Seung Huyn Lee -v- Leisa Strelnicks [2019] NSWSC 526

After at least a decade of constant litigation in the Local Court of New South Wales, insurers and hire car companies have finally been given the benefit of a decision in relation to loss of use/hire car cases from the Supreme Court of New South Wales. In the last decade, the Local Court of New South Wales has been inundated with cases run by credit hire companies against insurers. In these cases, credit hire companies seek to recover from insurers (or indeed those motor vehicle users without insurance) the cost of hiring a replacement vehicle to a “not at fault party” in a collision. Many issues have arisen as a result of the swarm of litigation in this area. The key areas of contention between credit hire companies and insurers have been the issues of need, rate and duration. Until now, these issues have been determined in the Local Court of New South Wales with no real guidance from a higher court of law in New South Wales. At best, the Local Court was working with decisions of District Courts in other states, or otherwise from decisions from the United Kingdom. These decision have often been contradictory and have offered little assistance to either insurers or credit hire companies in resolving the issues in dispute.

Here to hopefully offer some guidance to lower courts on, at least the issue of need, is the decision of her Honour Wilson of the Supreme Court of New South Wales in the case of Seung Huyn Lee -v- Leisa Strelnicks (“Lee”). In the Lee case, her Honour was asked to consider a decision from Assessor Olischlager (as he then was) sitting in the small claims division of the Local Court. The case, at first instance, was run as a dispute on both quantum and liability. In regards to liability, the defendant was found to be 80% liable for the collision and there was a finding of 20% contributory negligence on the part of the plaintiff. This aspect of the decision was not raised on appeal. After making a finding as to liability, the Assessor was then asked to consider the question of the need of the plaintiff in relation to a vehicle hired by her from a credit hire company called I’m In The Right. In the Defence filed on behalf of the defendant, the issue of need was specifically denied, and it was specifically alleged that the plaintiff had failed to provide any evidence of any need of the plaintiff for a replacement vehicle.

In support of her need for a replacement vehicle, the plaintiff put on a statement which evidenced, inter alia, that she needed the replacement vehicle “to travel to and from work, to take her kids from place to place and for domestic and social purposes, such as visiting friends and family.” This need was specifically challenged by the defendant. The defendant asserted that the statement of the plaintiff as to need lacked any supportive evidence and was a bare assertion at best, from which the Court could not be satisfied that the plaintiff actually had a real need for a replacement vehicle. Ultimately, Assessor Olischlager agreed with the submissions of the defendant and was not satisfied, on the evidence provided by the plaintiff, that there was a real and actual need for the replacement vehicle. In his decision, Assessor Olischlager remarked that on the evidence available to the Court and the defendant, the defendant:

“does not know the basis upon which a plaintiff hires a vehicle. It is necessary for the plaintiff to give some evidence – it is not a high bar to jump over – but some evidence as to the particular needs that she required the replacement vehicle for…here there is really no clear understanding about really why a need for a replacement is, other than her fair assertion.”

On appeal to the Supreme Court, the plaintiff challenged the findings of Assessor Olischlager. The plaintiff asserted that the Assessor had erred in the correct test to be applied when considering the issue of need. The plaintiff contended that the reasonableness or otherwise of the decision to hire a replacement vehicle is to be assessed by reference to the facts and circumstances existing at the time the vehicle was hired, and that the Assessor erred in requiring the plaintiff to establish a sufficient need and requiring her to tender evidence as to degree of use of the replacement vehicle. The plaintiff also submitted that the principles of restitutio in integurm should apply. That is, that the plaintiff had use of a motor vehicle prior to the collision and, inferentially, had a car because she needed to and the same need continued to exist following the collision.

In coming to its decision in the matter, the Court considered a large amount of authority which came from the United Kingdom. In particular, the plaintiff relied heavily on the principle of restitutio in integurm, meaning restoration to the original position. In the reasons for her decision, her Honour commented that the issue of need was clearly an issue on the pleadings, and one to which the plaintiff had been put to strict proof. The Court commented that liability for a collision and the quantum of damages arising from any such collision were distinctly separate issues and one does not automatically follow the other. Her Honour states that the plaintiff’s “need for a replacement car remained relevant to the assessment of quantum and had to be proved.”

Her Honour was satisfied that, in considering the issue of need and its application to the assessment of quantum of damages, Assessor Olischlager did not err. Her Honour commented that whilst Assessor Olischlager found the defendant was liable for the loss of use suffered by the plaintiff, it did not follow that the defendant was liable to pay the sum claimed for the loss of use. Her Honour was of the view that it remained for the plaintiff to prove her need for such a car, and if such need was established then quantum fell to be assessed by reference to the market rate for a leased vehicle and not by reference to the amount actually paid to I’m In The Right. Helpfully, her Honour was of the view that a decision in one’s favour in relation to liability “should not be viewed as an invitation to gratuitous expenditure, knowing it will be borne by someone else. There remains an obligation on a successful litigant to act reasonably in mitigating loss.” Her Honour went on to find that whilst there was no question that loss of use of property was a compensable loss, the monetary value of that loss was able to be questioned and defended and, if put to proof on this point, a plaintiff is obligated to provide evidence to support the loss claimed.

Ultimately, the decision in Lee is a favourable one to insurers in particular, however, should be reviewed and given serious consideration by all plaintiffs who seek to make a claim for loss of use. Plaintiffs seeking this head of damage need to ensure that they can indeed prove a need for the hire of a replacement vehicle, and should be mindful that need will require proof through supporting evidence and not merely by bare assertion by a plaintiff.