Down under

Credit hire is a world wide phenomenon.

This month the High Court of Australia handed down judgment in the first credit hire case to reach the High Court: which is the highest court  in Australia and the equivalent of the United Kingdom Supreme Court.

Decisions in the High Court should be of interest to United Kingdom lawyers because decisions in the common law jurisdictions permeate through to each other and can be useful persuasive authorities to argue for a particular result in this jurisdiction. One has only to think of the landmark case of Sutherland Shire Council v Heyman [1985] HCA 41 which 5 years later prompted the House of Lords to recast the tort of negligence in England and Wales.

In the case of Arsalan v Rixon and Nguyen v Cassim [2021] HCA 40 the question of “need” arose as the principal issue, and the High Court, has not adopted the approach of Lord Mustill in the House of Lords decision in Giles v Thompson [1994] 1 AC 142 but has instead adopted the approach to loss of use and need in the landmark decision of The Mediana [1900] 1 AC 113.  The High Court has further emphasised, that the head of loss of use, is perhaps more aptly to be called inconvenience. Thus the decision states:

34. Although a plaintiff must prove their loss, it will not usually be difficult for a plaintiff to establish heads of damage of physical inconvenience and loss of amenity of use consequential upon their lost ability to use their vehicle. There will, however, be exceptional cases where such loss to the plaintiff will be non-existent or so slight that the hire of a replacement vehicle will not be accepted to be a step in mitigation. Such exceptional cases might include where the plaintiff was hospitalised or abroad during the relevant period of repair, or where the damaged vehicle could have been replaced from idle stock within the plaintiff’s fleet of vehicles.

35 Apart from such cases, it will usually be sufficient for a plaintiff to identify a past suite of purposes for which the damaged vehicle was used in order to justify an inference that the plaintiff would have put the vehicle to the same uses during the period of repair and would be otherwise inconvenienced. As Lord Mustill recognised in Giles v Thompson, it will not be hard to infer that a plaintiff who incurs the considerable expense of running a private vehicle does so for reasons of convenience. Similarly, it will usually be sufficient to infer that a plaintiff derives amenity from the various functions used in their vehicle, particularly an expensive, prestige vehicle in circumstances in which the plaintiff incurred significant capital or ongoing expenditure on that prestige vehicle.

36 Once a plaintiff has proved heads of damage of physical inconvenience and loss of amenity of use, it will usually be difficult for a defendant to prove that the plaintiff acted unreasonably by seeking to hire a replacement vehicle. In some cases, a defendant might instead seek to establish that the amount of the hire costs incurred was unreasonable for various reasons: the replacement vehicle hired, in light of the range of vehicles that might fairly be 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 charge. But none of those matters of quantum arises on these appeals

37. The usual ease with which a plaintiff may establish heads of damage of physical inconvenience and loss of amenity of use explains why in Dimond v Lovell and in Lagden v O’Connor their Lordships assumed that it would generally be reasonable for a plaintiff to hire an equivalent vehicle, subject to any dispute about the unreasonableness of the quantum of the hire costs. For instance, in Lagden v O’Connor, Lord Hope assumed that a plaintiff would generally be able to recover as damages the costs of hire of an equivalent vehicle, but if “a larger or more powerful car was hired although vehicles equivalent to the damaged car were reasonably available at less cost – the amount expended on the hire must be reduced to the amount that would have been needed to hire the equivalent.

I suspect reliance upon this case in the County Court before a sceptical Deputy District Judge will not get you very far: but if, or when, the issue of need reaches the Court of Appeal again, then it may be part of the argument that Lord Mustill’s speech needs to be revisited, so that there is no real scope in a credit hire claim to argue that a claimant does not “need” a replacement vehicle, once more than de minimis inconvenience is shown.

I am grateful to William Richey and Shaun Ryan of the Australian Bar, who each kindly sent me a copy of the judgment.

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