John Rauof Megally v Andja Bojanic (NSWLC 2023)

Link to Decision

This decision concerned the relevance of ‘actual cost’ when assessing the diminution in value of a vehicle by reference to the reasonable market cost of repairs.

Key Takeaways

1. If a repair invoice is prepared for the dominant purpose of recovering damages from an at fault party, and is not evidence of work actually completed and charged by the entity who created the invoice, it is irrelevant to the assessment of the 'reasonable cost of repairs'.
2. An expert opinion, reached by adjusting items on an irrelevant invoice, cannot opine as to any appropriate question and if admissible, is of little or no weight (at [39]).
3. The loss suffered by a plaintiff who has his chattel damaged is the diminution in value of the chattel (at [40]). In assessing the appropriate quantum, the cost of repairs, i.e. the actual cost of repairs done, if known, is often the best proxy (at [40]).
4. Where there is no evidence of an actual cost, there is no reason to award the ‘top of the range’ of reasonable repair costs because it is not a question of reducing actual costs only by the amount of any extravagance or unreasonableness (at [45]).
5. Practical guidance:

‘Where a party asks an expert to adopt a document, such as an invoice, as a benchmark or starting point on the basis it represents actual repairs, they should be prepared to prove that it is. It has the capacity to mislead, and or generate wasted costs, if a document is deployed, particularly where repairs have been done, which is created as a claim and is then used as a benchmark or starting point on the basis it apparently records actual repairs, when it does not’ (at [42]).

Facts

The facts of the case are those seen on thousands of credit-repair recoveries nationwide.

The Plaintiff was referred to an accident management company (CARS Claims and Accident Management (CARS)) who then referred the repair to Accident Solutions Australia (ASA) who issued an invoice which was served on the Defendant in support of the Plaintiff’s claim for damage arising out of a motor vehicle accident.

It was uncovered by the Defendant that the repairs were carried out at Regatta Motor Body Repairs, which called into question the legitimacy of the invoice issued by ASA which the Plaintiff relied upon. The Plaintiff led evidence that whilst ASA did not have any staff or repair premises, they were permitted to use Regatta’s premises and Regatta ordered parts on their behalf, however they were unable to identify the natural person/s who they say actually carried out the repairs to the Plaintiff’s vehicle and who those person/s worked for was not concluded.

ASA issued a document titled Tax Invoice for the sum of $19,032.24 which was relied upon by the Plaintiff’s expert to conclude the fair and reasonable cost of repairs was the sum of $16,810.42 (incl. GST).

The Defendant’s expert considered the ASA Invoice, however after inspection of the Plaintiff’s vehicle, concluded that some of the repair listed on the ASA Invoice had not been carried out. Accordingly, the Defendant’s expert did not place any weight on the ASA Invoice and concluded the fair and reasonable cost of repairs was any sum in the range of $5,000.00 to $8,669.96 (incl. GST).

It was an agreed fact that the repair work done, whatever it was, had reinstated the plaintiff’s vehicle to its pre-accident condition. The parties took opposing views on the relevance of who did the repairs, what repairs were completed and the cost of those repairs.

The Plaintiff contended the real issue for consideration was “what is the reasonable cost of repairs to restore the plaintiff’s vehicle to its pre-accident condition?” and that the actual cost of repairs, which have not been paid for and not sought, was irrelevant to the assessment of the Plaintiff’s loss and does not need to be determined by the Court.

The Defendant contended that the actual cost as envisioned in the authorities is relevant in the assessment of damages as it acts as a starting point from which excessive or unreasonable costs are deducted; in the absence of an actual cost, any sum within the range is appropriate – but there is certainly no requirement to award the top.

Judgment

The Court accepted that investigations into who repaired the vehicle, where and when it was repaired, together with whether there were available records about the labour and parts recorded in the invoice are all potentially relevant to establishing whether a repair invoice should be treated as an ‘actual cost’.

It also determined that no reliable evidence was tendered as to what work was done or parts supplied by the contractor.

The Court found that the assumption by the Plaintiff’s expert that the ASA Invoice was created by an actual repairer and accurately recorded work actually done by that person was an unsafe assumption and the Defendant’s expert evidence (including what work was/was not reasonably required and what work was/was not done) should be preferred.

Evidence called in relation to the above, together with the Defendant’s expert evidence, tended to confirm ('and certainly did not undermine in any way') a conclusion that the ASA Invoice is not a reliable record of repairs done, and does not represent the reasonable cost of necessary repairs, or the actual cost of repairs within the meaning of the authorities; rather it was deployed to seek the recovery of money from an at fault driver.

Having accepted the Defendant’s expert’s evidence, the Court had reservations about awarding the top of the range, however acknowledging that as the wrongdoer, the Defendant is not entitled to have all doubtful matters resolved in her favour, the nominal figure of $7,000.00 was awarded as the reasonable cost of repair.

Implications 

In an industry predicated upon high volume litigation and quick cash flow, the decision has the potential to have some significant implication for credit-repairers and insurers alike.

Where credit-recovery agencies look to establish a Tax Invoice is representative of repair work actually done and a cost actually incurred, they are now on notice that they should be prepared to prove it beyond inference on the face of the document.

Where that cannot be proven, insurers and defendants alike now have some judicial commentary to support the contention that the Invoice should not be given any weight in the assessment of the reasonable cost of repairs, and there is no right to an award at the top of any expert’s range for cost of repairs, where variations from that figure can decrease an overall award by up to 20%.