NSW Court of Appeal clarifies how to work out damages for loss of use of a motor vehicle

The general need of the plaintiff

The question of whether a plaintiff needs a replacement vehicle is not self-proving and must be supported by actual evidence from the plaintiff of that need. The threshold is, however, a very low one.

This was the crux of the appeal in Lee. Need could not be proved. In turn, it was unanimously dismissed by the Court of Appeal.

The plaintiff is presumed to have a need for a ‘like for like’ replacement vehicle

Should need be established, it can be presumed that a plaintiff will be entitled to a “like for like” vehicle (that is a vehicle that is substantially similar to the damaged vehicle) as they should be placed in the position they were in prior to the negligent act occurring.

This presumption can be displaced by evidence from the Plaintiff that they did not need or want a “like for like” vehicle.

The replacement vehicle the plaintiff is entitled to

In assessing whether the plaintiff is entitled to be compensated for the cost of hiring a replacement vehicle they selected, the assessment really centres on whether it is “like for like” and if it is not, what kind of vehicle would be “like for like”. The following principles apply:

• It is to be assessed on a mixture of subjective and objective factors.
• From an objective perspective, you would consider the ‘bare functionality’ the plaintiff required of a vehicle, but that is not enough. You would also need to consider the characteristics of a replacement vehicle, in what was termed ‘general equivalence’. Here you would consider make, model, year, specifications and value.
• From a subjective perspective, the Plaintiff’s desire is a factor that will need to be considered, particularly for luxury vehicles.

How much the plaintiff is entitled to recover for that replacement vehicle

Once you have confirmed the kind of replacement vehicle the plaintiff was entitled to, the cost of hiring an equivalent vehicle in the market is the measure of damages.

The best evidence would be evidence:

• that a vehicle with identical or as close to as identical characteristics (make, model, year, specifications and value) was available for hire; and
• the rates that vehicle was hired out at.

It remains to be seen how much weight a Court puts on the value of the damaged vehicle as against the value of the hired vehicle when considering whether the hired vehicle was equivalent.

For example, if a plaintiff had a luxury 2012 4-door sedan, its value would probably be equivalent to or less than a late model Toyota Camry, whereas a late model luxury sedan would have a far greater value. The Toyota Camry will probably cost much less to hire than the late model luxury sedan. In that circumstance, a defendant would argue that the Toyota Camry would be the equivalent. The ultimate question is whether the “luxury” factor will trump the actual value of the vehicle. That remains to be seen.

Whilst it is only a comment that was made by one of the majority (White JA), it was said that blind acceptance of ‘credit hire’ rates may be sufficient to assert that a plaintiff has behaved unreasonably; however, that would also probably be subject to the Court finding the rate claimed was excessive or beyond the market rate.

Credit hire is where a motor vehicle is provided to a plaintiff at no upfront cost, on the condition that they participate in recovering that cost at the direction of the “credit hire” car provider.