Carr Smashed: Motor Vehicle Cost of Repairs v Replacement Value by Michael Adie & Ben Karalus | July 2007 Area of Expertise | General Insurance
In the recent case of Neville Kingsbury-Carr v Glenn William Kiliman1 the ACT Supreme Court re-examined the issues of whether a vehicle owner was entitled to have his vehicle repaired or whether his damages should be confined to the lower value of a replacement vehicle.
The Facts The self represented plaintiff, Mr Kingsbury-Carr, the owner of a vehicle described as a “1985 Ford Telstar of ‘normal’ condition and of normal type”, claimed against the defendant, Kiliman, in the Small Claims Division of ACT Magistrates Court for damages arising out of a motor vehicle collision caused by the defendant. Liability for the collision was admitted by the defendant. The plaintiff claimed for the $8,045.15 cost of repairs to his damaged vehicle. He also claimed for economic loss arising out of the time spent travelling to and from the various repairers plus some similar minor expenses. The defendant offered to agree to judgment for the plaintiff in the sum of $2,400.00 – representing what it argued was the replacement value of a similar vehicle. That offer was refused and the plaintiff sought the larger sum. At first instance the plaintiff was unsuccessful in obtaining a judgment for the higher cost of repairs and appealed to the ACT Supreme Court.
On Appeal AS TO COST OF REPAIRS TO THE VEHICLE The plaintiff submitted as the central tenant of his appeal that: “Where damages are caused to a chattel by wrongful conduct the …legal principles establish that the owner is entitled to recover the reasonable cost of repairs.”2 The plaintiff (now the appellant) relied centrally on the case of Beaumont v Cahir3, an ACT case concerning damages for an injured horse. In that case it was considered fair and reasonable that the ongoing care costs of the horse (which far exceeded the replacement cost of the horse) were recoverable by the wronged plaintiff. The Court distinguished that decision from the case at hand deciding that it was not “reasonable” that the vehicle be repaired. Unfortunately for the plaintiff, the vehicle for which he sought recovery for repairs was a standard Ford Telstar – not a vehicle of special significance or rarity to place it outside the “normal” rules for assessment of damages arising out of a motor vehicle collision.
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The Court held the true test for assessment of “cost of repairs v replacement value” remains the question of: “…whether it would be reasonable to incur the expenditure in repairing the motor car or whether the reasonable option is to replace the vehicle.”4 The Court also clarified that “market value” of a motor vehicle is not the value that the owner would have received for it if it was sold in an available market. The market value is the cost of obtaining a replacement vehicle having “…the same or substantially the same characteristics of the chattel damaged if there exists a market in which such a substitute could be obtained.”5 If there were no comparable vehicles on offer to the public at the time a plaintiff’s damages were to be assessed, the Court reasoned that it may be that the measure of damages could be the cost of repairs to re-instate the vehicle to its pre-accident state. However, the onus remained upon the plaintiff to prove that such was the case so as to take this matter outside the general principle in the law of damages that damages amount to the cost of repairs, except where such repair is unreasonable or the item is damaged beyond repair. In these instances the measure of damages is the value of an equivalent replacement item.6 In the case at hand the plaintiff failed to consider the ‘qualifier’ to the general principle when calculating his damages. The plaintiff had to show that he had taken the reasonable course in assessing his damages or provide compelling evidence for the need to abandon the normal rules. Justice Gray, refusing the appeal, stated that “a replacement vehicle would place the applicant in the same position as he would have been had he not suffered a wrong.”
AS TO THE CLAIM FOR ECONOMIC LOSS The court held that once the proper measure of damages was held to be the replacement value of the vehicle, no damages could flow which related to the repair to the vehicle or the process of establishing what those repairs would be. Accordingly the plaintiff failed on this ground. Nonetheless, the court did not rule out that given proper substantiating evidence such as receipts etc a plaintiff could claim the costs of “running around” in relation to the repair of the vehicle – if the cost of repairs of the vehicle was the proper measure of damages in the circumstances.
Implications Four main points can be drawn from this case:
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1.
Only in cases of an unusual, rare or irreplaceable vehicle will a court consider that a cost of repairs greater than the cost of an equivalent replacement vehicle may be a proper measure for damages to property arising out of a motor vehicle collision.
2.
The onus is on the plaintiff to show that the costs of repairs is the proper measure of damages and this may be done by bringing evidence of a larger market value or by bringing evidence as to the rarity or unavailability of an equivalent replacement vehicle.
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Whilst in the majority of cases the parties and the court will simply concede that the market value is greater than the cost of repairs (alleviating the need for the plaintiff to bring that evidence), it is open for a defendant to put the plaintiff to proof in this regard. 3.
The market value of a vehicle is the cost of obtaining a replacement vehicle having the same or substantially the same characteristics of the chattel damaged if there exists a market in which such a substitute could be obtained and not the pre-accident value of the actual vehicle damaged.
4.
A plaintiff may, with sufďŹ cient substantiating evidence, bring a claim for economic loss arising out of a collision as it relates to the costs incurred in obtaining the quotes and effecting the repairs to a vehicle above and beyond the actual cost of repairs themselves, as long as the cost of repairs is the proper measure of damages.
Endnotes 1
[2007] ACTSC 36 (8 June 2007) Ibid at [10] 3 [2004] ACTSC 97 (unreported) 4 Op cit 1 at [12] 5 Beaumont v Cahir [2004] ACTSC 97 at [32] 6 Murphy v Brown [1985] 1 NSWLR 131 at [132] 2
For more information, please contact: Michael Adie Senior Associate T: 02 8257 5768 michael.adie@turkslegal.com.au
Ben Karalus Lawyer T: 02 8257 5772 benjamin.karalus@turkslegal.com.au
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