Hire Car NSW: How long is too long?

  • TurkAlert
  • Published 07.04.2022

Key Takeaways

  • It will not be difficult for a plaintiff to prima facie establish a reasonable hire car duration.
  • The defendant then bears the onus of establishing the hire car duration claimed is unreasonable.
  • A plaintiff’s obligation to act reasonably might not be satisfied by simply relying upon a repairer’s opinion.
  • What the plaintiff knew, or a reasonable person in the position of the plaintiff ought to have known, will largely determine the reasonableness of the plaintiff’s conduct.

Background

As the dust settles following the excitement of the High Court decision of Arsalan v Rixon; Nguyen v Cassim (HCA 2021), insurers and consumers alike ask themselves what comes next? The High Court acknowledged in Arsalan that the issue of a reasonable equivalent vehicle is but one of the considerations a defendant might raise in seeking to establish that the hire car cost incurred was unreasonable. Others considerations included: 

‘the replacement vehicle hired, in light of the range of vehicles that might be fairly regarded as equivalent to the damaged vehicle; the period of hire, having regard to the reasonable period of time for repairs; or the extent of the costs included in the hire charges’

(our emphasis)

In this article we consider the period of hire, who bears the onus of establishing reasonableness and the facts that may favour either party.

Mitigation of Loss & Onus

Where a plaintiff attempts to reduce a loss (e.g. by hiring a replacement vehicle to avoid a loss of convenience and amenity), a defendant asserting that the plaintiff’s actions were unreasonable acts of mitigation bears the onus of proof and must show that the plaintiff acted unreasonably. Even where costs incurred by a plaintiff are greater than the loss they were trying to avoid, these will be recoverable as damages unless they can be shown to be unreasonable.1 

While a plaintiff bears the onus of proving their loss, the reasonableness of any duration of hire car claim will prima facie be established by showing that the plaintiff’s car was being repaired, involved in the assessment and repair process when entrusted to an insurer, or being assessed as a total loss and unable to be driven while the plaintiff looks to source a permanent replacement vehicle. All such scenarios are commonplace and readily proven.

What constitutes an unreasonable hire car duration?

In an answer that will bring a wry smile to a legal practitioner and a collective groan from the public at large – it depends. 

The question of whether delays in the repair process such as quoting, a busy repair shop, or parts delays, should have any bearing on the reasonableness of a hire car duration is raised every few years, often paired together with expert evidence suggesting the repairs may have been completed over a shorter duration of time. Bedlam LJ said in Mattocks v Mann (RTR 1973) at [18]:

‘For a supervening cause or a failure to mitigate to relieve a defendant of a period of hire there must, in my judgment, be a finding of come conduct on her [Ms Mattocks] part or on the part of someone for whom she is in law responsible, or indeed of a third party, which can truly be said to be an independent cause of loss for her car for that period’.

This approach has been followed here and in the United Kingdom. 

Loraine Keenan and Terance Keenan v Myung Ok Hummelshoj (NSWLC 2021)

This NSW Local Court General Division matter recently dealt with the same issue. The plaintiffs entrusted their vehicle to a repairer and hired an accident replacement vehicle for a period of 129 days. There was no dispute that the repair process encapsulated the whole 129 day period, notwithstanding an initial repair estimate of ‘about two weeks’. Citing the New Zealand case of Frucor which in turn cited with approval the NSW Local Court decision of Tang, the Court held that the delays in the repairs did not constitute a new independent cause (or novus actus interveniens) so as to render the hire period excessive or unreasonable.

Xiaoqiang Lin v Karl Edward Reid (NSWLC 2022)

In this recent NSW Local Court Small Claims Division matter, the Court considered the question of whether the plaintiff had acted reasonably in electing to repair a vehicle when it was uneconomical to do so, and what effect that had on the duration of the hire claim. The plaintiff entrusted her vehicle to a repairer and hired an accident replacement vehicle for a period of 92 days. 

The Court accepted the defendant’s submission that on the evidence, it was uneconomical to repair the plaintiff’s vehicle as the repairs exceeded its true market value. The Court observed that the plaintiff ‘bears responsibility for the decision making in this regard’ and held that the plaintiff had ‘failed to make the necessary enquiries about the nature and extent of the repairs … that a prudent vehicle owner would make when faced with a significantly damaged vehicle.’2 The Court reduced the recoverable hire car duration from 92 to 28 days – allowing 21 days as a sufficient period in which a party would ordinarily be able to source an alternative vehicle together with an extra 7 days as an allowance for the fact that the period fell in the lead up to Christmas in December 2017.

Implications

The NSW Local Court lists reflect that hire car litigation will remain live and well in this country, albeit with a slight shift in what remains in issue. As ever, disputes about the reasonableness of the cost of hire car charges turn mainly on findings of fact and therefore largely depend on the evidence. 

A plaintiff is unlikely in most cases to find it hard to establish the reasonableness of the length of a hire car period. Should you wish to consider challenging the duration of a hire car claim, ask yourself:

  1. What act or circumstance led to the length or extension of the hire car period? (e.g. a big repair job, a delay in parts, a decision to swap between insurers, a decision to repair a vehicle that ought to have been considered a possible total loss)
  2. Did the plaintiff have any involvement in that act or in bringing about that context? 
  3. What information was known, or ought to have been known by a reasonable person in the position of the plaintiff? 
  4. Can the defendant establish any unreasonableness in that conduct?
1 See for instance Arsalan at 10 citing Watts v Rake (CLR 1960) 158 at 159 and other cases.
2 Lin at [26]

Michael Adie

Partner

P: 02 8257 5768

Email Michael