Everyone prefers a luxury sedan to a two-door hatchback, but following a recent Supreme Court decision, a real question arose as to whether a plaintiff is entitled to a luxury vehicle, or something sufficient just to get them from A to B.

The credit hire car industry has experienced significant growth in recent years with claims for luxury or prestige hire vehicles following collisions becoming increasingly commonplace in the Local Court of New South Wales. Yet despite this, there is little guidance from the superior courts when it comes to assessing the damages payable in relation to loss of use and credit hire claims.

The “Aside”

There was a sign that this may be about to change at the end of 2015, when Justice Harrison handed down judgment in Droga v Cannon [2015] NSWSC 1910 (Droga). While Droga primarily considered an appeal on a procedural point flowing from a Local Court hearing, his Honour was sceptical of the plaintiff’s need to hire a luxury vehicle while her own BMW X5 SUV was being repaired. His Honour noted that the plaintiff only used her vehicle for domestic and personal purposes and stated as an “aside”:

A far less sophisticated vehicle could have adequately coped with the activities identified by Ms Droga at what may well have been a considerably reduced tariff. The issue would have been a question of what was reasonable to meet Ms Droga’s needs, not what was necessary to compensate her for her choice.

Following Justice Harrison’s “aside”, there was a real question as to the view the Local Court of New South Wales would take on credit hire car claims moving forward. In particular, whether the Local Court of New South Wales would accept that a plaintiff only needs a vehicle to get them from A to B if their stated needs are merely for transport and domestic tasks.

The Local Court weighs in

Droga was first cited by Magistrate Grogin in Metleg v Sheikh [2016] NSWLC 6; however, his Honour noted the above passage and as the plaintiff failed to prove their case it was not considered in detail.

The Small Claims Division of the Local Court has engaged in the first real consideration of Droga in Lowe v Pearce[2016] NSWLC 5. Assessor Olischlager, who has written a wealth of judgments on hire car matters, considered Drogaat length.

Assessor Olischlager observed that the “aside” in Droga was not based on any particular authority. Not only that,Droga seems to sit at odds with the established principles of compensation as a plaintiff is generally entitled to be put in the same position as they were in before the collision.

The Assessor drew on English authority and concisely summarised the position that Droga would result in:

‘the additional test of need would allow a defendant to argue that the plaintiff did not need a similar chair as a temporary replacement. If the “need” is only to sit upon something then an upturned milk crate could satisfy the identified “need”.’

It appears that the Court, for now, won’t be asking a plaintiff to run their errands in a hatchback.

Impact on the Industry

In essence Lowe has dismissed the test contemplated by Droga, but the story does not end there. Lowe does acknowledge that a plaintiff’s right to recover damages is qualified by the fact that the Court will only award damages that are reasonable.

For now Droga and Lowe will stand as a cautionary statement, ready to temper any credit hire claims that go beyond what is “reasonable”.