• Candan Koyuncu

High Court of Australia determines the Credit Hire Appeals

We were instructed by the appellants in Arsalan v Rixon, Nguyen v Cassim [2021] HCA 40. The decision was handed down on 8 December 2021.

The High Court did not allow the appeals, however, the orders of the Court of Appeal of the Supreme Court of New South Wales in Arsalan were varied to require the plaintiff's damages to be assessed in accordance with the reasons for judgment of the High Court of Australia and with the magistrate's reasons as to the credit hire costs.

In Arsalan, Magistrate Keogh had found that the credit hire rate claimed by the plaintiff included non-compensable benefits and did not represent a market rate. Therefore, the damages awarded will be less than what is claimed and in accordance with Her Honour's findings regarding non-compensable benefits.

The reasons for the decision

In its unanimous decision, the Court found that the heads of damage being compensated are physical inconvenience; and loss of amenity of use. The plaintiff is entitled to take steps to mitigate both aspects of loss by the hire, at a reasonable rate of an equivalent car, for a reasonable period of repair.

Reasonableness of the cost of hire

The reasons set out some of the grounds which the defendant might rely on to seek to establish that the amount of hire costs incurred was unreasonable, they include:

  1. the replacement vehicle hired, was unreasonable in light of the range of vehicles that might fairly be regarded as equivalent to the damaged vehicle;

  2. the period of hire, having regard to the reasonable period of time for repairs;

  3. the extent of costs (non-compensable) benefits included in the hire charge.

The decision does not give guidance on how to determine what is a reasonable equivalent car, however, reference is made to range of vehicles that might fairly be regarded as equivalent to the damaged vehicle, and the decision of the England and Wales Court of Appeal in Watson v Noire is provided as an example of a plaintiff hiring a vehicle considered to be a reasonable equivalent at a price that was not reasonable. Therefore, the range of vehicles provided by ordinary hire car companies such as compact, sedan, SUV, and prestige, should serve as a yard stick for a fairly equivalent range and avoid argument over badge and particular classes of vehicles.

The decison also cites the English authorities that are commonly referred to with approval, which should result in a uniform approach in each jurisdiction to awarding damages in credit hire claims, by following those decisions and awarding damages based on the lowest market rates (because doing otherwise unfairly rewards the credit hire company), and acknowledging the non-compensable benefits and the costs of those benefits involved in credit hire claims.

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