Local Court New South Wales Medium Neutral Citation: Megally v Bojanic [2023] NSWLC 9 Hearing dates: 12 August 2022 and 13, 14, 15 & 28 March 2023 Decision date: 24 August 2023 Jurisdiction: Civil Before: Brender LCM Decision: Verdict in favour of the plaintiff for $7,000 Catchwords: EVIDENCE — Opinion evidence — Exceptions — Expert opinion Cases Cited: Brits Inns Ltd v BDW Trading Ltd [2012] EWHC 2143 Dasreef Pty Ltd V Hawchar [2011] HCA 21 Fung v Stocavaz [2006] NSWSC 1345 Hyder Consulting (Australia) Pty Ltd v Wilh Wilhemsen Agency Pty Ltd [2001] NSWCA 313 Kyluk Pty Ltd v Chief Executive, Office of Environment and Heritage [2013] NSWCCA 114 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 Texts Cited: Local Court of New South Wales, Practice Note Civ 1, Part E Category: Principal judgment Parties: John Megally (Plaintiff) Andja Bojanic (Defendant) Representation: Plaintiff Counsel: K Young Defendant Counsel: W Richey File Number(s): 2021/00175446 JUDGMENT 1. The Plaintiff commenced proceedings in the Small Claims Division for damages arising from a motor vehicle accident caused by the defendant's negligence. Paragraph 6 of the Statement of Claim pleaded that "...as a result of the collision they have suffered loss, damage expense and inconvenience ("loss and damage")". Paragraph 7 appears under the heading "Particulars of loss and damage" and says, "Due to the Collision caused by the Defendant, the Plaintiff suffered loss and damage (a) "Cost of Repairs $19,032.24"". 2. The defendant admitted negligence but denied paragraphs 6 and 7. He further pleaded that the plaintiff had not suffered actual damage in the form of the repairs specified in paragraph 7 and insofar as the claim is for the actual cost of repairs specified in paragraph 7, that claim is a sham. It was asserted that the plaintiff provided to the defendant a tax invoice ('invoice') for the alleged amount of repairs, issued by a business trading under the name Accident Solutions Australia. The defendant has defined this invoice as 'the false repair invoice'. It was alleged by the defendant that the vehicle was not repaired at Accident Solutions Australia on the dates referred to and gave particulars including an assertion that the repairs do not represent the loss or damage that the plaintiff has suffered. Issues 1. These issues were said to be common to many other cases and the matter was transferred to the General Division of the Local Court. The matter was fixed for three days but it took longer than that. The resolution of this dispute lies in identifying the reasonable cost of repair as determined with the assistance of expert evidence. 2. There were Agreed Facts as to the collision, the liability for the collision, that the vehicle was repaired from 20 to 27 April 2021, that the repairs reinstated the vehicle to its pre-accident condition and that Accident Solutions Australia (ASA) created a tax invoice (invoice) shortly afterwards in the sum of $19,032.24. 3. The agreed issues were said to be as follows: 1. Do actual costs play any part in the assessment of damages in a case such as this? 2. Is the ASA invoice evidence of an actual cost to repair the vehicle? 3. Assuming the invoice is not an actual cost, should damages be assessed by deducting the extravagant portion of the invoiced amount? 4. What is the fair and reasonable cost of repairing the damage to the plaintiff's vehicle occasioned in the collision? 1. As part of the exchange of evidence, the plaintiff served an expert report which said that the expert had "reviewed and adjusted Invoice Estimate 1024 presented by ASA to determine the range of fair and reasonable reinstatement costs" and that figure was $16,810.42. 2. The plaintiff's case summary sought to recover the reasonable market cost of repairs which, on a fair reading, is the $16,810.42 figure. 3. The defendant's case summary submitted that if it could be demonstrated that the invoiced amount is not an actual cost then it would not be a relevant starting point for the assessment of damages. In those circumstances the authorities such as Fung v Stocavaz [2006] NSWLR 1345, to the effect that if the actual cost is inside a range of reasonable costs, it is recoverable, but if it is outside the range, it would be cut back only to the extent it was extravagant (upon which question the defendant carries the onus), would be inapplicable. As would the approach adopted pursuant to Hyder Consulting (Australia) Pty Ltd v Wilh Wilhemsen Agency Pty Ltd [2001] NSWCA 313, that where the actual cost is known it will provide sound evidence of the reasonable cost and would ordinarily provide the basis for damages. 4. Accordingly, such a finding would have significance to the determination of the reasonable repair costs because damages would not be worked out backwards from the invoiced amount, but by an approach as to reasonableness entirely setting the invoice to one side. 5. On the first day on which it was intended that this matter proceed (12 August 2022) the significance of the invoice was discussed in the context of case management and whether an AVL order should be made. The solicitor for the plaintiff said as to the invoice: "They say it's false. We say it reflects the work that was carried out on the vehicle and acts as a benchmark … You have to determine what is the appropriate amount to allow. The invoice provides, in our submission, a benchmark, an indicator, a first point from which you can determine what appears to be the cost – the actual cost of repairs. But because it's credit repair we say you have a further job to do which is to determine whether the work that has been done is within a reasonable range or whether it is extravagant and unreasonable. The test of Handley AJ was a question of whether it is unreasonable or extravagant. The onus being on the defendant." (T 8-9). 1. The defendant's counsel said (T15) that "As long as the plaintiff holds onto the invoice as saying that is the starting point. It's a benchmark. It becomes a serious issue." 2. Thus, while the amount in the invoice was not pursued, whether the invoice represented 'actual cost' was a live issue. It caused the hearing to become protracted. That will no doubt assume significance on costs at a later point. 3. The evidence consisted of documentary evidence and the statements of witnesses who were cross examined. 4. I then received extensive written submissions from the parties. 5. It is convenient to start with the legal positions of the parties. Plaintiff's Submissions 1. The plaintiff submitted as follows. At [16]: "The loss to be awarded to a Plaintiff who has his chattel damaged is the diminution in value of the chattel. In assessing the appropriate quantum, the cost of repair is often the best proxy. Even so, such cost of repair must be reasonable, because unreasonable repair costs would not properly represent the diminution in value of the chattel (i.e., the plaintiff's loss)." 1. It was submitted at [50] that the sole issue is "what is the reasonable costs of repairs to restore the Plaintiff's van to its pre-accident condition." (emphasis added). 2. The plaintiff described the question "what are the actual costs of repairs and is the amount claimed a sham" as a misconceived issue. As to that he submitted, "The amount claimed is not a sham but it's irrelevant. At para [6b] of the Defence, the Defendant states: "In so far as the Plaintiff 's claim is for the actual costs of "Repairs" in the amount of $19,032.34, that claim is a sham". The Plaintiff has confirmed his claim is NOT and has never been for the actual costs of repairs but rather for the reasonable costs of repair which is less than the unpaid actual costs of repairs. The Plaintiff contends that Issue 4 is not a real issue in the proceedings and does not need to be determined by the Court as it is irrelevant not only because the Plaintiff is not bringing a claim for the actual costs of the repairs but on the basis of the legal authorities detailed below." 1. As far as I can discern, the reference to the authorities is a reference to the cases discussed at [25] to [45] of the plaintiff's written submissions: Fung v Stocavaz [2006] NSWLR 1345, Hyder Consulting (Australia) Pty Ltd v Wilh Wilhemsen Agency Pty Ltd [2001] NSWCA 313 and Brits Inns Ltd v BDW [2012] EWHC 2143. Those cases were all distinguished by the plaintiff on the basis that they involved actual costs of repairs that had been paid. The point was made that here the Plaintiff was suing, not for the (unpaid) costs referred to in the invoice, but for the reasonable costs as assessed by the expert. 2. The defendant submitted that the question of payment was beside the point. It submitted as follows: "…The ASA Invoice does not represent an actual cost. The Plaintiff's closing submissions now come close to conceding this point, albeit for the wrong reasons. The Plaintiff now seems to argue that the invoice cannot be regarded as evidence the actual cost of repairs – but only because it has not yet been paid. It is now described as "unpaid actual costs of repairs" (PS [51]). The Plaintiff glibly states that "one can readily understand" why payment of repair costs turns them into a reliable indicator of reasonable cost (PS [30]). It is not easy to see why, least of all why it should matter who pays (PS [30], [44]). In fact, it is clear from Stocovaz that it is the incurring of repair costs in an open market that gives the underlying transaction its evidential value. [1] Whether those costs have been paid by the time of trial or are due to the paid the following week is of marginal significance. The tension in the Plaintiff's argument is to assume that it is only where repair costs have been already paid that the case can be characterised as one where "the actual costs of repairs are being sought." If payment has not occurred, the plaintiff says the case is one for "reasonable cost of repairs." (PS [27]) In truth, there is no difference. The case is always and only about the objectively reasonable cost of repairs. That being so, what evidential purpose does the ASA Invoice serve in deciding that issue if the Plaintiff is not "seeking" the costings described in that document? The Court posed that very question when the case began: "HIS HONOUR: "You don't want to rely on the [repair invoice] or any of your evidence then? Why don't we just put it all in the bin and have a case about whether this is worth [$8,000] or [$16,000] or something in between."" [2] 1. The answer given on behalf of the plaintiff was that the ASA Invoice was integral to the prima facie assessment of reasonable cost. [3] It was an indispensable "starting point". [4] While it had not yet been paid, the invoice was said to "reflect the work that was carried out on the vehicle and acts as a benchmark". [5] In other words, the standard by which the damages assessment is to be measured against. The purpose of that assessment was to arrive at the point of intersection between reasonable and unreasonable repair costs, by potentially "reducing" the benchmark if required. [6] Put simply, the plaintiff cannot have it both ways. He cannot urge that evidence about the supposed actual repairs to his car be taken as an indicator of reasonable cost - but simultaneously suggest that the evidence not be "scrutinised and investigated" because an invoice has not been paid (c.f. PS [44]). Consideration 1. There was a deal of evidence about the arrangements pursuant to which somebody repaired the vehicle, where and when. It extended to questions about whether there were available records about the labour and parts recorded in the invoice. This was all potentially relevant to establishing whether the invoice should be treated as a starting point or benchmark for the experts to opine as to the reasonable cost of repair. 2. In short, it appears that the plaintiff approached Mr Leslight of a company called Regatta to repair his vehicle at Five Dock. They said they did not wish to take the work in case it caused problems with NRMA, so they referred the matter to an organisation called CARS Claims and Accident management ('CARS'), which is an accident management company. The plaintiff ultimately decided to deal with CARS directly and not make an insurance claim on his own insurer. 3. CARS is said to have referred the repair to ASA. It is a company which had a repair licence, but no staff or premises. CARS had previously arranged with Regatta to use Regatta's facilities without payment to repair vehicles. ASA had an arrangement to have Regatta order parts on the basis that it would be paid when ASA was paid. ASA also apparently had an arrangement with another company to use premises at St Peters for repairs. ASA played some sort of co-ordination, administrative or desktop role in the repairing of vehicles by a person or entity who was apparently a contractor of somebody's, possibly ASA. It had no staff or premises of its own. Its director knew few of the details. Her brother, who set up the company and used to be a director, had experience in the industry, was a lawyer or former lawyer and knew the principal of CARS. 4. Mr Leslight appears to have been wrong in his understanding that Regatta could not do the work due to a conflict with NRMA. If anything, it may be that referring the customer to CARS was a breach of the term of his agreement with IAG not to promote third party recovery (Exh 40). Nothing turns on that. His position was that Regatta did not do the work, although it may have been done at its premises, using parts bought on its credit accounts. I accept that evidence. 5. Evidence was led about the details of how matters were allocated to, or by, CARS or ASA, and ASA's business model. Attention was directed to the failure to produce records of these arrangements and the precise circumstances of the repairs allegedly done. Ultimately, the evidence tended to confirm, and certainly did not undermine in any way, the conclusion that I have reached about what is apparent from the expert evidence to which I refer below, namely that the invoice created by ASA is not a reliable record of repairs done or the reasonable cost of necessary repairs. I am not in a position to know who actually repaired the van, or who that person worked for. There is no reliable evidence tendered as to what work was done or the parts supplied. 6. The plaintiff's position in written submissions was that whether the work in the invoice was done or not, and the values ascribed to the items in it, is irrelevant - at [45]: "It is submitted that in the Plaintiff's case, the actual costs of repairs which have not been paid for and not sought is irrelevant and does not need to be determined by this Court." 1. However, that is at odds with the submissions made on 22 August 2022 - that the invoice operates as a benchmark or starting point. And it is at odds with the approach taken by the plaintiff's expert, who used the invoice as a starting point. 2. The expert evidence leads to the conclusion that the invoice was in no real sense a reliable record of actual repairs. 3. One example is the right back door of the vehicle. To determine what repairs were undertaken, the defendant's expert Mr. Black took "paint film readings" across the body of the vehicle using a positector. [7] That device can measure the thickness of the paint layers on the panel of a motor vehicle. Mr Black took a total of 157 positector readings across the entire van - with multiple readings on each panel. [8] The results of those readings confirmed Mr. Black's observation that the right backdoor was not repaired. Accordingly, he regarded the costs associated with the unperformed work on the invoice as unreasonable ($1,710.76). [9] I accept that evidence. It was well reasoned and supported by contemporaneous observations and measurements. 4. There was an Agreed Fact that the van had been restored to its pre-accident state. Thus, the plaintiff points out that the reinstatement occurred without that work ever having been done. 5. Mr. Black also concluded that the invoice contained charges to repair parts the van did not have. Namely, a "Heat Shield" and a "Rear Bar Upper Stiffener." [10] The plaintiff's expert Mr Hasan agreed that he could not see a heat shield in the photos he was supplied. [11] In cross-examination, he sought to identify a photograph of the bar stiffener. [12] 6. While it is difficult to resolve that factual dispute, given that only Mr Black inspected the van, and was the only expert who considered that whether the work was actually done was a relevant matter. His evidence on that point is to be preferred. 7. Mr Hassan clarified in the conclave report that his was a desktop report. In his opinion, whether work was carried out or not was irrelevant (CB 340). Throughout his report he referred to the Repairer, implicitly assuming the invoice was created by an actual repairer and accurately recorded work that was actually done by that person. That was an unsafe assumption. 8. There was evidence lead by various people about the process by which the Plaintiff came to have the car repaired, and which person or entity was involved. The upshot of the evidence lead about the process of the arranging of the repairs to the vehicle is that it was left unclear which natural person did the repair, and who he was directly employed by or contracted to. It is also not clear, except by expert opinion, what work was actually done. The dates that the work was done is probably accurately identified in the invoice, as probably is the location of the work. To the extent the plaintiff sought to establish that the invoice represented a reliable benchmark or starting point for actual repairs (as opened by Mr Adelstein), it failed in that endeavour. The invoice is an unreliable document. I do not need to decide if it is accurately to be called a 'sham'. That would depend on what it was said to represent. It does not represent the actual cost of repair within the meaning of the authorities. No-one explained how it came to be that repairs were done, but an 'invoice' was generated by ASA that identified the dates repairs were said to have been done but did not record accurately the work that was done on the vehicle. 9. The invoice was an inappropriate starting point. That is because it does not reliably reflect accurately the work in fact done, and it does not represent any expert opinion or other admissible evidence as to the reasonable cost of anything referred to in it. It is a document created from information apparently supplied by an unidentified person or persons, not shown to be the person who did any work, a person who was qualified to do the work or a person with any expertise to offer any opinion. It is not shown to be a business record. It appears to have been prepared as a claim, and hence in contemplation of possible litigation. It says in it that is an 'estimate although its heading is 'Invoice'. It records apparent dates of repair. It was deployed to seek the recovery of money from an at fault driver. It was then abandoned as the amount claimed and said to be irrelevant except as a starting point. I am not satisfied it is an accurate record of anything. It is a claim document. Plaintiff's Expert 1. The plaintiff's expert used the document as a starting point or benchmark. That would only have been an appropriate method, on the authorities, if it represented an actual cost of repair (paid or otherwise), in which case it would have been an appropriate place to start, subject to reduction to the extent it was extravagant or unreasonable. As Patten AJ observed at first instance in Stocavaz, once evidence of actual cost is adduced, the practical issue before the Court normally converges on an analysis of whether, and by how much, the invoice "should be subject to deduction." [13] 2. As it is not in any sense an actual cost of repair, (i.e., a record of an actual repair) it becomes unsuitable for use as a starting point from which to deduct anything. 3. The plaintiff's expert was asked 21 questions. The material one seems to be: "Please comment as to whether the plaintiff's cost of repairs were (a) extravagant excessive and/or unreasonable, (b) within market range of costs, and/or (c) fair and reasonable." 1. In answer to this question, the expert opinion offered consisted of the following sentence: "After viewing all images and analysing received documents my final calculation of the reinstatement costs to the plaintiff's vehicle are not extravagant excessive and/or unreasonable, and the adjusted quantum is well within industry market range." 1. The relevant adjustment is contained in an annexure which adjusts the invoice on a line-by-line item basis. No line-by-line reasoning for each decision is provided, although some opinions were provided elsewhere in the report and in court. 2. That expert opinion, reached by adjusting items from the (irrelevant) invoice, cannot opine as to any appropriate question, and, if admissible, is of little or no weight (Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305, Dasreef Pty Ltd V Hawchar [2011] HCA 21, Kyluk Pty Ltd v Chief Executive, Office of Environment and Heritage [2013] NSWCCA 114). 3. The law, as I understand it, is clear that the loss to be awarded to a plaintiff who has his chattel damaged is the diminution in value of the chattel. In assessing the appropriate quantum, the cost of repair, i.e., the actual cost of repairs done, if known, is often the best proxy. 4. Thus, ordinarily, the damages are to be assessed by the Court, having regard to the evidence of the reasonable costs of actual repairs. The phrase "cost of repair", correctly understood, is a reference to the reasonable commercial cost of repairing and/or reinstating the damaged good. Because it is at least potentially a proxy, actual costs operate as a benchmark or starting point. Experts are often used to provide opinions based on that repair cost. 5. Where that occurs, most cases should proceed with a single expert. That is the default position in the Practice Note Civ 1, Part E. Some cases may have competing experts. The lawyers who brief experts ought to do so by asking them to perform the relevant task – namely asking them their opinion, in an appropriate case, as to the reasonable cost of repair. If they ask them to adopt a document, such as an invoice, as a benchmark or starting point on the basis it represents actual repairs, they should be prepared to prove that it is. It has the capacity to mislead, and/ or generate wasted costs, if a document is deployed, particularly where repairs have been done, which is created as a claim and is then used as a benchmark or starting point on the basis it apparently records actual repairs, when it does not. Defendant's Expert 1. The defendant's expert Mr Black was an impressive witness. He approached the case by assessing what work was reasonably necessary to restore the van to its pre-accident condition. He used the invoice as an agenda or list of possible charges but considered each on its merits. His approach was to disallow items in the invoice where that work was not necessary to restore the car to its pre accident state. The process included disallowing items not carried out or not required to be carried out. He inspected the vehicle and did not rely only on a desktop assessment. His conclusion was well reasoned, step by step at paragraphs [48] to [124] and was that the reasonable costs were in the range of $5000 to $8537.96. His opinion was that the invoice recorded overservicing and inflated costs outside the industry range. He defended and explained those opinions in the witness box. 2. Mr Black increased the top figure in a joint report to $8669.96. 3. While it is not a question of simply choosing between experts, in this case, I am satisfied that only one expert, Mr Black, was able to give meaningful and relevant expert opinions about the questions in dispute. His opinion was, as I understand it, that the reasonable cost of repairs was in the range of $5000 to $8669.96 including GST. I accept that opinion. There is no reason to award the top of the range because it is not a question of reducing actual costs only by the amount of any extravagance or unreasonableness. The Court's Determination of Reasonable Costs 1. I will determine the reasonable cost of repair within the range. I do that because I have reservations about the top of the range. For example, there was a paucity of evidence linking the parts identified in the invoice to the parts actually ordered. The evidence was that under $3,000 was spent on parts (Ex 19), whereas Mr Black allowed, at his top figure, $4,545 excluding GST. That is significant given the Agreed Fact that the work actually done, whatever it was, restored the car to its pre-accident condition. If parts were not supplied, it makes it difficult to find, on the balance of probabilities, that their cost would be part of the reasonable cost of repairs. Mr Black also did not positively opine about the higher labour rate he included, merely saying that he "had no problem" with it. The defendant points out that in the open market, it may well have been possible that a lower figure could have been obtained. 2. Doing the best that I can, and recognising that the defendant is the wrongdoer and is not entitled to have all doubtful matters resolved in his favour, I will take about $1500 off the top figure in Mr Black's range, and fix a round amount of $7000 (including GST) as the reasonable cost of repair, and hence the measure of damages for the diminution in value caused by the accident. 3. I will hear the parties on costs. ********** Endnotes 1. Stocovaz v Fung [2007] NSWCA 199 at [12] per Basten JA; [38] per Handley JA. See too: Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd (2001) NSWCA 313 at [94] – [99] (the 'actual cost' was that which was incurred). 2. T (12 Aug 22) 13.5-30. 3. T (12 Aug 22) 13.35. 4. T (12 Aug 22) 12.5-20 (c.f. 15.30). 5. T (12 Aug 22) 8.30 (Emphasis added). 6. T (13 Mar 23) 8.45-9.25. T (12 Aug 22) 12.35-45. 7. CB215 (Black) [17]. 8. CB293 – 312 (Black). 9. CB236 (Black) [[121], See too: CB221 (Black) [56](a). 10. CB 213 (Black) [67]; [116]. 11. T (28 Mar 23) 55.5-10. 12. T (28 Mar 23) 55.25-45. 13. Fung v Stocovaz [2006] NSWSC 1345 at [39]. Amendments 25 June 2024 - Amended file number and parties field. 08 July 2024 - Amended formatting. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 August 2024