The latest development in the ever-changing world of 'Loss of use' claims has seen the NSW Court of Appeal hand down their respective decisions in Lee v Strelnicks; Souaid v Nahas; Cassim v Nguyen; Rixon v Arsalan [2020] NSWCA 115.   

This decision has essentially confirmed a claimant's entitlement to recover compensation for the cost of hiring a "reasonably equivalent", "commensurate", or "comparable" replacement vehicle in the absence of their damaged vehicle.   Furthermore, the decision indicates that the issue of "need" is not satisfied by mere reference to other vehicles of similar "functionality".    

In handing down its decision across all four matters, the court specifically identified 8 principles relevant to loss of use claims, contained in paragraph 69 of the decision: 

  1. "The overarching principle is that damages in tort are intended to compensate the plaintiff for loss actually suffered to put the plaintiff in the same position as he or she would have been in had the tort not been committed. 
  2. The plaintiff has the onus of establishing that he or she suffered some loss by reason of being deprived of use of the vehicle for a period. 
  3. The plaintiff is entitled to recover as special damages expenses reasonably incurred to mitigate the loss of use of the damaged vehicle. 
  4. The plaintiff will be entitled to recover as special damages for the loss of use of the vehicle while it is under repair the reasonable cost of hiring a replacement vehicle, if the plaintiff reasonably needs to hire the replacement vehicle. If the plaintiff does not need a replacement vehicle, he or she does not suffer a loss from being temporarily deprived of the use of the vehicle for which special damages for the cost of hire of a replacement vehicle are payable. General damages for any inconvenience suffered may still be recoverable. 
  5. A reasonable need for the replacement vehicle is not to be assessed by only considering what vehicle would be adequate to meet the inconvenience to the plaintiff of his or her vehicle being off the road. 
  6. Prima facie, it can be inferred that the plaintiff will have a reasonable need for a "commensurate" vehicle, or a "reasonably equivalent" vehicle, or a "reasonable substitute", or a "broadly comparable" replacement vehicle. 
  7. This is because the loss suffered by a plaintiff who has lost the use of a prestigious vehicle is not merely the inconvenience of not having a vehicle to transport the plaintiff and his or her family, friends and associates, from A to B, but the loss of his or her ability to do so in a vehicle which has the safety, luxury and prestige of the damaged vehicle.
  8. Although the plaintiff has the onus of establishing a reasonable need for a replacement vehicle, once that onus is discharged, the onus of establishing that the hire of the particular replacement vehicle was unreasonable lies on the defendant."

This means that the claimant still has the onus of establishing both the need and the extent of the loss suffered.  However the need will not be measured by merely assessing the need for transport from point A to point B, instead the issue of need will be determined by having regard to other issues such as the safety features, luxury and prestige of the damaged vehicle.  Once that is established by a claimant, the onus then falls to the Defendant to try to argue that the particular hire was unreasonable, such as in circumstance where the damaged vehicle was an older model and the replacement vehicle was a much later one.

It should be noted that all the vehicles that were the subject of this decision had what the court referred to as "fungible" qualities.   The nature of fungible vehicles lends itself to a mainstream market which can easily provide a source for a like for like vehicle.   With this in mind, it is doubtful that the decision will impact hires involving vehicles possessing extremely unique qualities or rarity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.