Blumberg v Frucor Beverages Ltd

• Jurisdiction: New Zealand
• Judge: Jagose J
• Judgment Date: 26 July 2018
• Neutral Citation: [2018] NZHC 1876
• Docket Number: CIV-2016-004-2229 CIV-2016-004-1916
• Court: High Court
• Date: 26 July 2018

Between

Ilan Blumberg

Plaintiff

and

Frucor Beverages Limited

Defendant

Between

Peter Boardman

Plaintiff

and

Harry Wang

Defendant

Between

Rachel Mackey

Plaintiff

and

Hayley Skarratt

Defendant

[2018] NZHC 1876

CIV-2016-004-2229

CIV-2016-004-2200

CIV-2016-004-1916

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Insurance, Tort — claims for the cost of a hire vehicle rented for the period of repair for damage caused by at-fault drivers — company which supplied the vehicle did not pursue not at-fault owners for those charges if they abided by the terms of their hires, and assisted in the recovery of the charges — whether the at-fault driver was liable to the not at-fault driver for the price of the replacement vehicle.

Appearances:

D J Chisholm QC, A Wooding, and M Singh for the plaintiffs

M G Ring QC for all defendants; A Barnett for Mr Blumberg; S Connolly for Mr Boardman; and J McLennan for Ms Mackey

JUDGMENT OF Jagose J

Introduction	[1]
Not at-fault drivers obtain replacement car from R2D for period of repair	[6]
Defendants resist liability for expense of plaintiffs' replacement cars
—pleadings	[11]
—issues	[14]
A: does R2D bring proceedings in the plaintiffs' names?
—subrogation	[15]
—maintenance and champerty	[17]
B: have the plaintiffs suffered loss?
—New Zealand cases	[18]
—United Kingdom cases	[23]
—Australian cases	[28]
—reframing the pleading in terms of mitigation expenses	[33]
C: have the plaintiffs incurred mitigation expenses?	[38]
D: were the plaintiffs' mitigation expenses reasonably incurred?	[42]
—expense of a replacement car	[43]
—reasonable expense of a replacement car	[48]
—expense of a replacement car, reasonably incurred	[55]
—how to assess ‘reasonableness’?	[55]
—price comparisons	[58]
—back to the ‘prudent driver’	[63]
—delivery and collection costs	[65]
—repairer's independent obligation to repair?	[68]
Conclusions	[70]
—defendants liable for plaintiffs' mitigation expenses …	[70]
—… plus interest	[71]
Orders	[77]
Costs	[78]
Schedule: extract from Pattni v First Leicester Buses Ltd

Introduction

1 A driver loses use of her car for the period necessary to repair collision damage negligently caused by another driver, the cost of repair being borne by the at-fault driver. The not at-fault driver replaces her car with another vehicle rented for the period of the repair. Is the at-fault driver also liable to the not at-fault driver for the replacement vehicle's expense?

2 That is the core question before me in each of these three proceedings, brought by not at-fault plaintiffs against at-fault defendants. So stated, the question has an orthodox answer: yes, provided the not at-fault driver acted reasonably in obtaining the replacement car to mitigate her loss of use. “[A] private individual who is inconvenienced by the loss of use of his private vehicle can claim general damages for that loss against the tortfeasor”, 1 and “the plaintiff may claim for expenses incurred in taking reasonable steps to mitigate” that loss. 2

3 But in the wings are the defendants' insurers, and the company from which the plaintiffs rented their replacement cars, Right2Drive (New Zealand) Limited (“ R2D”). R2D – operating similarly to its Australian parent, Right2Drive Pty Ltd – provides not at-fault owners with replacement cars for the period of their damaged car's repair. It does not pursue not at-fault owners for those charges if they abide by the terms of their hires, and assist in the charges' recovery (successful or not). R2D seeks to recover its charges for the replacement cars from the at-fault drivers or their insurers. The insurers do not always pay: since R2D's entry to New Zealand in 2016, insurers have declined to pay some $4.22m of R2D's charges.

4 Counsel – David Chisholm QC for all plaintiffs (but really R2D), and Michael Ring QC for all defendants (but really their insurers) – describe these consolidated proceedings as a ‘test case’. 3 They hope I will decide – in principle, as well as in fact – whether damages recoverable by each of the plaintiffs should equate to R2D's charge to them.

5 More specifically, then, the real question I am to determine here is ‘Is the at-fault driver liable to the not at-fault driver for the price of the replacement vehicle charged by R2D?’.

Not at-fault drivers obtain replacement car from R2D for period of repair

6 Each plaintiff arranged with the respective defendant's insurer to attend a repairer. The repairer referred the plaintiff to R2D for a replacement car. The plaintiff contacted R2D, and provided details of the accident, the drivers, the vehicles, and the insurers. R2D selected a replacement car from its fleet, and organised for it to be available to the plaintiff at the repairer's premises when leaving their own vehicle for repairs, for collection from the same place when the plaintiff recovered the repaired vehicle. It was unclear from the evidence when arrangements were made with R2D. Each plaintiff said in evidence s/he was told R2D would claim the hire costs from the respective defendant's insurer, whose claim number the plaintiff had given R2D. R2D claimed those costs from the insurers; the insurers have not paid.

7 The material background for each plaintiff can be depicted as follows:

	Blumberg	Boardman	Mackey
Own car	2005 Nissan Wingroad	2015 Mercedes Benz C180 Coupe	2011 Suzuki Swift
Date of accident	10/3/2016	18/4/2016	24/2/2016
Defendant's insurer	Vero Insurance	AMI Insurance	AA Insurance
Repairer	Causeway Panelbeaters	Ray Haslar Autohaus	Hauraki Panel and Paint
R2D's replacement car	2015 Mitsubishi ASX	2012 Skoda Superb	2016 Holden Barina
R2D's daily hire rate	$114.62	$138.92	$112.17
R2D's delivery/pickup fee	$50.00	$50.00	$50.00
Rental period	14/4/2016–16/5/2016 (33 days)	16/5/2016–8/6/2016 (23 days)	11/3/2016–17/3/2016 (6 days)
R2D's invoice (excl GST)	$3,832.46	$3,245.16	$723.02
R2D's invoice (incl GST)	$4,407.33	$3,731.93	$831.47

8 When leaving their car for repairs at the repairer's premises, each plaintiff met a R2D representative, and executed largely pre-completed R2D documents, described as Application Form, Rental Agreement, Advice of Authority to Act, and Agreement and Authority to Act. Notably, the Rental Agreement's box headed “Rental Charges (office use only)”, with space to specify ‘Daily Rental’ and ‘Delivery/Pickup’ rates, contained no detail. The Rental Agreement specified “[h]irers are liable for costs incurred during the rental period”, and provided it was “to be read with the Agreement and Authority to Act”.

9 The Advice of Authority to Act asserted to the relevant insurer the plaintiff's explanation their car was damaged “as a result of your client's negligence”, entitlement to reimbursement of “the costs of a replacement vehicle for the period my car is to be repaired”, and expectation the insurer would reimburse “in full for the replacement vehicle costs”. Following in the same one-page document, the Agreement and Authority to Act explains “[i]t deals with the hirer's legal liability to pay for a hire vehicle issued as a result of a road traffic accident”, and provides:

…

R2D agrees to provide the hire vehicle to the hirer for the hire period as shown on R2D's tax invoice at the contract rate set out in the RA [Rental Agreement], on credit for the credit period.

R2D will use its best endeavours (not including the commencement of legal proceedings) during the credit period to have the charges paid by the TP [Third Party]. On receipt by R2D of payment from the TP, the hirer will be released from liability for the charges to the value of the payment received from the TP, provided the hirer has fully complied with the obligations imposed on the hirer under this Agreement. After the expiry of the credit period R2D may demand that the hirer pay, and if so demanded the hirer shall pay forthwith, any charges unrecovered from the TP by R2D at that date.

… The hirer agrees to assist, and render all cooperation required by R2D in respect to the implementation and conduct of the recovery process, which the hirer acknowledges may require that the hirer provide statements and documents, and appear in court as a witness.

…

As at the date of this Agreement, the charges are estimated because the hire period is based on an estimated duration of repair or replacement of the damaged vehicle. The final charges will not be known until the expiry of the hire period. The hirer agrees to be liable for such final charges advised by R2D.

‘The charges’ are defined as “[t]he amounts payable pursuant to this Agreement and the accompanying RA, which specifies the contract rates for provision of the hire vehicle”. ‘The credit period’ is defined as “[t]he period of 90 days from the date of issuance of R2D's tax invoice for the charges”. This credit facility distinguishes R2D from conventional car rental companies, which typically secure payment at the time of the rental.

10 Under cross-examination, each plaintiff denied any comprehension s/he was liable for the charges. None knew the “contract rate”, or the cumulative charges for their rental. Prior to being shown it in cross-examination, none had seen R2D's respective invoice issued against them.

Defendants resist liability for expense of plaintiffs' replacement cars

—pleadings

11 Each plaintiff now seeks to recover the amount of R2D's invoice from each defendant (or, more...