Court rules on smash repair holding fees

The New South Wales Supreme Court has tackled the long-disputed notion that smash repairers have the right to charge for storage and others fees while temporarily holding damaged vehicles after crashes.

Following a lengthy dispute between two NSW vehicle owners and a Sydney smash repairer, Justice Lucy McCallum found there was no basis for repairers to charge any fees after receiving vehicles from tow truck operators because no contract existed for storage.

Smash repairers that attempted to charge fees for cars towed to their premises after accidents were attempting to circumvent the law.

Two women had their cars towed to Maroubra Automotive Refinishers (MAR) after separate accidents in December 2013 and January 2014.
In both cases, a tow truck driver had the women sign “permission to tow” forms, nominating MAR as the holding yard until they selected a repairer to fix their vehicles, or they were written off by their insurers.

Sharon Wong and Salome Ayres were told by the tow truck drivers they were not obliged to use MAR and could collect their vehicles at any time to take them to a repairer of their choice.

The court was told the women opted to have their cars repaired elsewhere but, when they tried to collect their cars, MAR refused to release the vehicles until towing and storage fees were paid.

The fee was $2,116.40 for Ms Wong and $1,424.50 for Ms Ayres.

Further attempts to recover the vehicles, including written letters of demand from the women’s insurer, NRMA, also failed.

The cars were eventually released when the court agreed to hear the case and the women paid the disputed fees into a court-administered trust fund.
On March 16, Justice Lucy McCallum agreed to hear the case, rather than send it to a lower court because of the small financial amounts involved, because of its significance to the smash repair and insurance industries.

The women told the court that at no time did they think they had any agreement with the smash repairer to repair or even look after their vehicles.
They had signed the consent form with the two truck drivers on the understanding they could collect their cars at any time and take them to repairers of their choice or one determined by their insurer.

MAR’s lawyers argued the women had freely signed the permission forms, fully aware their vehicles were to be taken to MAR’s yard for holding.
That was effectively a contract between MAR and the vehicle owners, and allowed MAR to recover any costs incurred if the cars were later taken elsewhere for repairs.

MAR argued the fact NSW towing regulations required tow truck drivers to stipulate a destination for damaged vehicles was implicit government recognition that “permission to tow” forms could be regarded as contracts between a repairer that accepted a vehicle from a tow truck and the vehicle’s owner.

Justice McCallum said the smash repairer’s arguments showed “ingenuity” but failed at every step.

“There are simply no circumstances from which it can be inferred that any contract ... came into existence at any point,” she said.

She rejected the argument NSW legislation requiring tow truck operators to nominate a repairer before towing implied a contract between all three parties.

“Lest it be thought an implied contractual obligation to pay reasonable storage fees arises upon delivery of a car to a particular repairer, the simple answer is that no repairer is obliged to accept delivery of a car towed to its premises,” she said.

“The decision to do so is a commercial one, presumably informed by the prospect of securing the relevant job.

“The legislation relied upon by the repairer’s lawyers regulates tow truck drivers (not repairers).

“Compliance with that legislation [therefore] cannot [form] a contract between the owner of a vehicle and a repairer.”

She said the legislation specifically prohibited tow truck operators seeking authorisation on behalf of repairers.

“The reason for that prohibition is obvious. It is for the protection of owners and the prevention of collusion between tow truck drivers and repairers,” she said.

Justice McCallum criticised MAR’s attempt to defend its actions, saying the case was a “transparent attempt …. to circumvent the regulations”.
She ordered the funds paid into trust by Ms Ayres and Ms Wong be returned. She also struck out a cross claim by MAR for NRMA to pay the outstanding fees if the women were found not liable.

Robert Ishak and Carlos Jaramillo, from William Roberts Lawyers, in a commentary on the case, said it was an important win for insurers. They said the owners were entitled to damages for the period after they had demanded the return of their vehicles until they received them back.
The damages were equal to the market rate of hire of a replacement vehicle for that time, including periods where they did not have use of a replacement vehicle.

(Wong v Maroubra Automotive Refinishers Pty Ltd; Ayres v Maroubra Automotive Refinishers Pty Ltd (No 2) [2015], NSWSC 222, 16/03/15)