In early December 2021, the High Court in Arsalan v Rixon; Nguyen v Cassim HCA40 considered the issue of hiring a replacement vehicle of broadly equivalent value to the damaged luxury vehicle.
The case concerned luxury vehicles that were damaged in motor vehicle accidents driven by Mr Rixon and Mr Cassim. The insurers admitted liability in negligence. Both vehicles were used for social and domestic purposes, and not incoming earning purposes. Mr Rixon and Mr Cassim hired replacement vehicles of similar value to their damaged luxury vehicles, while the vehicles were being repaired.
The Court proceedings started in the Local Court of New South Wales. A Magistrate held that Mr Rixon had not demonstrated the need for a prestige replacement vehicle and awarded damages representing the market rate of a Toyota Corolla. The Magistrate determined that a Toyota Corolla would have met Mr Rixon’s needs. He did not agree. So much so, that he lodged an appeal to the Supreme Court of New South Wales.
The Supreme Court agreed with the Local Court. Mr Rixon was even more displeased with that outcome and appealed ot the Court of Appeal.
The Court of Appeal had a different view. They held that Mr Rixon and Mr Cassim were entitled to a replacement vehicle that is equivalent to or is close to equivalent as possible as the damaged vehicle.
The Insureres appealed that decision. The High Court dismissed the appeals, holding that Mr Rixon and Mr Cassim were entitled to damages representing the costs of hiring replacement prestige vehicles. The Court determined that loss from the negligence includes both the physical inconvenience from the inability to use the vehicle but also the loss of enjoyment of the use of that vehicle. The Court confirmed the loss of amenity of a use of a chattel should be recognised as a recoverable head of damage for negligent damage to a chattel, consistent with the compensatory principle. Once a plaintiff mitigates their loss by hiring a replacement vehicle of broadly equivalent value to the damaged vehicle, the onus lies upon a defendant to prove that the costs incurred in mitigation was unreasonable. In this case, the costs of a replacement luxury vehicle were reasonable.
Liability limited by a scheme approved under Professional Standards Legislation