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The Last Word on Hiring Replacement Vehicles?

If you have an income producing vehicle (say, a delivery truck) that is damaged in a motor accident, it has long been accepted that the cost of hiring a replacement vehicle can be claimed as damages against the ‘at fault’ driver. The position with private vehicles has been less clear. The Court of Appeal was recently asked to consider four, completely unrelated claims, which all raised the same or similar issues: were the car owners, who hired replacement (private) vehicles entitled only to a “functional” substitute or alternatively to vehicle of similar “quality”.

Although the particular car models were not specified, it is clear they were “luxury” cars in each case.

Historically, damages for the loss of use of a private vehicle have generally been characterised as damages for “inconvenience”. That is, damages were not awarded by reference to the particular cost of hiring a substitute, but rather a generalised assessment was made of the inconvenience for loss of use and a lump sum of damages was awarded. However, ultimately, the basis for any award of damages was that the car owner had a “need” to use it, and it was that need that was compensated by damages.

The Court of Appeal, by majority, held that when assessing damages, the relevant “need” was for the use of the particular vehicle that had been damaged; and that if that need existed, it was appropriate to award damages by reference to the hire cost of a qualitatively similar car. The minority judge, Meagher JA took the view that the “need” was for a vehicle that performed the same functions as the car that had been damaged and that it was not reasonable for the ‘at fault’ driver the be burdened with the cost of a “luxury” car, if a cheaper vehicle would perform the same functions.

However, all of the Courts agreed that no damages at all were recoverable if there was no need for the use of the car. Although the majority accepted that the existence of the damaged car implied the owner had a need for it, one example cited was of a car owner who was hospitalised for a longer period than it took to repair their car, so that they had no need to use it at all during the repair period.

So the position appears to be this: if your car is damaged in a motor accident, you will generally be entitled to recover, as damages, the hire cost of a qualitatively similar vehicle. There is also a presumption that you have a need to use your vehicle during the period of repair – but if the ‘at fault’ driver can demonstrate a need did not exist, or did not exist for the whole of the repair period, that part of the hiring cost is likely to be disallowed.

In the particular situations considered by the Court of Appeal, two of the car owners were entitled to the full hiring costs of substitute luxury vehicles. One owner failed completely on the basis there was no evidence of need; and the fourth owner failed because evidence had been given in the lower Court that he would have been happy with any type of car at all and, since the trial judge made a factual finding based on that evidence, it was not open to an appeal: Lee v Strelnicks (and Ors) [2020] NSWCA 115 (18 June 2020).

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