Court awards damages based on standard replacement market value, not original purchase price, for a damaged vehicle.

[*20] 1976 October 22

(DEMETRIADES, P.D.C. & NIKITAS, D.J.)

IN THE DISTRICT COURT OF NICOSIA

Leonidas St. Ioannou,

Plaintiff,

v.

Zoi Papadaki and Another,

Defendants.

(Case No. 8111/73).

Damages - Negligence - Motor vehicle damaged in collision - Cost of repairs exceeding its market value - Measure of damages.

R. Michaelides, for the plaintiff.

E. Eldon (Mrs.)(for V. Tapakoudis), for the defendants.

JUDGMENT

The judgment of the Court was delivered by: -

NIKITAS, D.J.: Motor-car under Reg. No. EM 808, [*21] was involved in an accident on 8th August, 1973, whilst it was driven by one Kyriacos Atteshlis on the Nicosia - Famagusta main road. It came into collision with another car, whose driver Petros Papadakis, was killed in the accident. The owner of motor-car E.M. 808 now sues the administrators of the estate of the deceased driver in negligence, claiming damages, which are itemized in paragraph 6 of the statement of claim as follows:-

a) £6,000.- value of the car prior to the accident;

b) £l00.- loss of use; and,

c) £120.- loss of insurance premium.

The several claims arising out of the collision and the question of liability have been determined in Action No. 7587/73. In this action we are not concerned with liability because the effect of the joint statement of counsel, made in the course of the trial, is that full responsibility on the part of the deceased is admitted. Quantum, therefore, is the only issue before us.

The car in question is a Jensen-Interceptor, Mark II, a British car of high quality. It is an automatic car and was provided with air-condition. It appears from the evidence of P.W.2, the person responsible for the fleet of cars of Messrs. Ioannou & Paraskevaides Ltd., in which the plaintiff is a director, that this car had, originally, a British registration. It was imported in December, 1969, and the witness took delivery of the car from the customs at Famagusta and drove it to Nicosia. [*22] Its milage was 4,000 at the time. Subsequently it was registered here and in the certificate of registration

-- exhibit No. 1 in the action — we read that it was manufactured in 1969. It is the unchallenged evidence of this witness that the Jensen in question

was acquired in England in October of the same year. So by the time of the accident the car was about four years old and there is ample evidence for a finding that it had been driven for approximately 36,500 miles. The evidence further shows that there were at the time in Cyprus 3 or 4 cars of the same type.

In paragraph 6 of the statement of claim it is pleaded that the plaintiff's car became a total loss because of the accident. Its pre-accident value is the main part of the damages claimed. In fact there is no evidence at all to substantiate the remaining heads of damage (claims (b) and (c) above) and this part of the claim fails.

Before we consider the content and effect of the expert evidence, it is convenient at this stage to examine the principles underlying the award of damages in such cases.

It is a well known principle that when a car is damaged by collision but the extent of the damage is such that it can be repaired, the measure of damages is the reasonable cost of repairs. In addition compensation may be recovered on account of depreciation where it was not made possible to restore the car to its former condition. On the other hand when the damaged car is detroyed, in [*23] other words, it is beyond repair, market value at the

time the damage occurs rules damages. The measure of recovery in such a case is the difference between the market value before the accident and the

value after it, that is to say, the value of the wreckage.

The relevant principles are expounded in Ma.yne & McGregor on Damages, 12th edition, paragraph 674, p. 673, and in 11 Halsbury’s Laws (3rd ed) paragraph 437 at p. 263, from which we quote:-

"Where a chattel has been damaged by negligence the owner of the chattel or any other person entitled to sue may recover the cost of repairing it, and the difference, if any, between the value of the chattel before it was damaged and its value after repair. If the chattel was damaged beyond repair its value is recoverable, and this is ordinarily the market price of a similar article or, where there is no market, or no similar article, the cost of replacement.”

“The plaintiff may also recover damages for loss of the use of the chattel while being repaired or replaced and, in the case of a chattel of commercial use or value, this will include any loss of profit resulting directly from his being deprived of its use”. [*24]

As the over-riding principle is restitutio in integrum when "there is no market, or no similar article", the cost of replacement or the cost of repairs though in excess of market value may be awarded. Illustrations are afforded by J. & E. Hall, Ltd. v. Barclay. (1937) 3 All E.R. 620, C.A., and O'Grady v. Westminster Scaffolding,Ltd., (1962) 2 Lloyd’s Rep. 238, respectively.

In the case of Hall, supra, which was a case of conversion, the owner of the articles converted was held entitled to their value, which was ordinarily the price of similar articles in the market. As it was impossible to buy those articles in the market, the measure of damages was the cost of replacement.

In Darbishire v. Warran,

(1963) 3 All E.R. 310, Harman, L.J., commented on the case of O'Grady in the following terms:-

"The learned Judge relied on the case of O'Grady v. Westminster Scaffolding, Ltd., where a plaintiff was held to be entitled to the cost of repairing his car at a cost considerably exceeding its market value. This case, of course, is not binding on us, but if it be right it may be supported perhaps on the ground that the car there in question was unique and could not be replaced".

In Mazengarb’s Negligence the Highway (4th ed.) the learned author deals with the measure of damages [*25] in the same branch of the law and says at page 366:-

"The basis of assessment when damage has been done to vehicles presents some perplexing problems. It is submitted that the law at present stands as follows:-“

“Vehicle damaged beyond repair. -- When a vehicle has become a total loss the measure of damage is its value to the owner at the time and place of loss and should include a capital sum made up of:”

"(i) The market value of a vehicle comparable to the one lost, on a free market.”

"(ii) Any cost in adapting and bringing it to the owner (including incidental items of insurance and registration).”

"(iii) Compensation for disturbance and loss of business during the period between the date of loss and the date on which a new vehicle could reasonably have been made available. Credit should be given for any value in the salvage. Only nominal damages are awarded where a car is used only for convenience or pleasure and the owner is not able to prove any pecuniary loss.”

"Alternatively, the true measure may be the market value of the car at the time of the collision [*26] plus the cost of hiring a substitute until a new car could be procured and made ready for use, less the 'scrap value' of the damaged car".

Darbishire v. Warran. supra, was relied on by counsel for the plaintiff. In that case the owner of an old car which was, however, maintained in very good condition, had spent on repairs

considerably more than the market price of the car. The Court of Appeal held that since the car was not irreplaceable,

damages should be assessed on the basis of the market value of the car and the higher cost of repairs was disregarded.

Market price was the test accepted in Pomphrey v. James A. Cuthbertson, Ltd., (1951), S.C. 147, and part of the headnote in that case was quoted with approval by Harman, L. J.:-

"Opinions that, on the footing that the damaged car was a constructive total loss, the true measure of damages was its market value at the date of the collision plus the cost of hiring a substitute until a new car could be procured and made ready for use, less, the 'scrap value' of the damaged car".

The evidence called by either side revolves, in substance, round the question of the market value of the Jensen prior to the collision. Mr. Isseyegh, a qualified motor-car assessor in practice for over 10 years, [*27] inspected the car after the accident. Before that he had seen it several times. The first occasion was about the end of 1969 when he was asked by an insurance company to examine this Jensen and ascertain its condition before they insured it. In each subsequent year he used to examine the car on behalf of the insurers before the policy of insurance was renewed. In 1969 he found the car to be in new perfect condition and in 1973, when he last examined it before the accident — the evidence does not specify the exact date — it was in good condition. This part of the evidence of Mr. Isseyegh is accepted and we find accordingly subject, however, to what we shall have to say later about the significance of an earlier accident concerning the same car.

The witness used two methods, so he said, in finding out the market price before the accident. We quoted from the record his own words:-

"One method is the current second - hand value before the accidents and the second is by compiling all the damaged parts, the costs of repair, getting prices and labour”.

His estimate of the replacement of the damaged parts and the work to be done totalled £5,088.715 mils. The repairs, if done, would require 3 - 4 months. By adopting the other method, he found the market price to be £5,280.-. In cross-examination he was confident that he could, if given the opportunity, find quite a number of prospective purchasers and sell the car for over £5,000.-. [*28] The witness arrived at the figure of £5,280.- by deducting from the purchase price of £6,500.-, 10% for depreciation which he considered as the annual rate of depreciation for a high quality car like the Jensen. We did not have the purchase price from the plaintiff as he did not testify and the knowledge of the witness is based on information. Mr. Isseyegh said that the Jensen cars are not easy to find in the second-hand market and in cross-examination he said that there are no available cars of the type and quality of this particular Jensen though there exist other cars of the same range in value.

P.W.3 is the agent of Jensen cars in Cyprus since February, I974. He was a dealer of new and secondhand cars in Famagusta where he ran his own garage. It was his stand first that the market price of the subjectcar in August, 1973, before the accident, would range between £4,800.- and £5,500.- but in due course he admitted that he was unable to give an estimate.

Mr. Longinos was called by the defendants and stated that the market price of this car at the material time was from £2,000.- to £2,500.-. He is also an experienced motor-car assessor of long standing and has had the opportunity to examine this car both before and after the accident.

The factors which guided Mr. Longinos in fixing the market price were:- [*29]

(a) Original purchase price of the car at £5,813;

(b) The model of the car;

(c) Its age;

(d) Engine capacity;

(e) The fact that it was involved in an accident. He said — and we believe him -- that this took place in 1970 when the milage of the car was 5,609. He gave us a detailed description of the damages because he himself had made the estimate on instructions from the insurers. When he happened to see the car after the repairs were done, most of the damaged parts were replaced, but interference with the panelling during repairs was still visible. The reputation that the car was involved in an accident as well as the damage itself are causes of depreciation, according to his testimony.

(f) The demand in the market which he considered as the most vital factor. According to Mr. Longinos, in Cyprus there is practically no demand for the Jensen or similar cars. A prospective purchaser of the type of car like the Jensen, especially with a milage of 36,000, would not buy it unless the car was offered at a low price.

An additional consideration in ascertaining [*30] market value was depreciation. He stated that it is natural for cars to depreciate and moreover, expensive, fast cars like the Jensen depreciate more rapidly than ordinary cars, the rate of depreciation being 20% — 25% for the first year, reaching 50% of its original value after 4 years’ use. He explained that his depreciation percentages were the result of a study he made of car magazines (exhibits 2 and 3), concerning the particular Jensen we are dealing with in the English market, which he adjusted to the Cyprus reality. He said that such a car would depreciate even more in Cyprus as there is no market really for those cars.

We have examined the expert evidence and on the whole we find the evidence of Mr. Longinos more realistic and more convincing. We are satisfied that demand for this model must be very limited

and this important consideration seems to have been overlooked by Mr. Isseyegh. The previous accident was also excluded

from his consideration. In fairness to him we must say that he had no knowledge of the first accident. There can be no doubt that this latter event is a circumstance which has some bearing on the issue before us.

As to depreciation, we think that it is not safe to rely on the English figures due to the different conditions prevailing in England, a fact admitted by Mr. Longinos, but we do accept his statement that expensive cars similar to the Jensen depreciate more rapidly than [*31] ordinary cars where the rate is only 10% per year. Further his evidence as to the original price is also preferred.

Evidence of a general nature was

given that there has been an increase in car prices from 1969 - 1973, but nothing was mentioned about the price of a new Jensen at the crucial time, except that,

when P.W. 3 took over the

Jensen agency in February, 1974, the price of this particular type of Jensen had risen to £8,500.-. We are not entitled, however, to

decide, in the absence of any concrete evidence, what was the purchase price in August, 1973. Furthermore, the expert for the plaintiff does not seem to have paid particular attention to this matter and the other expert said that possibly such a fact would not really affect his judgment, as the decisive test of market value is demand for such high priced secondhand cars.

As stated earlier, the number of Jensen cars circulating in Cyprus was indeed very small, but it has not been shown that it was impossible for the plaintiff to find the same type of car or a similar car of another make in the Cyprus market. Perhaps we may add that there is nothing to establish that the plaintiff had any particular need or any particular use for his car, as for example, in his business, which would render it irreplaceable. (See Darbishire v. Warran). [*32]

It is obvious from the analysis of evidence that the experts were referring to market value as the price which the Jensen might fetch on sale in the open market. In the case of Darbishire v, Warran, supra, these words were given the following interpretation. Pearson, L.J., said at p. 314:-

"There is no complete definition of the expression ’market value’ in the evidence or the judgment, but I understand it as meaning standard replacement market value, that is to say the retail price which a customer would have to pay in July, 1962, on a purchase of an average vehicle of the same make, type and age, or a comparable vehicle. It is not the price for a sale to a dealer or between dealers. It appears from a passage in the judgment that the ’market value’ does not include any allowance for the good maintenance and reliability of the plaintiff’s vehicle".

Pennycuick, J., spoke in similar terms, at p. 317:-

"By ’market value in this connection is meant the price at which the article before damage, or a comparable article, could be purchased. As a rule the scrap value of the damaged chattel must be brought into account, but this is not a factor here". [*33]

Though. market value in the instant case was approached on a somewhat different footing, nevertheless, we think that it is still a proper and sound basis for awarding compensation to the plaintiff in respect of his loss. The amount which a sale of the car in the open market would realize is, a sound indication of what one had to pay for getting a replacement. The assessment of Mr. Longinos, which we prefer, ranges from £2,000-£2,500.-. In all the circumstances we have decided to award the higher figure less the scrap value of the car which was given by Mr. Isseyegh as £500.-

In the result we give judgment for the plaintiff against the defendant for £2,000.- with costs on the scale of £1,000.- - £3,000.- to be assessed by the Registrar and approved by the Court.

Judgment and order for costs

as above.