On 18 June 2020, the NSW Court of Appeal handed down its decision in the matter of Lee v Strelnicks; Souaid v Nahas; Cassim v Nguyen; Rixon v Arsalan [2020] NSWCA 115. The case dealt with the appeals of four judgments of the Supreme Court of NSW related to the entitlement to hire vehicle costs following motor vehicle collisions. The Court of Appeal held that parties who are entitled to damages for hire vehicle costs are entitled to a vehicle equivalent in model, make, year and specification.


Background

In three of the cases heard on appeal by the Court, the Supreme Court of NSW decided that the plaintiffs were not entitled to luxury replacement vehicles whilst their own damaged luxury vehicles were being repaired, as it was held that an economy vehicle would suffice. In the fourth case, the plaintiff failed to establish a “need” for a replacement vehicle.

The key issues before the Court were:

  1. Was there a “need” for a replacement vehicle?
  2. What constitutes reasonable expenditure on hiring a replacement vehicle?


Judgment

By majority judgment, the Court held that a claimant must establish a ‘”need” for a replacement vehicle. This means that the claimant must show that a replacement vehicle was required to put them in the position they would have been in had the wrongdoing not occurred. An example of this would be that the claimant needed a replacement vehicle as they ordinarily would have used the damaged vehicle to drive to work.

The Court held that a claimant is entitled to a replacement vehicle that is equivalent to or as close to equivalent as possible as the damaged vehicle. The cost should be what is reasonable to hire an equivalent vehicle in the circumstances and based on the market.


Key takeaway

The impact of this decision is that defendants to claims for damages for loss of use of a motor vehicle may be liable for the costs of a replacement vehicle that is equivalent to the damaged vehicle, even where the vehicle is a luxury or prestige vehicle.

In March 2021, the High Court of Australia granted special leave for the decisions of Rixon v Arsalan and Cassim v Nguyen to be appealed. The High Court will determine whether the Court of Appeal was correct in their method of assessing damages for the loss of use a motor vehicle.