High Court resolves important question for insurers

10 December 2021

In the matters of Arsalan v Rixon and Nguyen v Cassim, the High Court has dismissed an appeal from the New South Wales Court of Appeal and held that when a plaintiff’s luxury vehicle is damaged they can recover as damages the reasonable costs incurred in hiring a replacement vehicle of broadly equivalent specifications while their damaged vehicle is being repaired.

This type of matter comes before the lower courts of Australia thousands of times a year. This High Court decision resolves an important question of principle that had previously been the subject of conflicting authority.

The High Court has held that where a plaintiff's vehicle is negligently damaged and unavailable during a period of repair, loss will be inferred from the plaintiff's ownership and past use of the vehicle. That loss consists of (i) physical inconvenience from the inability to use the vehicle and (ii) loss of amenity or enjoyment of the use of the vehicle. Consistent with the compensatory principle, loss of amenity of use of a chattel should be recognised as a recoverable head of damage for negligent damage to a chattel. A plaintiff's loss of amenity of use includes the loss of convenience or pleasure derived from the use of their vehicle. Once a plaintiff mitigates their loss by hiring a replacement vehicle of broadly equivalent value to the damaged vehicle, the onus lies upon a defendant to prove that the costs incurred in mitigation were unreasonable.

Justin Gleeson SC and Ryan May of Banco Chambers appeared for the Appellants with Shereef Habib SC and Kyle Oliver.

Link to judgment