The NSW Supreme Court has ruled smash repairers do not have the right to charge storage fees while holding customers’ vehicles.
The decision came after two NRMA customers sued a Maroubra smash repairer for refusing to release their vehicles unless they paid storage fees. The NRMA, who supported their customers in the legal proceedings, have heralded the descision as a 'landmark court victory'. Both customers had their cars towed to Sydney smash repairer Maroubra Automotive Refinishers after separate crashes in December 2013 and January 2014.
Both customers signed "permission to tow" forms at the crash scenes. The forms named Maroubra Automotive Refinishers as the holding yard until the customers gave permission to repair their cars or nominated another repairer to fix them.
The NRMA press release goes on to say that the customers chose not to have Maroubra Automotive Refinishers conduct the repair work but the repairer refused to release the cars until towing and storage fees were paid. The court heard Maroubra Automotive Refinishers also refused numerous formal demands from the customers’ insurer, NRMA Insurance, to release the vehicles.
In handing down the judgement, Justice Lucy McCallum of the Supreme Court said: “There are simply no circumstances from which it can be inferred that any contract of bailment ... came into existence at any point." Justice McCallum rejected Maroubra Automotive Refinishers’ contention that under NSW legislation when tow truck operators nominate a repairer before towing a car it implied a contract was formed between the tow truck operator, the customer and a repairer.
Justice McCallum said the legislation specifically banned tow truck operators seeking authorisation on repairers' behalf. "The reason for that prohibition is obvious. It is [to protect] owners and [prevent] collusion between tow truck drivers and repairers." Justice McCallum went on to say that it was a "transparent attempt [by Maroubra Automotive Refinishers] to circumvent… the regulation".
Justice McCallum ordered a total of $3,540.90 be paid to the customers and struck out a cross-claim by Maroubra Automotive
Refinishers for NRMA Insurance to pay the outstanding fees if the customers were not liable.
The NSW Supreme Court findings were:
1. The repairer could not detain the vehicle pending payment of towing and/or storage fees.
2. There was no contract between the repairer and the owner for the repairer to store the vehicle in exchange for payment of storage fees.
3. The Tow Truck Industry Act did not assist the repairer in trying to create a contract between the repairer and the owner for storage of either vehicle.
4. The Motor Vehicle Repair Industry Code of Conduct did not assist the repairer in trying to create a contract between the repairer and the owner for storage of either vehicle.
5. Each owner was entitled to damages for the period after they had demanded the return of their vehicle up to when they received it back. The NSW Supreme Court has ruled smash repairers do not have the right to charge storage fees while holding customers’ vehicles.
That was equal to the market rate of hire of a replacement vehicle for the period between when the demand for return of the vehicle was made and when the vehicles were actually returned (this included periods where they did not have use of any replacement vehicle).
6. A claim against the insurer for the payment of storage fees was unsuccessful.
If a repairer in NSW:
a) receives a vehicle from a tow truck driver;
b) does no repair work on the vehicle; and
c) has no direct dealings, let alone an agreement, with the owner of the vehicle regarding storage fees or to withhold the vehicle pending payment of storage fees; then the repairer cannot detain the vehicle once the owner makes a demand for its return. The Code or towing legislation will not assist the repairer in any way in those circumstances to detain the vehicle.
NRMA Insurance Head of Supply Chain Steven Bubulj said the court case was a huge victory for unsuspecting customers who are preyed upon at the scene of an accident.
“Being involved in a car accident is an emotional and confronting moment. It is abhorrent that someone in that situation would be taken advantage of as part of an opportunistic money-making exercise,” Bubulj said.
“This court ruling has drawn a very strong line on the rights of a customer, and for that matter an insurer, where towing a car from an accident is concerned.
“We will not tolerate our policyholders being treated this way and the message to the industry is very clear: this sort of behaviour is unlawful and you will be punished if you continue to engage in this unscrupulous activity.”
The next issue of Paint & Panel will contain a response from Mick Schumak of Marourba Automotive Refinishers
