No hire car charges for unroadworthy vehicles and unlicensed drivers

Did you know: You can (and should) oppose hire car or loss of income claims where the damaged third party vehicle was (i) unroadworthy, or (ii) illegally modified, or (iii) where the third party driver was unlicensed.

Following the High Court’s judgment in Arsalan v Rixon (2021) 274 CLR 606, our firm was involved in two matters that went on appeal to the Victorian Supreme Court.

Yehia v Williams [2022] VSC 197 involved a claim for hire car charges incurred after a heavily modified Holden was allegedly written-off in a motor vehicle collision. The Magistrate accepted our arguments that the damaged Holden was repairable, and that as the Holden could not have been legally driven on Victorian roads, there was no consequential loss of amenity which could ground a claim for hire car charges. The Plaintiff unsuccessfully appealed the Magistrate’s decision, with the Victorian Supreme Court stating:

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 … 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.

Taleb v Rijal [2022] VSC 259 followed on the heels of Yehia and (similarly) involved a claim for hire car charges incurred when Mr Taleb’s vehicle was written-off in a collision. The insured reported to the claims officer that Mr Taleb had produced a blue licence (Victorian licences are green). Subpoenaed records from the (now) Department of Transport and cross-examination revealed that Mr Taleb had lost his Victorian licence and was unable to be relicensed without a Court order, but that he had obtained a South Australian licence without declaring his driving record to SA authorities. The Magistrate awarded nominal damages of $1,000 for loss of use, finding that Mr Taleb was entitled to a hire car but had failed to prove the sum of his loss. Mr Taleb appealed the Magistrate’s decision on the quantum and we cross-appealed the finding that Mr Taleb was entitled to any hire car at all. Having already delivered the Yehia decision, the Victorian Supreme Court dismissed Mr Taleb’s appeal, upheld our cross-appeal and found as follows:

 I recently considered similar submissions in the matter of Yehia v Williams… In this case, the illegality is different.  It relates to the driver of the damaged vehicle, not the vehicle itself.  Notwithstanding this difference, having considered the submissions of both parties, I am satisfied the result is the same.  Mr Taleb should not be awarded damages for a replacement car that he was not lawfully permitted to drive.  Unlike Mr Yehia, who was denied a claim on the basis that it would have put him in a better position, I consider Mr Taleb should not be awarded car hire costs as the Court will not be a vessel for such illegality.

 Importantly, the illegality element did not prevent the underlying collision damage itself from being recovered (i.e. cost of repairs or total loss values of the vehicles) – while it could be a significant additional element if there is a liability dispute or any allegation that the illegal modifications, unroadworthiness, or lack of licence caused or contributed to the collision, in circumstances where an insured is plainly liable for the collision it is only the consequential loss (hire car charges or loss of income, for example) which can be opposed by reference to the decisions in Yehia or Taleb.

About me (Stuart Proposch) – I have been an insurance litigation lawyer for 6 years and am a Senior Associate in William Roberts’ Victorian team. When not at work, you can usually find me tinkering with my (legally) modified Mazda MX5, riding my (unmodified) bicycle with family and friends, or on the mixed netball court.

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