [34]

[33]Kioa v West (1985) 159 CLR 550, 628–9 (‘Kioa’); SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152; Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576, 589–90; Luck v Renton [2005] VSCA 2010, [17]; Barrett Burston Malting Co Pty Ltd v Kotzman [2013] VSC 248, [31]–[37]; Victoria v Jerak [2018] VSC 680, [32]–[36].

[34]Kioa (n 33), 582.

In Condon v Pompano Pty Ltd,[35] the High Court stated that procedural fairness is an essential attribute to a court’s procedure.[36] Further, it was noted that this, in part, requires parties to put each other on notice of the case to be made and how it is to be made.[37]
[35]Assistant Commissioner Condon v Pompano Pty Ltd (2013) 252 CLR 38.
[36]Ibid, 99 [156].
[37]Ibid, 100 [157].

In Roberts v Harkness,[38] the Court of Appeal expressed the obligation in this way:

It is an essential requirement of a fair hearing that each party be given a ‘reasonable opportunity’ of presenting its case, whether in writing, or orally, or both. This will ordinarily include being informed of the case to be advanced by the opposing party, and having an opportunity to respond.[39]

[38](2018) 57 VR 334.

[39]Ibid, 354-4 [48] (citations omitted).

Applying these long standing principles, and considering what was said in Banque Commerciale,[40] I do not consider that Mr Yehia was denied procedural fairness by the Magistrate.
[40](n 30).

I am satisfied that Mr Yehia’s ownership of the vehicle was not material to Mr Williams’ defence of this claim. As such, it was not necessary for Mr Williams to plead that the vehicle had not been sold.

I consider a fair reading of the transcript reveals that doubt about the sale of the vehicle only emerged during the course of the trial. It was not referred to by Mr Williams’ counsel in his opening submissions. Only after Mr Yehia gave some inconsistent answers during cross-examination did suspicion arise regarding the sale of the vehicle. It is clear from the transcript that towards the end of the first day of the trial (14 July 2020), Mr Yehia’s counsel was aware that there was a ‘suggestion’ that the vehicle was ’indecently disposed of’.

It appears that a forensic decision was made by Mr Yehia’s counsel not to formally seek an adjournment of the trial to answer the allegation. Further, no objection was taken to this issue being raised against Mr Yehia.

A review of the transcript reveals that an adjournment application was only raised in the context of an objection to Mr Phivopoulos being asked to give evidence regarding matters outside the scope of his written report. The Magistrate ultimately agreed to allow the evidence as to the cost of repairs despite such matters not being in the Phivopoulos report. Mr Yehia’s counsel then asked for the matter to be stood down, to get instructions to ‘… pay for an adjournment’ and to give a proper report. In response to this the Magistrate stated:

I have given you leave to proceed with the cross-examination, the further examination. I’m not sure while (sic) you’d be asking for an adjournment in those circumstances. Mr Ryan has made his point in relation to the disposition of the car. That will be the subject of cross-examination in due course as it already has been. We need to get on with this case.

I do not accept that this request by counsel to stand the matter down was an application by Mr Yehia for an adjournment. It therefore follows that I do not accept that the Magistrate rejected an application to adjourn.

As is the usual course, at the conclusion of Mr Yehia’s evidence, his counsel would have had an opportunity to obtain instructions from his client as to the calling of a rebuttal witness. Therefore, Mr Yehia was not denied such an opportunity in the way he now claims. If such a witness was not available, that may have provided a further opportunity to apply for an adjournment.

I note that Mr Yehia’s counsel made closing submissions regarding this allegation without any concern expressed as to a denial of procedural fairness. I therefore consider the issue as to the sale – or rather non sale – of the vehicle was known to Mr Yehia, was fairly put, and was able to be met during the running of the trial.

Further, in circumstances where there was no objection by Mr Yehia’s counsel at trial in respect of the Magistrate determining the issue, it is not open to Mr Yehia to now claim he was taken by surprise and denied procedural fairness.

In Banque Commerciale[41] and Nadinic,[42] the alleged frauds were essential elements of the plaintiffs’ claims. Here, the issue regarding the sale of the vehicle became relevant in respect of Mr Yehia’s credit but was not material to the primary issue which was whether damages should be awarded for the cost of repair or the cost of replacement of the vehicle.
[41](n 30).
[42](n 24).

I also accept Mr Williams’ submission that there was not an actual finding of fraud by the Magistrate, rather a finding that part of Mr Yehia’s evidence was contrived.

In view of the above, I am not satisfied that Mr Yehia was denied procedural fairness and I reject his ground of appeal relating to this.

Grounds of Appeal 1-5: Measure of Damages

I was taken to numerous authorities which dealt with the measurement of damages where a chattel is damaged as a result of a defendant’s negligence. These authorities establish that:

(i)The prima facie measure of damages is either cost of repair or cost of replacement, whichever is reasonable;[43]
(ii)What is reasonable is usually whatever sum is less;[44]
(iii)The burden is on the plaintiff to show which of the two is reasonable in the circumstances;.[45]
(iv)Whether the plaintiff has acted reasonably is a question of fact;[46]
(v)The plaintiff has a duty to mitigate their loss;[47] and
(vi)The burden is on the defendant show the mitigation was unreasonable.[48]
[43]Jansen v Dewhurst [1969] VR 421, 427; Murphy v Brown (1985) 1 NSWLR 131, 135 (‘Murphy’); Talacko v Talacko (2021) 389 ALR 178, 189 [45]; Zogiannis (n 15), [7].
[44]Zogiannis (n 16), [7].
[45]Murphy (n 43), 135.
[46]Clark v Tull [2002] EWCA Civ 510, 132.
[47]Ibid.
[48]Clarke v McCullough [2012] NIQB 104, [20] (vii); Arsalan (n 1), [3], [32].

Ground 1

Mr Yehia submitted that the Magistrate failed to answer the proper question ‘was it was reasonable for him to treat his vehicle as uneconomical to repair and dispose of it for $3,505?’. If that failure is made out, Mr Yehia contends that it constitutes an error in law.

Mr Yehia submitted that if the replacement versus repair calculation resulted in a conclusion that it was economical to repair the vehicle, according to the authorities cited above, an additional question should be asked: ‘has the plaintiff acted reasonably in bringing his claim on the basis that the vehicle was a write off?’. It was submitted that the Magistrate failed to ask this question, as he was required to do, constituting an error of law.

Mr Yehia submitted that had the Magistrate asked the correct question, he would have found that Mr Yehia acted reasonably by relying on the advice of Mr Phivopoulos. He submitted that it was not until 6 months later, well after having sold the vehicle, that there was an opinion given that the vehicle was economical to repair.

Mr Williams asserted that the Magistrate did not err in asking the questions identified in the replacement versus repair calculation. Further, Mr Williams submitted that Mr Yehia’s contended question misapprehended the Magistrate’s decision and actual findings.

Having concluded that the vehicle had not been sold, and that Mr Yehia had sufficient means to pay for the repair of the vehicle, the Magistrate concluded that if Mr Yehia had ‘acted reasonably … he would have attended to those repairs immediately’. Mr Williams submitted that as findings of fact which were open on the evidence, those conclusions cannot be the subject of appeal.

Ground 2

Mr Yehia alleged that the Magistrate erred in law by finding that the vehicle was economical to repair when that conclusion was either not supported by any sufficient evidence, and/or was contrary to the evidence, and/or was contrary to the calculations that he had performed.

Mr Williams submitted that this was not an error of law, but was instead an attempt by Mr Yehia to challenge a finding of fact. He contended that the Magistrate made numerous findings of fact which he was open to make on the evidence and this was the foundation of the determination that it was economical to repair the vehicle.

Ground 3

Having accepted the evidence of Mr Cuthbert, in respect of the pre-collision value of $30,000-$33,000, and having accepted the salvage price of $11,278, it was submitted that the Magistrate should have deduced that the value of the vehicle was no more than $21,722. Mr Yehia contended that the Magistrate erred in law for failing to so conclude and thus the vehicle was uneconomical to repair.

Mr Williams submitted that the Magistrate was not obliged to accept all of the evidence of Mr Cuthbert. It was open to the Magistrate to accept all, some, or none of a witness’ evidence. Mr Williams submitted this was a further attempt by Mr Yehia to challenge a finding of fact.

Ground 4

Mr Yehia claimed as a related ground of appeal, the Magistrate failed to provide any or any adequate reasons in respect of why he preferred the evidence of Mr Phivopoulos to Mr Cuthbert on the question of the pre-accident value of the vehicle.

Mr Williams submitted this was not an error of law but rather an attempt by Mr Yehia to challenge the Magistrate’s findings of fact.

Ground 5

Mr Yehia claimed that the Magistrate erred in law by finding that Mr Yehia failed to act reasonably by not using the funds available to him to pay to have the vehicle repaired within 28 days from the date of the accident.

In written submissions, Mr Yehia also claimed that he was denied procedural fairness as it was not put to him that he had the means to pay for the repairs. Further, he claimed that no submissions were made in respect of his financial capacity to pay for the cost of repairs, rendering it a finding of fact that was not open to the Magistrate.

Once again, Mr Williams submitted that this was a finding that was ‘clearly open’ to the Magistrate, as some of Mr Yehia’s bank accounts were tendered as evidence. It was also put that if Mr Yehia wanted to contend that he was impecunious, in that he did not have sufficient funds to take mitigatory measures, he was required to plead and prove that.[49]
[49]Zurich Insurance v Umerji [2014] EWCA Civ 357, [37].

Analysis and findings

I consider that Mr Yehia’s grounds of appeal regarding the measure of damages are essentially complaints which go to merit.

Mr Yehia contends that the Magistrate erroneously concluded that the vehicle should have been repaired and not written off. Such a complaint does not constitute an error of law. I am satisfied that the Magistrate approached this task in the way required and in a manner consistent with the established principles relevant to the awarding of damages for a chattel damaged as a result of negligence. The Magistrate correctly expressed the factors he had to consider in the replacement versus repair calculation. The Magistrate went about that task by evaluating the facts as he found them and considering the differing expert opinions on such matters. He then concluded that the vehicle was not a write off and that it was reasonable for Mr Yehia to have had it repaired.

As the Magistrate did not accept that the vehicle had been treated by Mr Yehia as a total loss, he was not required to separately ask if Mr Yehia had acted reasonably in doing so, nor was he required to assess what measure of damages was applicable in such circumstances.

In determining the vehicle’s pre-collision value, the Magistrate preferred the opinion of Mr Phivopoulos in respect of the impact that the 6000cc engine modification had on its value. It is not an error of law for a Magistrate to prefer only some part of an expert’s opinion. It was open on the evidence for the Magistrate to accept Mr Phivopoulos’ evidence that as a collectible vehicle, some prospective purchasers may want to store the vehicle in a garage or showroom. I am satisfied that this finding by the Magistrate was open on the evidence and that his reasons in respect of this were adequate.

The Magistrate’s path of reasoning to determine that the measure of damages should be the cost of repair rather than replacement was clear and cogent. On any fair reading, the Magistrate provided an intelligible explanation for the substantial matters he was required to determine. I reject the notion that he insufficiently explained what Mr Yehia described as the selective use of figures in the Phivopoulos and Cuthbert reports. To the contrary, the Magistrate analysed the different expert opinions for each of the values he had to determine in the replacement versus repair calculation, and came to his own findings as to the most appropriate values. There was no uncertainty in understanding why the Magistrate decided as he did.

Finally, I consider that it was open on the evidence for the Magistrate to find that it was reasonable for Mr Yehia to pay for the repair of his vehicle, given some of Mr Yehia’s bank records were tendered and he had not specifically alleged impecuniosity. I consider this is a further finding of fact, not an error of law.

In view of the above, I am not satisfied that there was an error of law arising out of this aspect of the Magistrate’s judgment and I dismiss grounds of appeal 1-5.

Grounds 6-9 Entitlement to hire costs

Mr Yehia alleged numerous errors of law by the Magistrate in respect of his claim for car hire costs. Mr Yehia’s primary submission relied upon the High Court decision in Arsalan[50] decided in December 2021.
[50] Arsalan (n 1).

High Court decision in Arsalan

Mr Yehia’s appeal was stayed for months pending the outcome in Arsalan which determined whether a plaintiff suing for negligent damage to a vehicle was required to establish ‘need’ before being entitled to the cost of a hire vehicle. The High Court appeal involved two individual plaintiffs, who each had their prestige vehicles damaged in negligent circumstances. Mr Rixon drove an Audi A3 sedan and following damage to his car, hired a car of the same make and model. Mr Cassim drove a BMW 535i sedan and following damage to his car, he hired a car which was ‘slightly lower in value’, albeit ‘similar to’, his BMW.

In a joint judgment of Kiefel CJ, Gageler, Keane, Edelman and Steward JJ, it was stated that the ‘simple answer’[51] to the question before the Court was this:

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 vehicle.
The basis for this answer is 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. That loss will commonly consist of (i) the physical inconvenience from the plaintiff’s inability to use the damaged vehicle during the period of repair and (ii) loss of amenity or enjoyment of the use of the vehicle. Those heads of damage can 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. Recovery of damages under these heads of damage will usually be necessary to restore the plaintiff to the position they would have been in but for the defendant’s actions that caused the accident. Once the plaintiff acts to mitigate that loss by hiring a substitute vehicle, the onus of proof will lie upon the defendant to show that the costs incurred in mitigation were unreasonable. [52]

[51] Ibid, [2].

[52] Ibid, [2]-[3].

The High Court went on to state that ‘the head of damage of loss of amenity of use of a chattel should be recognised and the loose concept of ‘need should be eschewed’.[53] It was noted that this principle ‘has the basic goal to undo, by monetary equivalent, the consequences of the wrong experienced by the plaintiff so far as is reasonable’.[54]
[53] Ibid, [17].
[54]Ibid, [25] approving Eric Descheemaeker “The Standardisation of Tort Damages” (2021) 84 Modern Law Review 2, 2.

The High Court distinguished cases relating to negligent damage to a chattel from cases relating to a claim for gratuitous services arising from a negligent act. It held that that concept of ’need’ was:

a distraction from the proper focus upon the heads of damage identified by the plaintiff – such as physical inconvenience and loss of amenity of use- and the onus upon the defendant to establish the unreasonableness of the plaintiff’s steps to attempt to mitigate that damage by the hire of the substitute vehicle.[55]

[55] Ibid, [31].

While it will not usually be difficult for a plaintiff to prove their loss, the High Court noted that there may be exceptions, such as if the plaintiff is in hospital or abroad during the period of car repair.[56]
[56] Ibid, [34].

The High Court ultimately held that it was reasonable for both plaintiffs to hire cars with equivalent prestige. As a consequence of the negligent act, both plaintiffs had been deprived of the use of their prestige cars, including the enjoyment of the safety features, pleasurable functions and other specifications.

Does Arsalan apply to this appeal?

Mr Yehia submitted that, in accordance with the principles outlined in Arsalan, the Magistrate erred in law by requiring him to establish that he reasonably needed a replacement car. Mr Yehia claimed that he should have been awarded car hire costs, for at least the 30 day period in which his vehicle could have been repaired, on the basis that he was entitled to such damages for the physical inconvenience and loss of amenity of his vehicle.

In response Mr Williams submitted that as this was an appeal ‘simpliciter’, it had to be determined on the law as it existed at the time that the Magistrate determined the claim, such that any subsequent change in the law had to be disregarded. Mr Williams expressly submitted that Mr Yehia could not benefit from the decision in Arsalan.

It was noted that during the trial before the Magistrate, Mr Yehia did not contend that the concept of ‘need’ was unnecessary. To the contrary, in his closing written submissions, it was accepted that in order for Mr Yehia to establish an entitlement to damages for the replacement vehicle, ‘he need[ed] to satisfy the court that he had a reasonable need for one’.

In support of Mr Williams’ submission, that the law as it stood at the time of the Magistrate’s decision was the applicable law in this appeal, I was referred to the judgment of McHugh JA in Eggins v Brooms Head Bowling And Recreational Club Ltd (‘Eggins’).[57] In that case, Mr Eggins, was injured when he slipped and fell at the Brooms Head bowling and recreation club, of which the defendant was an occupier at the time of the fall. The claim was based upon a duty owed by an occupier to an invitee. At first instance, the trial judge directed the jury to return a verdict for the defendant on the grounds that the premises did not constitute an unusual danger, and that there was no evidence that the defendant knew or ought to have known of any danger in the use of the premises.[58]
[57] (1986) 5 NSWLR 521 (‘Eggins’).
[58] Ibid, 523.

After the trial, but before the appeal was heard, the High Court expanded the duty of care owed by occupiers in a decision of Australian Safeway Stores Pty v Ltd v Zaluzna, (‘Zaluzna’).[59] On appeal, the plaintiff in Eggins sought leave to amend his statement of claim by substituting a cause of action based on the duty owed to an invitee, to a general duty of care owed by the defendant to the plaintiff, and to have the verdict set aside. The Court of Appeal held this was not permissible.
[59](1987) 61 ALJR 180; 69 ALR 615 (‘Zaluzna’).

McHugh J stated the following in respect of how a change in law, may be dealt with on appeal:

The issues at a trial are decided on the basis of the “law” which applies to them at the date of the trial. If a party believes that the current state of the law is erroneous, he must object to its application to his case or be bound by it. If he fails to raise the point at the trial, he cannot be allowed to raise it on appeal because of the accident that he has lodged an appeal and that, before the hearing of the appeal, a superior court has decided that the law is different from what it was conceived to be at the date of the trial. If the unsuccessful party succeeds in obtaining a new trial for a reason unconnected with any change in the law, then he may apply to amend his pleadings, if necessary, so that the new trial can be governed by the changed state of the law. But in my opinion he cannot seek to have a verdict, based on an accepted state of law, set aside on the ground that the law is later held to be different from what the parties accepted it to be. No one suggests that, where appellate proceedings are concluded or no appeal has been lodged, a party is entitled to have a verdict set aside on the ground that the law is later declared to be different from what it was at the date of the trial or the appeal. The accident of filing an appeal cannot alter this situation. Ex hypothesi the unsuccessful party, who cannot point to an error in the trial conducted in accordance with an accepted state of the law, has no appeal. It would be extraordinary if an unsuccessful party who had filed an appeal could have a verdict set aside because of a subsequent change in the state of the law while a party who recognised that he had no right of appeal could not get a new trial because he had failed to lodge a notice of appeal.[60]

[60]Ibid, 524.

In a later judgment of Western Suburbs Hospital v Currie (‘Currie’),[61] the New South Wales Court of Appeal allowed a plaintiff to rely on the principles in Zaluzna. This was permitted as the appeal did not involve an application for a new trial, but rather an appeal in which the court was ‘asked to enter a verdict for the appellant on the basis of the evidence given at trial and where the respondent will suffer no prejudice by reason of the application of a different set of principles’.[62]
[61]Western Suburbs Hospital v Currie (1987) 9 NSWLR 511, (‘Currie’).
[62] Ibid, 521.

Mr Williams referred me to two further cases in which the comments of McHugh JA in Eggins, have been applied. Both cases involved trials which were heard before the High Court decision in Brodie v Singleton Shire Council; Ghantous v Hawkesbury Shire Council (‘Brodie’),[63] with appeals heard subsequently. In Brodie, the High Court abolished the common law non-feasance immunity for road authorities.
[63] (2001) 206 CLR 512 (‘Brodie’).

The first of those two cases was Owner Strata Plan No 13218 v Woollahra Municipal Council.[64] As that case related to an appeal decided by way of rehearing, I consider it is of limited assistance to me in this appeal.
[64] [2002] NSWCA 92.

The second was RTA v Welling (‘RTA’).[65] That was a case relating to property damage suffered following the collapse of a bridge. Before Brodie was decided, the Court at first instance had accepted a report which absolved the Road & Traffic Authority (‘RTA’) of any liability. There was then an application by the plaintiff (and others) to amend the pleadings to allege an act of non-feasance on the part of the RTA. Leave was granted to the plaintiff to amend its pleading and the RTA appealed that decision to the Court of Appeal.
[65] [2003] NSWCA 14 (‘RTA’).

In considering whether the plaintiff was able to rely upon the principles outlined in Brodie, the Court of Appeal approved the position of McHugh JA in Eggins. Expressly, Meagher JA stated as follows:[66]

Once a trial has been concluded on the basis of the old law, one cannot seek to take advantage of the new law unless one has at the trial “taken objection to the application of the old law”. Certainly, no such objection was taken here.

[66] Ibid, [16].

Handley JA, who agreed with Meagher JA, also added the following explanation for this approach:

When Parliament changes the law, particularly when it changes some part of the general law, it almost invariably legislates prospectively so as not to affect accrued rights. Parliaments have recognised that retrospective legislation will disturb the expectations and arrangements of persons who have conducted their affairs on the basis of the existing law, and may therefore occasion injustice…[67]
When a court overrules an existing decision or decisions, its judgment has retrospective effect because the new decision affects the existing rights and duties of all citizens and not just the parties to the particular case…[68]
The retrospective effect of judicial decisions is mitigated by statutes of limitation and by Judge-made law. Existing judgments where the old law has been applied and the rights of the parties have become res judicata cannot be reopened. Secondly, in accordance with the principles applied in Piening v Wanless (1968) 117 CLR 498, existing trials where the old law has been applied without challenge are also not reopened.[69]

[67] Ibid, [21].

[68] Ibid, [23].

[69] Ibid, [25].

In response to this, Mr Yehia submitted that Arsalan did not change the law in the way that Zaluzna and Brodie had. Instead, it was put that it had simply clarified the law in respect of the damages to be awarded.

Therefore, the question I must answer is what to do in the context of a Magistrates’ Court appeal when ‘the law is declared to be different from what the parties at the trials accepted it to be?’[70]
[70] Currie (n 61), 521.

The authorities referred to above, were either appeals for a re-trial, an appeal to substitute a verdict, or an appeal de novo. None of the cases dealt with an appeal simpliciter where in order for the appeal to succeed, the appellant was required to establish an error of law by the trial judge.

In considering whether the principles enunciated by the High Court in Arslan should apply to this appeal, I am guided by the principles outlined by McHugh JA in Eggins, and the explanation offered by Handley JA in RTA.

As this is an appeal to be determined in the strict sense, it should be determined on the state of the law as it was at the time the case was determined. In the absence of uncertainty or a contrary submission as to what the law was or should have been at the time of trial, it must be that law which applies on appeal. To hold otherwise may give an unintended advantage to a party whose appeal was otherwise unfounded. It may also inadvertently encourage unmeritorious appeals, and encourage applications for leave to appeal out of time.

The oral and written submissions, as well as the Magistrate’s judgment, make it clear that the parties and the Magistrate understood the case was to be determined on the basis that Mr Yehia had to demonstrate a reasonable need for the hire car. Therefore, in determining whether the Magistrate erred in law, I will answer based upon the state of law as declared at that time.

The New South Wales Court of Appeal decision of Lee enunciated the law that applied at trial. Having accepted that as applicable, it is impermissible for Mr Yehia to now contend as a ground of appeal, that the Magistrate erred by requiring him to prove a need for the vehicle to be entitled to the costs of a replacement hire vehicle. Mr Yehia’s written submissions at trial stated that the Magistrate was to determine whether need was established. Mr Yehia cannot contend otherwise now.

In the event that I ruled that the principles enunciated in Arsalan did not apply to this appeal, Mr Yehia maintained that the Magistrate made a number of errors of law in relation to the need for a replacement hire car, those being:

(a)he failed to consider whether any inference or inferences could be drawn from the direct facts that he had found in relation to need;
(b)the direct facts he found in relation to need were themselves sufficient to establish that the Respondent had established that he needed a replacement hire car;
(c)if the Magistrate had considered the issue of inferences from the facts established by him then he would have had to find inferences that also established that the Appellant had a need for a hire car.

Mr Yehia suggested that if the court considered those questions of law to be improperly framed, then I should adopt the approach of Davies J in Zogiannis[71] and reframe the question as ‘Did the Magistrate err in law by failing to apply the relevant principles of law to the issue of whether the Appellant needed a replacement hire car?’
[71](n 15).

However the questions of law are framed, I consider those submissions to be attempts to have me revisit the Magistrate’s factual findings. The Magistrate found the facts, and applied them to the relevant principles, as understood by the parties.

There can be no suggestion the Magistrate applied an erroneous or unfair standard of proof by stating the Mr Yehia had to establish a reasonable need for a hire car. That was the very question Mr Yehia submitted the Magistrate had to answer. The Magistrate did answer that question, just not in the way that Mr Yehia desired.

The Magistrate was not compelled to draw an inference from the evidence before him that Mr Yehia had a need for a replacement vehicle. Given the Magistrate’s concerns as to Mr Yehia’s credit, he was not prepared to draw such an inference. That is not an error of law. In view of the above, I dismiss grounds of appeal 6-9.

Grounds of Appeal 10-11: Illegality

In circumstances where I am not persuaded that there was an error of law in respect of the determination that Mr Yehia had no need for a replacement car, it is not strictly necessary for me to consider the consequences of the vehicle being unable to be lawfully driven on Victorian roads. However, in the event that I am wrong in respect of the applicability of the principles in Arsalan, I have also considered the alternative ground of appeal relevant to the car hire costs.

Mr Yehia claimed that the Magistrate erred in finding that he was not entitled to damages for loss of use of the vehicle. This was found as the Magistrate was not satisfied that a special dispensation could be obtained from the relevant statutory authorities to permit the vehicle’s use within the time it would have taken to repair the vehicle. Mr Yehia submitted that this was an error of law as any illegality in respect of the vehicle had no bearing on Mr Yehia’s entitlement to damages.

In support of this contention, Mr Yehia referred me to several cases which established that a tortfeasor would not be relieved of liability for damages if the plaintiff’s injuries were brought about whilst performing an unlawful act. However, such authorities were of no assistance to me given there was no suggestion that the vehicle’s oversized engine played a role in the collision. Further, Mr Williams never asserted that he should be excused of all liability on the basis that the vehicle ought not to have been on the road at the time of the collision.

I was referred to the Full Court of Victoria’s decision in Mills v Baitis (‘Mills’),[72] a case in which a plaintiff injured in a transport accident sought to recover damages for lost income. The plaintiff’s earnings derived from his work as a car mechanic from a garage at the back of his home. The plaintiff lived in an area which was zoned as residential, with commercial activity such as repairing cars against the local council’s planning laws. The defendant contended that as the plaintiff’s income was derived in breach of these council laws, he should be denied damages for his income loss. This was rejected and the plaintiff was permitted to recover his damages.
[72][1968] VR 583 (‘Mills’).

Gowans J in Mills stated that:

The public interest is not concerned to relieve the defendant wrongdoer. It directs its concern to the question of the deprivation of the plaintiff wrongdoer. Where the plaintiff’s wrong-doing has had no causal connexion with the defendant’s wrong-doing which has caused the damage, it is less probable that the purpose of the law will be to treat the plaintiff's wrong-doing as affecting the plaintiff’s relief, than where there has been a causal connexion. Whatever may be the implications where the background wrong-doing on the part of the plaintiff is an offence at common law, where it is a statute which creates the offence, the statute should be regarded as providing an exhaustive statement of the purpose of the law. If all that the statute does is to take an activity which is ordinarily permitted and to prohibit it only in respect of a particular time or a particular place and to prescribe a penalty for a contravention, it should not be inferred, in the absence of any other expression of intention, that it was the purpose of the law that it should carry any other privative consequences.[73]

[73]Ibid, 591.

Mr Yehia submitted that the penalty for not notifying VicRoads was 2 penalty units, and that this was the kind of statutory breach that courts have regarded as being insufficient to deprive a plaintiff of damages which the common law would otherwise entitle them to claim.

In reply to such submissions, Mr Williams stated that in accordance with the principles in Arsalan, (accepting for current purposes they apply) a claim for the cost of hiring an alternative vehicle is a claim for damages to compensate the owner for the loss of use of the vehicle which the owner would have otherwise had, but for the negligent event. Mr Williams submitted that in circumstances where the damaged vehicle was not lawfully permitted to be driven on the road, the replacement car which Mr Yehia hired was not commensurate because it was able to be driven on the road, unlike the damaged vehicle.

It was also put that in Mills, the Court had not been taken to the High Court decision in Smith’s Newspaper Ltd v Becker (‘Smith’s Newspaper’).[74]
[74][1932] 47 CLR 279 (‘Smith’s Newspaper’).

In Smith’s Newspaper, the plaintiff was a German doctor who had attempted to register himself as a medical practitioner in South Australia. He was unsuccessful in that registration but nevertheless held himself out as qualified to practice medicine, constituting an infringement of the relevant statute. The defendant published an article about the plaintiff, describing him ‘as an inhuman or reckless exploiter of the sick’.[75]
[75]Ibid, 289.

The High Court held that the illegality of holding oneself out to be a doctor and practising as one without registration, did not negate the plaintiff’s right to his personal character and professional reputation. The High Court found the question of illegality did not take away the plaintiff’s right to sue for defamation, but was relevant in relation to the amount of damages which he was entitled to recover.

In the Magistrate’s judgment, he referred to the decision of Dean J in the County Court of Central London in Agheampong v Allied Manufacturing (London) Ltd (‘Agheampong’).[76] This was a property damage claim in which the plaintiff’s car had unlawfully not been registered for compulsory third party insurance. The defendant alleged that this disentitled the plaintiff to claim a replacement hire car, by reason of the public policy maxim ex turpi causa non oritur action.
[76][2008] EW Misc 3 (EWCC).

Dean J considered a number of decisions, and ultimately commented as follows:

… the application of any illegality principle such as ex turpi causa is very fact dependent or specific in my judgment. The principle is a wide and broad principle, which is easy to state but presents much more difficulty in application. It has been described by very learned judges as an unruly horse which will take you who knows where once you get astride it. It is important, therefore, that the judge who is being asked to apply the principle endeavours to ensure that a proper control is kept over this beast.[77]

[77]Ibid, [84].

Considering the principles outlined above, and in an attempt to deal with the car hire claim in a manner proportionate to its potential quantum, I note that at the Magistrate’s court trial Mr Yehia accepted the vehicle was not permitted under the Regulations to be driven on the road at the time of collision and led no evidence as to whether the vehicle could be certified to be driven on the road, the time frame for when that could take place, and the likely costs associated with the certification.

The purpose of damages is to put the plaintiff in the position he or she would have been in, if not for the defendant’s negligence. At the time of the collision, Mr Yehia was lawfully permitted to admire his car and show it to others, but under the Regulations, he was not permitted to use it on the road. I accept Mr Williams’ submission that to award Mr Yehia the cost of the replacement car would put him in a better position than he was in at the time of the collision.

This is not a situation whereby Mr Yehia is disentitled from recovering any damages for the loss of use of his vehicle. The Magistrate awarded Mr Yehia damages for his inability to enjoy and appreciate his vehicle in the period in which it could have been repaired. The damages he awarded for that loss of use was by application of a percentage of capital value. That was indeed the approach endorsed by the High Court in Arsalan for situations when a replacement vehicle was not the appropriate measure.[78]
[78]Arsalan (n 1) [20]- [21].

In view of the above, I am not satisfied that the Magistrate erred in not awarding hire charges and I dismiss grounds of appeal 10-11.

Ground of Appeal 12: Interest

Mr Yehia contended that the Magistrate had erred by not awarding interest, when good cause was not shown as to why such interest should not be awarded on the judgment sum.

Section 60(1) Supreme Court Act 1986 (Vic) provides as follows:

Interest in proceedings for debt or damages
(1)The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.

Mr Yehia submitted that ordering interest is not discretionary but rather must be made unless the defendant to a proceeding can establish ‘good cause’ for not doing so. Save for a reference to Mr Yehia’s failure to accept a pre-litigation Calderbank offer, it was submitted that neither Mr Williams nor the Magistrate explained why this amounted to good cause.

Mr Williams submitted that an award of interest is discretionary and is to be exercised judiciously. In support of this, I was referred to a decision of Davies J in Cameron v McMahon,[79] in which she stated that what constitutes good cause will obviously depend on the particular facts and circumstances of the proceedings, such that the Court must be satisfied ‘there is good reason not to apply the general rule in favour of awarding interest to the plaintiff’.[80]
[79] [2009] VSC 412.
[80] Ibid, [6].

Further, Davies J stated that:

The good cause requirement has to be measured against the purposes of the statutory power to award interest. They have been recognised to be twofold. First to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money and deprived of its use during the relevant period and secondly to encourage the early resolution of litigation.[81]

[81] Ibid, [7].

In Clarke v Foodland Stores Pty Ltd (‘Clarke’),[82] the Full Court considered s 58(1) of the Supreme Court Act, which is a similarly worded section relating to applications for interest in respect of debts or sums recovered. The Full Court (Fullagar, Marks and JD Phillips JJ) stated that:

When good cause is shown, the court may refuse to award interest at all or may, if it sees fit, award interest on terms which are less, but not more, onerous than those laid down by the section. As the court always has a discretion as to the rate (subject only to the maximum imposed by s 58), this means, in effect, that once good cause is shown, the court may allow interest to the plaintiff for a lesser period than that marked out by the section - as, indeed, was done in David Leahey’s Case. And it follows, we think, that “good cause to the contrary” means no more and no less than good reason, according to the justice of the case, for not allowing interest at all or, if interest is to be allowed, then for not allowing interest for the whole of the period marked out by the section.
…
The question of interest cannot be said to be wholly a matter of discretion, as is the case with costs; for the injunction laid down by s 58(1), to allow interest according to its terms, must be followed unless good cause is shown otherwise. But this should be understood as meaning no more than that the course charted by the section should be followed unless, for good reason, the court is satisfied that some. other and lesser course should be followed.
It follows that, on appeal from an award of interest under s 58, at least in a case like the present where the trial judge has based himself upon the existence of “good cause”, the matter should be approached as an appeal from the exercise of discretion. To combat this approach, counsel for the liquidator urged upon the court another view, that the existence or not of good cause is a matter of jurisdiction and not just discretion, with an onus on the defendant to lead positive evidence to justify a finding that there was “good cause”.
Certainly, the submission that the defendant bears an onus to adduce evidence is too restrictive. Good cause may be shown in many ways and not only by evidence led on behalf of the defendant. Thus, having heard all of the evidence at trial, the court might be satisfied, for instance, that in all of the circumstances it would be unjust to allow interest to the creditor from the date of demand…[83]

[82] [1993] 2 VR 382 (‘Clarke’).

[83] Ibid, 394.

This authority has been subsequently approved in multiple Supreme Court decisions.[84] Therefore, it is clear that the court has discretion to determine whether or not to award interest, the period of time to which such interest applies, and the rate at which to award interest.[85] The confines on this discretionary power are that the interest rate cannot exceed the penalty rate and that good cause must be shown to depart from the ordering of interest.
[84]Hodgson v Amcor (No. 9) [2012] VSC 205; Snapper Holdings Pty Ltd v Lentini (Costs) [2019] VSC 204; Weatherbeeta Ltd v Hammersmith Nominees Pty Ltd (No 2) [2019] VSC 713.
[85] Clarke (n 82).

This discretion was required to be exercised judiciously by the Magistrate. That is, he was required to apply the correct principles take into account relevant considerations, and have no regard to irrelevant considerations. As was stated by the High Court in House v R:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.[86]

[86](1936) 55 CLR 499, 505.

I am not persuaded that the Magistrate erred in law in exercising his discretion by deciding not to award interest. Having heard all the evidence at trial, the Magistrate was satisfied that there was good cause to refuse interest on the damages award given his findings that Mr Yehia had ‘contrived to pretend’ he had sold the vehicle and was unreasonable in rejecting the pre-settlement offer. There was no error by the Magistrate in the exercise of his discretion and I therefore dismiss this ground of appeal.

Costs

Mr Yehia’s final ground of appeal related to the Magistrate’s order that he pay Mr Williams’ costs on an indemnity basis.

Mr Yehia contended that in relation to the costs order, the Magistrate erred in law by having regard to an irrelevant consideration or failing to have regard to relevant considerations.

There were 11 matters which Mr Yehia claimed the Magistrate had either given undue weight to, or had failed to attach any or appropriate weight to. It was stated that he gave undue weight to the Calderbank offer being made pre-litigation. It was further claimed that the Magistrate failed to attach any or appropriate weight to a number of factors, including that when the offer was made, Mr Yehia had acted in reliance on Mr Phivopoulos’ assessment that the vehicle was a write off, with a net loss of $58,497. It was put that this was considerably more than the sum offered. Further, it was alleged that the offer did not explain the reasons why Mr Yehia would not recover more than the amount offered in the Calderbank offer and there was no explanation given as to how the amount offered was calculated or constituted.

In Hazeldene,[87] the Victorian Court of Appeal discussed the factors relevant to determining whether a Calderbank offer should have the intended cost consequences. Before identifying the relevant factors, the Court stated:

The critical question is whether the rejection of the offer was unreasonable in the circumstances. …
Of course, deciding whether conduct is “reasonable” or “unreasonable” will always involve matters of judgment and impression. …[88]

[87] (n 8).

[88] Ibid, [23]-[24].

The Court commented that it was ‘neither possible nor desirable to give an exhaustive list of relevant circumstances’. However, it stated that:

… a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(a)       the stage of the proceeding at which the offer was received;
(b)       the time allowed to the offeree to consider the offer;
(c)       the extent of the compromise offered;
(d)      the offeree’s prospects of success, assessed as at the date of the offer;
(e)       the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.[89]

[89]Ibid, [25].

Mr Williams submitted that the Magistrate had correctly identified the above principles and applied them to the situation that Mr Yehia was in when the offer was made. In doing so, the Magistrate noted that the key battleground in respect of the application for indemnity costs was Mr Yehia’s prospects of success at the time the offer was made. In circumstances where the Magistrate found that by that time, Mr Yehia had ‘contrived to pretend’ that he had sold the vehicle, it was unreasonable for him to reject the offer. Mr Williams submitted this was open to the Magistrate to determine.

Further, Mr Williams submitted that Mr Yehia’s ‘relevant delinquency’[90] was also a factor relevant to the Magistrate’s exercise of his discretion.
[90]Oshlack v Richmond River Council (1998) 193 CLR 72, 89 [44].

I am not persuaded that the Magistrate erred in respect of the order for costs. I am satisfied he did exactly what he was required to do – he took in to account relevant considerations identified in Hazeldene and gave them appropriate weight. The 11 matters Mr Yehia claims the Magistrate did not attach any or appropriate weight to were all undermined by the Magistrate’s finding that Mr Yehia had not in fact sold the vehicle and ‘contrived to pretend’ that he had. As that was a finding which was open to the Magistrate, Mr Yehia’s allegations that the Magistrate erred in respect of his cost order has no merit. I therefore dismiss this ground of appeal.

I will hear from the parties in respect of costs.

[2022] VSC 197

22 April 2022