New South Wales Supreme Court CITATION : AAMI Limited v Eastwood Towing & Auto Salvage Pty Limited and Rydalmere Motor Industries Pty Limited [2001] NSWSC 70 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 12392/00 HEARING DATE(S) : Monday 12 February 2001 JUDGMENT DATE : 23 February 2001 PARTIES : AAMI Limited v Eastwood Towing & Auto Salvage Pty Limited and Rydalmere Motor Industries Pty Limited JUDGMENT OF : Michael Grove J at 1 I. Raine (Plaintiff) COUNSEL : M. Lawson (First Defendant/Cross claimant) No appearance (Second Defendant) SOLICITORS : Potts Latimer (Plaintiff) Gadens Lawyers (First Defendant) CATCHWORDS : Motor Vehicle - Insurer becomes owner of stolen car consequent upon payment under policy - Later recovery by police - Towing and storage charges - Insurer/owner erroneously rejects delivery but later seeks it - Diminution in value claimed while in possession of salvager - Lien LEGISLATION CITED : Local Court (Civil Claims) Act 1970 DECISION : Judgment for defendants on plaintiff's summons; Judgment for cross claimant on cross claim. THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MICHAEL GROVE J Friday 23 February 2001 12392/00 - AAMI LTD v EASTWOOD TOWING & AUTO SALVAGE PTY LIMITED & RYDALMERE MOTOR INDUSTRIES PTY LIMITED JUDGMENT 1 HIS HONOUR : This matter came before me in the Duty Judge's application list on Monday 12 February instant. I was informed by counsel that in the light of the relatively small amount of money involved it was their mutual wish to dispose of the hearing within the time limit for short applications, rather than having the matter referred to a holding list for allocation of a fixture with consequent likely escalation in costs. The second defendant has not appeared or taken part in the hearing. There is evidence that at relevant times the second defendant shared a vehicle storage yard with the first defendant. I was told that it was agreed that all affidavits could be read without objection or cross examination of the deponents even though the affidavits contained hearsay material. In addition, some short evidence was adduced from Mr Neiberding on behalf of the defendant (as I shall refer to the first defendant which appeared to contest the plaintiff's claim and pursued a cross claim ). Further, I acceded to the request that written submissions be received in lieu of oral argument. 2 I find the following facts and circumstances: (1) On or about 30 May 1999 a Toyota Celica bearing registration ABQ 68Q (the car) was stolen at West Ryde from the possession of Sarah Engelander in whose custody it was with the permission of the owner (a company associated with her father, a medical practitioner). (2) The vehicle was insured with the plaintiff (AAMI). (3) On 21 June 1999 AAMI paid the owner the value of the vehicle assessed, I presume, in accordance with policy conditions and a small additional amount for a baby capsule which was in the vehicle when it was stolen. (4) AAMI thereby became the owner of the car. (5) On 3 July 1999 a person in Auburn saw the car driven onto a kerb and mount the verge. Two young males were seen to egress from it and depart in another. The witness reported what he had seen to police. (6) On inspection by police it was seen that there was some damage to the car which included removal of a stereo system. (7) On 3 July, in accordance with routine arrangements, a police officer requested the defendant to salvage the car. The defendant was selected pursuant to a roster of those who were available to perform such work. The defendant was informed that the police would contact the owner and instruct the owner to contact the defendant. (8) On 5 July the defendant was informed by a telephone caller that the insurer (AAMI) had paid out on a policy and was now the owner of the car. (9) On that day the defendant took the car to AAMI's depot at Mascot and thereafter at AAMI's direction later to its Alexandria premises. At both places delivery was rejected and representatives of AAMI disclaimed ownership of the car. (10) The defendant took the car to 1 Park Road, Rydalmere. A police report that it was found locked and abandoned outside 3 Park Road, probably arose from a misinterpretation of the appearance of the vehicle at that location. (11) Thereafter in other contacts between AAMI and the defendant, AAMI continued to disclaim ownership of the car. (12) In the winter of 1999, therefore after 5 July and before the end of August, the car was driven by a man called Erone Fittipelli over a period of up to about a week. Mr Fittipelli was given possession of the car as a "courtesy vehicle" by Joseph Rizk who was a director of the second defendant, that is, the sharer of the car yard. There may have been two Toyota Celica cars in the yard at the time and it may have been intended that it was not this particular car to be used. Nothing turns on this. By coincidence, Mr Fittipelli and Mrs Engelander attended the same church, she recognized the car and she approached him about his possession of it. She was also told by Mr Rizk when she went to collect some items from the salvaged car that it was "on a truck". Nothing turns on this either. It was at about this time that the defendant was unsuccessfully trying to return it to AAMI at its depots. It may well have been "on a truck". (13) The defendant was unaware of any loan arrangement and believed that the car was in the holding yard. Save the period of up to one week when Mr Fittipelli had the car, it is probable that it was in the yard. (14) At some stage between July 1999 and April 2000 the defendant detached the registration plates and placed them in a drawer. The purpose was to return them eventually to the RTA broadly in coordination with taking steps to recover salvage and storage fees. (15) The currency of the registration of the car expired in October 1999. (16) At 6.23 am on 2 November 1999 a vehicle bearing the ABQ 68Q plates was photographed by a speed detection camera on the Pacific Highway southbound between Gordon and Killara. It was said to be travelling at 69 kilometres an hour in a 60 kilometre per hour zone. I interpolate that this event was relied upon by AAMI to support its submission that I should reject the evidence of Mr Neiberding that the vehicle was in the locked yard. The only direct evidence about this that I have is a copy of the penalty notice. It does not specify the make of vehicle bearing the plates. I do not have any print photograph or detail of it. Although it seemed to be assumed that the Toyota bore the plates, I do not know whether the photographed vehicle was the Toyota Celica or not. Insofar as AAMI seeks to rely upon the incident I am not satisfied that the onus of proof that it was the car has been discharged. I am conscious that if someone attached the plates to a "foreign" vehicle an offence was being committed but there is no evidence enabling any finding as to who might have done so. The evidence goes no further than showing that Mr Neiberding put the plates in a drawer. I draw no inference beyond that. (17) On 14 April 2000 AAMI became aware of the traffic infringement notice pursuant to the offence of 2 November 1999. I infer that by then it had dawned upon AAMI that it was the owner of the car. (18) On 15 April 2000 the car was apparently again relisted by police as stolen. I do not know how this came about but I am satisfied that it was not instigated by the defendant which never disputed its possession of the car but did claim a lien to assure payment of towing and storage fees. (19) On 18 April 2000 there was a conversation between Mr Cooper (of AAMI) and Mr Neiberding (a director of the defendant). Mr Cooper demanded return of the car and Mr Neiberding demanded towing and storage fees. I am satisfied that Mr Cooper believed (wrongly) that the car was being used rather than stored. The source of his belief was the traffic infringement notice. So far as I can gauge the information from Mrs Engelander about encountering the car being used by Mr Fittipelli was acquired at a later time. It was certainly not mentioned in this and subsequent acrimonious exchanges between Mr Cooper and Mr Neiberding. Mr Cooper threatened to call the police. Mr Neiberding said that he had legal advice about his rights to "recover our losses" by which I take him to have been referring to his fees and charges. (20) On 11 July 2000 the defendant sent AAMI an account (dated 5 July 1999) for $5,515 made up of first tow $61, excess kilometres, (presumably attempts to deliver to AAMI at Mascot and Alexandria) and storage charged for twenty four days at $10 per day and 257 days at $20 per day. Given the number of days charged I conclude that the date 1999 on the document was an error. (21) On 8 September 2000 AAMI issued a summons against Mr Neiberding and the second defendant claiming a declaration that it owned the car (this had never been disputed), delivery of the car and damages for diminution in value by reason of its alleged detention and use. (22) An affidavit in support of the summons sworn by Mr Cooper maintained the assertion that the car was being used by the defendant. The sending of the account in July was acknowledged and although it was said that AAMI was prepared to pay a reasonable amount for storage, initial towing and towing to one of its salvage yards, the affidavit is silent about any offer to pay the account or any part of it, or in what respects it was claimed to be disputed. Letters from AAMI's solicitors about that time also acknowledged that some payment should be made to the defendant. (23) AAMI chose to litigate. I note that the court file shows an ex parte application for restraint of the defendants from disposing or dealing with the vehicle. This relief was granted. (24) On 11 September 2000 Mr Neiberding (sued personally as the first defendant) appeared and gave undertakings to the Court coordinate with the injunction. The matter was adjourned to 9 October. On 9 October it was by consent further stood over to 20 November. (25) On 20 November a motion was heard to substitute the first defendant corporation for Mr Neiberding and an order was made to that effect. On the following day (21 November) orders were made that AAMI pay the defendant $1,000 for salvage, towing and initial storage; $9,110 into Court to abide the outcome of the dispute between the parties and that the defendant deliver the vehicle to AAMI and have leave to file a cross summons. The matter was again adjourned to 4 December 2000. (26) The order for return of the car was complied with on 23 November 2000. (27) On 4 December 2000 an order setting a timetable of affidavits was made and hearing fixed for 12 February 2001. (28) On 12 February 2001 the matter came on for hearing as I have described at the commencement of this judgment. 3 Despite the unequivocal acknowledgments in the affidavit by Mr Cooper that AAMI should pay reasonable costs of towing and storage and the solicitors' letters, counsel has raised an argument concerning the legal nature of the relationship between the parties. I comment that the submissions scarcely coincide with the proclamation of the desire of seeking just, quick and cheap disposal of proceedings about a relatively small amount of money. The submission provoked a response from counsel for the defendant canvassing principles relating to agency of necessity and restitution. When requesting the abbreviated hearing it was indicated to counsel that there would, for unrelated reasons, need to be an expeditious determination of the dispute and they expressly acknowledged this. It suffices to record that I hold that the plaintiff is liable to the defendant for salvage, towing and storage fees. Provided the charges were reasonable, this has never been and is not genuinely in dispute and I do not propose to delay the matter by undertaking an analysis of the legal relationship between the parties. I am not satisfied that there was agreement as to rate or amount and this must be assessed quantum meruit. 4 So far as the claim for diminished value of the car is concerned, I have dissertations by valuers and loss assessors and references to the "red book" valuers guide for secondhand cars. Had AAMI accepted delivery in July 1999 as it ought, no claim would arise. Demand for delivery was in fact made about a year later. I am not prepared to hold that any diminution in value between July 1999 and July 2000 is claimable by AAMI from the defendant. The simple fact is that it did not have possession of the car because it rejected it. I am not satisfied that any further damage beyond what was inflicted by the thieves was done to the car whilst it was in the custody of the defendant. There is no evidence of any such specific damage. I regard the ruminations of the loss assessors on this and allied topics as speculative. 5 A difficult question could arise as to the responsibility of the defendant for diminution in value between July 2000 (when return was demanded) and November 2000 (when it actually happened) given that the defendant was exercising a claimed lien during that period. Common sense might have suggested negotiation of return of the car in exchange for payment of charges at July 2000 but I have the impression that Mr Cooper believed that the defendant had been using the car, Mr Neiberding knew that the defendant had not (neither of them knew about Mr Rizk handing it to Mr Fittipelli for less than a week) and each was stubbornly unwilling to deal with the other on any basis other than their respective predetermined positions. However, counsel for AAMI asserted that the claim for lien was no longer of immediate relevance and this is so in the sense that there is no evidence upon which a diminution in value of the car between July and November 2000 can be properly assessed. Counsel for the defendant extracted opinions of an assessor to demonstrate that it had in fact appreciated between April and November 2000. Whilst I doubt that, it is sufficient to observe that there is no acceptable evidence of diminution in value. The orders sought in paragraphs 2 and 3 of AAMI's amended summons must be refused. 6 The defendant seeks storage charges only up until 20 July 2000 when AAMI finally demanded that the car be delivered. The claim for the first twenty four days is made at the rate of $10 per day, thereafter it doubles to $20 per day. It is true that the defendant foreshadowed a claim at the higher rate but there was never any agreement by AAMI to pay it. It is recognized that a guide publication issued by the Tow Truck Authority stipulates a maximum charge of $10 per day unless advice of higher charge is given. Merely to give advice of higher charge does not demonstrate that it is reasonable. Whilst the car was stored at $10 per day it was occupying the same space at the same place. I find $10 per day to be a reasonable rate recoverable as quantum meruit . 7 The defendant's cross claim is allowed in the following items: Salvage $45 Initial towing $123 Transporting to AAMI at Mascot $135 Transporting to AAMI at Alexandria $74 Storage 3 July - 7 July 1999 No claim Storage through to 20 July 2000 at $10 per day (allowing that it was "outside" with Mr Fittipelli for four to seven days) $3,750 Total: $4,127 Less payment pursuant to the order of 21 November 2000 $1,000 Balance: $3,127 8 Counsel for AAMI specified that no relief was sought against the second defendant (written submission paragraph 32) and sought that the proceedings against it be struck out. Discontinuance after commencement is inhibited by Part 21 rule 2 and in the circumstances there should be judgment on the summons for the second defendant with no order as to costs. 9 I turn to the issue of the costs of the disputants. Costs of the various interlocutory hearings which I have scheduled were reserved. The defendant (written submissions paragraph 32) claimed an understanding that costs would be decided after the substantive proceedings. Such an understanding is directly contrary to my express statement when I acceded to the joint request for abbreviated hearing that written submissions should address all issues (including costs) so that they could be dealt with in a single judgment which it was necessary to deliver promptly. 10 I reject the contention that the commencement of proceedings by AAMI was an abuse of process. It suffices to observe that the claim was bona fide as is evidenced, inter alia, by the defendant's consent to being ordered to deliver up the vehicle. 11 More important, however, is the failure of AAMI to pay heed to the jurisdiction of the Local Court vested by ss 12(2) and 28A(1) of the Local Court (Civil Claims) Act 1970. Although AAMI obtained injunctive relief the claim that the defendant was using the car (apart from the error when Mr Fittipelli seemingly took the wrong Toyota Celica for a week or less) could not be sustained. Nor was there any realistic risk that the defendant would dispose of the vehicle as long as AAMI would meet towing and storage charges. 12 The commencement of potentially expensive proceedings in this Court is the responsibility of AAMI. On the other hand, by November 2000 AAMI had apparently come to a proper appreciation of the position but the defendant opposed remission of the outstanding issues to the Local Court. I need to balance the circumstance that the defendant was brought to this Court by AAMI's actions with the defendant's later intransigence to remitter to an appropriate jurisdiction with consequent effect upon costs. Also, I do not ignore the circumstances that although AAMI will not succeed in obtaining further relief, its proceedings were successful in requiring the defendant to yield up possession of the car. 13 I mention that counsel for the defendant sought to rely upon an affidavit sworn by himself in relation to costs. This was opposed. I have perused the content and I decline to permit it to be read in evidence in the action or on the issue of costs. The affidavit contains a mixture of communication between counsel apparently attempting to achieve compromise, assertions of fact and submissions. I am unpersuaded that any orders for costs should be on an indemnity basis. 14 I make the following orders:- (1) There be judgment for each defendant on the plaintiff's summons. (2) On the cross summons, there be judgment for the cross claimant (first defendant) against the cross defendant (plaintiff) for $3,127. (3) That the sum of $9,110 paid into Court by the plaintiff pursuant to the order made on 21 November be paid out as follows: (a) As to $3,127 to the first defendant; (b) As to the balance $5,983 to the plaintiff. (4) The plaintiff is ordered to pay one third of the first defendant's costs of action including reserved costs. Last Modified: 02/26/2001 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.