A driver who crashed her car and arranged a replacement vehicle from a credit hire company is not entitled to have the full rental charge covered by the at-fault insured, a court has ruled.

The WA Supreme Court heard a tow truck driver recommended hire company CompassCorp to the woman after the May 13 2019 accident. The driver later “skimmed over” and signed an agreement for a car while her vehicle was being repaired, without making enquiries with other companies.

The woman, who was pregnant, lived in Alkimos and worked in Osborne Park, both Perth suburbs “some distance” from the city centre. The car was delivered to her mother’s home.

Compass provides replacement vehicles and additional services to no-fault accident victims without requiring them to pay upfront. It aims to recover the charges direct from the negligent driver’s insurer.

The court case was nominally between the two drivers, but the ruling said the “matter of commercial substance” was between RAC Insurance, which covered the negligent driver, and Compass.

The dispute centred on the $1930.81 difference between Compass’ charges of $3832.66 and RAC Insurance’s payment to it of $1901.85, based on its assessment of a reasonable cost.

Justices Michael Buss, John Vaughan and Stephen Hall overturned an appeal and reinstated a magistrate’s decision in ruling the reasonable cost of hiring an equivalent vehicle was recoverable, but charges attributable to a range of benefits and services were not.

Benefits in the hire agreement included having the car provided on credit, having Compass manage the claim and liaise with the repairers, and having Compass appoint legal advisers to act for the customer.

The court found the Toyota Corolla hired was broadly equivalent to the driver’s Opel Astra hatchback, and a Toyota Camry also used cost the same.

The loss being addressed was the physical inconvenience and loss of amenity associated with an inability to use the vehicle being repaired.

“The avoidance of physical inconvenience and loss of amenity of that kind ordinarily involves the acquisition of a replacement vehicle during the repair period,” the ruling said. “It does not ordinarily involve the acquisition of additional benefits with associated additional charges.”

The driver’s circumstances did not justify acquiring benefits with associated charges, and there was no evidence she was “impecunious” and unable to pay hire charges without making unreasonable sacrifices, the judges said.

The court found the woman’s action in hiring a replacement car from Compass was “unreasonable”, because Compass’ total charges “substantially exceeded” what mainstream rental companies charged for similar vehicles.

“The proper inference is that Compass’ total charges included amounts for the provision of benefits to [the car hirer] in addition to the provision of the replacement vehicles.”

The rental agreement did not separate out vehicle hire and other benefit costs, with the court basing calculations on total Compass charges compared with mainstream car rental company rates, and adjustments.

“On this alternative approach, the amount paid by RAC to Compass exceeded the amount properly claimable,” the ruling said.

The magistrate’s conclusion that the woman’s claim should be dismissed was correct and the primary appeal judge should have affirmed the magistrate’s decision, it said.

The decision is available here.