Credit Hire Car Matters in South Australia – Assessing the Rate of Hire

Written by Ellen Duckworth

On 31 August 2023 Her Honour Magistrate Jackson of the Adelaide Magistrates’ Court handed down her decision of Kerin & Anr v Zadow [2023] SAMC 113. The case centered around the reasonableness of the rate charged and sought to be recovered by a not at fault driver from the at fault driver for a replacement vehicle hired on credit.

The Trial proceeded before Her Honour over three days.

Discussion of the Issues in Dispute

The duration of hire was not in dispute. It was originally disputed but ultimately accepted by the Court that the vehicle hired by the Applicants (a Mercedes Benz GLE300D) was a broadly equivalent vehicle to that of the Applicants’ own (a 2018 Mercedes Benz GLE 3500) and that the Applicants were entitled to recover the reasonable costs of hiring that vehicle. The Applicants hired the replacement vehicle for a period of 92 days at a cost of $52,204.00.

The Respondent accepted the Applicants were entitled to a replacement vehicle, however disputed the daily rate of hire. The Respondent submitted the Applicants’ damages should be limited to $26,296.48, to reflect the market rate for a broadly equivalent vehicle.

1. Was the Applicants’ conduct reasonable?

The Respondent submitted that the Applicants’ failure to enquire with mainstream hire car companies and failure to make enquiries about charges being incurred through R2D was unreasonable.

Having regard to the authorities, the Court found:

  • The Applicants were not required to calculate potential R2D costs or compare rates through the mainstream hire car market.
  • Although duration of hire was not an issue for determination if the repair parts had taken 9 months as originally estimated, the hire car costs would have significantly exceeded the Redbook value of the vehicle and the reasonableness of the Applicants’ actions would have been considered.
  • Notwithstanding that the Applicants “took the easiest hire option available” without “being concerned about the costs”, their conduct was reasonable.

2. Were the costs incurred reasonable?

The Respondent submitted the costs were unreasonable because they substantially exceeded the market rate for a broadly equivalent vehicle and the daily rate included non-compensable benefits (components which did not constitute loss arising from the loss of use of the Applicants’ motor vehicle).

Having regard to the authorities, the Court found:

  • The costs incurred were “more than the Applicant would have paid for a vehicle broadly equivalent to both his own and the Replacement Vehicle, from the mainstream hire car market”.
  • An Applicant taking “reasonable steps to mitigate their loss when armed with the knowledge that they may require a replacement vehicle for up to nine months, would select the lowest rate for a comparable vehicle and nominate the weekly hire option”.
  • With respect to any additional days of hire that may not be refunded by the mainstream hire car company, the Court suggested the Applicants could have contacted their crash repairer at regular intervals to ascertain the likely completion date. In addition, the Court noted the extra days at the lower weekly rate would be compensable.
  • The Court found there is a “fair and sensible method of calculating the compensable part of the charges rendered which is by reference to the rates offered by mainstream hire car companies. It is the lowest reasonable rate which is the reference point not the highest”.
  • The Court did not agree with the evidence of the R2D representative that there was no mark up in R2D’s rates to allow for non-compensable benefits. In addition, the Court found that some of the additional benefits provided to the Applicants “do not arise from the loss of the use of the Applicant’s car” and that they were “more than what the Applicant is entitled to as reasonable costs”.
  • The Court agreed with the Respondent that the appropriate method of assessing the rate of hire and the benefit offered to the Applicants by reducing the insurance access to nil, was to add both the maximum excess reduction offered by the mainstream hire car company and the excess reduction fee levied by R2D.

The Decision

Judgment for the Applicants in the amount of $26,776.96 (being just over 50% $25,427.04 of the amount claimed by the Applicants).


Magistrate Jackson’s decision has shifted away from the 2021 decision of Zhao v Jang [2021] SAMC 23 which considered the mainstream market was not the relevant market to compare the rate of hire and that a reasonable rate was the average mainstream daily rate plus a 25% uplift.

Magistrate Jackson’s approach is encouraging to insurers as it allows an assessment based on the lowest mainstream tiered rate for a broadly equivalent vehicle.

If you wish to discuss this decision, please contact Ellen Duckworth on 08 6165 2457 or any member of the Ligeti Partners team on 03 9947 4500.

Ligeti Partners Contacts

Ellen Duckworth.

Ellen Duckworth

Senior Associate