Recovery of money

Contributed by Jo Boots and Robert Guthrie and current to 1 September 2005

FINANCIAL POSITION OF THE OTHER PARTY

If a person finds that the other vehicle involved in the accident was not insured he or she should try to find out whether the party responsible for the accident is in a financial situation that would allow them to pay for the repairs to the vehicle. There is nothing to be gained by incurring legal costs to obtain a judgment in court against a defendant who is simply unable to pay.

LEGAL COSTS – IF NOT INSURED

If a person decides to sue for damages, the legal costs must be considered. It is possible for the claimant to handle all or part of such a claim themselves to minimise costs, but it is not advisable. If a person instructs a lawyer to handle the claim, the legal costs recoverable from the defendant, if successful, may be insufficient to cover the cost of the actual legal fees charged. It is also possible that while a claimant may obtain a court order for the defendant to pay the cost of the damage and the legal costs, those costs may remain unpaid because the defendant is unable to pay, or may be paid over a long period of time at a fortnightly rate (for example). The legal costs in recovering the money and the period over which the payments are made may ultimately make the recovery uneconomic. It is unlikely that a Legal Aid lawyer would be appointed to recover damages in relation to a motor vehicle accident unless the circumstances are exceptional, although some assistance with regard to advice may be obtained (see LEGAL ASSISTANCE).

WHICH PARTY WAS AT FAULT?

Deciding whether or not another driver was at fault (negligent) is often quite difficult.

Clearly a driver who is drunk while in charge of a motor vehicle is driving negligently if, due to his or her drunkenness, an accident occurs. A vehicle being driven at a speed above the speed limit is probably being driven negligently. Failing to stop at a red light or stop sign is also negligent driving. Negligence is discussed more fully in the next section. If a person is in doubt as to whether the other driver was negligent, he or she should seek legal advice.

In many cases, more than one driver in an accident may be at fault. In such a case, a court has power to apportion (share) the liability between the parties according to the degree of each party’s responsibility for the accident.

Where one party bears part of the responsibility for an accident, that party is said to have been contributory negligent.

Contributory negligence almost invariably occurs at an uncontrolled intersection where, for example, the driver on a priority road (who has the right of way) may be held 15% responsible for the accident. This is because every driver is supposed to drive in a manner so as to be able to avoid an accident, even when he or she has the right of way.

In some cases a person may recover 100% of damages (such as where a car was parked at the side of the road and was hit by another car, or where the car was stationary at a traffic light and struck from behind) but the possibility of apportionment must always be considered.

An example of apportionment of liability

A’s car and B’s car collide at an intersection. Each suffers $500 in damages. A sues B for $500 and B counterclaims A for the same amount. B is found to be 80% responsible and A, 20 %.

A gets 80% of $500 = $400

B gets 20% of $500 = $100

Therefore, B gives a total of $300 to A (the difference between what he is required to pay and what entitled to receive). If A has instructed a lawyer, then A may have to pay the lawyer’s fees and only receive part of the full amount of fees that normally would be awarded (which is less than the actual legal costs in any event).

REPAIR COSTS OF THE OTHER VEHICLE

As discussed above, it is possible that a person will have to pay a share of the other party’s damages even if that other party is mostly responsible for the accident. If the damage (cost of repairs) of the other driver is much greater, this can have the effect of cancelling out any benefit in pursuing that

other driver for a person’s own damages. This is illustrated by the following example:

Example of damages cancelling each other out

A’s repairs cost $250 and B’s repairs cost $1,000. The court decides that A is 80% responsible and B, 20%.

A gets 80% of $250 = $200

B gets 20% of $1,000 = $200

Thus, A’s damages and B’s damages cancel each other out. A may have to pay the lawyer’s costs and the cost of repairs. In these circumstances, it is obviously not worth proceeding.

Before deciding whether to proceed with court action against the other party it is necessary to compare the costs of a person’s repairs with the excess and loss of any potential no claim bonus, the legal costs and the cost of repairs to the other vehicle.

THIRD PARTY PROPERTY INSURANCE

In deciding what action to take if a person has third party property insurance, all of the above considerations apply, except for the cost of repairs to the other vehicle. There is nothing to stop a claimant from proceeding with a claim for damages, and when faced with a counterclaim for the other vehicle repairs, having the insurance company defend that action. The insurance company must of course be notified of the accident and that a claim will be made against them by the other driver. It is still necessary to consider the amount of damages sought compared to the likely legal costs.

IF UNINSURED

In this case, a person has only two choices:

• sue the other party for the cost of the repairs; or

• pay for the repairs themselves.

In deciding which of these two alternatives to take, consideration should be given to factors such as the amount of damage to each vehicle, who was at fault in the accident and whether or not the other driver could afford to pay the amount of damages.

HANDLING A CLAIM WITHOUT A LAWYER

If a person decides the potential costs of engaging a lawyer outweigh the amount of damages recoverable, they may chose to handle the claim themselves. In this case,certain steps preliminary to issuing any court proceedings should be taken. These include:

• Obtaining details of the car accident – a person should have found out the other party’s name and address at the scene of the accident. If not, they can apply to the Police Department, Crash Records section (Ph 9222 1929) for a copy of the full police report of the accident (when any prosecution action has been finalised). A small fee is payable. A police report is recommended in most cases because statements from other parties and witnesses may also be available. You will need to obtain an authority from a witness to obtain a copy of his or her statement.

• Obtaining a quote for repairs – a person should also have the cost of repair of the vehicle assessed by a reputable repairer and obtain a written quote. It is not necessary to get two quotes, but it is advisable. In such a case, the lower quote should be claimed.

• Attempting to negotiate a settlement with the other party without going to court, including by writing formal letters of demand (see below).

• If negotiations fail, deciding where to sue – the question of where to bring an action is discussed in DEBTS .

LETTER OF DEMAND

A letter of demand could be sent to the other party in the terms set out below.

A copy of the letter should be kept. It should be sufficient to cause the other party to send it on to their insurer. However the other party may not wish to claim against his or her insurer.

If a reply is received, and the matter is agreed, the monies should be paid over. If the other party disputes the repair quote, contact them and invite them to arrange for another quote. If the other party still denies liability a claimant may proceed to issue a court summons, although it may be worth notifying the other party first of the intention to take court action.

(name)

(address)

(date)

Dear.........................

I am writing to you about the accident on (date)… place of accident)…

I am the owner of a motor vehicle number (registration number) which was damaged as a

result of a collision with a vehicle driven by you (and owned by… if the owner was not the

driver) on the above date.

I am holding you responsible for the damage to my vehicle. The damage has been assessed

at $............ and a copy of the quotation is enclosed. If your vehicle is insured, please forward

this letter to your insurers as soon as possible.

Unless you contact me within 10 days from the date of this letter, legal proceedings will be

taken against you.

Yours faithfully,

(signature)

A second letter of demand could be written in the following terms:

(name)

(address)

(date)

Dear.........................

I am writing to you about the accident on (date).

I refer to my letter to you dated ................. in which I gave you until ........................ (10 days from the first letter) to contact me regarding the damage to my vehicle suffered as a result of the accident

referred to above.

As I have received no offer or money in satisfaction of my claim, I now inform you that unless I receive payment of my damages of $................. within 7 days of today’s date, I will commence court proceedings without further notice.

Please forward this letter to your insurance company if you are insured against such a claim.

Yours faithfully,

(signature)

If this second letter of demand produces no result, court proceedings can be started (after consideration of the matters mentioned above concerning apportionment of damage and cost of repairs to each vehicle).

LETTER OF DEMAND – INSURANCE EXCESS

If a person has made a claim on their insurance and has had to pay an excess they may be able to recover this sum from the other party. Alternatively, the insured person’s insurance company may do so for that person – check with them first.

If the person wishes to proceed to recover this sum the following letter of demand could be sent.

(name)

(address)

(date)

Dear.........................

I am the owner of vehicle number .................. which was damaged as a result of a collision with a vehicle driven by you (and owned by ................ if the owner was not the driver) on the (date) at (place of accident).

I am holding you liable for the costs of repair. Under my comprehensive insurance policy, I am required to pay the first $................. (amount of my excess) of my claim for the cost of repairs to my vehicle.

I hereby claim payment of the sum of $.......... (amount of excess) within 10 days of today’s date. If I do not hear from you within this period, I will commence court proceedings without further notice.

Yours faithfully

(signature)

If no reply is received, a decision should be made whether to commence proceedings in court, bearing in mind the costs that will be involved. If the excess is small, it may be advisable not to proceed further. If the excess is substantial, the court proceedings can be commenced.

COMMENCING COURT PROCEEDINGS

Before a claimant takes this step, consideration should be given as to whether it is worth taking to court. It is possible that a summons against the other party may provoke a counterclaim.

Assuming that a claimant wants to proceed, they should go to the office of the nearest Magistrates Court (formerly know as the Local Court). Telephone the Perth Magistrates Court on (08) 9425 2222 to find out which Magistrates Court is appropriate. It should be explained that the claimant wants to issue a summons in respect of a motor vehicle accident. Sometimes, the Court Registrar will help fill out the summons form and the court can arrange to have the defendant served (that is, formally provided with) with the documents.

THE DEFENDANT

If a defending party receives a letter of demand, it should not be ignored. If the defendant is responsible for the accident and is satisfied that the claim made by the other party is correct, the defendant may engage their own insurance assessor to look at the vehicle to make an assessment as to whether the repair costs claimed are correct. Immediate payment will avoid further expenses such as court costs, lawyers’ fees etc. If a defendant is not sure who is responsible for the accident, legal advice should be sought.

If a decision is made to contest a claim, a letter should be written to the claiming party denying liability and, if his or her own vehicle has been damaged in the accident, notice of intention to make a counterclaim for the cost of those repairs should be given. If the cost of the repairs is also disputed, notice of this should also be given.

A claimant as well as a defendant is entitled to request that the other party provide copies of repair quotes and invoices and receipts for damages claimed. If the matter proceeds to a hearing, those documents will have to be produced.

If there is no dispute about responsibility for the accident, and a defendant is uninsured or does not wish to make a claim on the insurance policy, then they should offer to pay the amount claimed by instalments. If the other party does not accept the amount of instalments offered, then the matter may be resolved by the court ordering the payments following enforcement proceedings (see Chapter 13: DEBTS) and this action will add significantly to the cost of the claim.

OBTAINING A RELEASE AFTER SETTLEMENT

When claims are settled it is normal, and indeed advisable, for the person or the insurance company paying the money to obtain a signed release from the party who has made the claim. This document releases the paying party from further responsibility.

The release should be in similar terms to the following:

Sample Settlement Agreement

Between..................................................... (name of claimant or plaintiff) and

................................................................... (name of defendant)

The plaintiff hereby agrees to accept the sum of $............... paid by the defendant in full and final settlement of all claims for property damage arising out of the accident on the ............... (date) between vehicle registration number .... owned by the plaintiff and vehicle registration number ............ owned by the defendant.

Signed............................................Plaintiff

Signed.......................................Defendant

If the claimant or Plaintiff is asked to sign a release by the other party, then he or she should first ensure that it does not prevent them from taking subsequent action for physical injury arising out of the accident. If in doubt, see a lawyer.

A defendant should not pay any money without getting a signed release from the other party.

EXPENSES OTHER THAN REPAIR COSTS

In some circumstances the owner of the vehicle can claim from the responsible party other costs, such as loss of wages or profits, if it can be proved to the satisfaction of a court that the vehicle damaged in the accident was essential for the owner to earn income (such as where the vehicle is a taxi). Alternatively, another vehicle could be hired, and the cost of hiring claimed from the other party. Again the obligation rests upon the person making the claim to show that the hiring charges were reasonable, and that there was no cheaper method of alternative transport available such as use of taxis or public transport, as the claimant has a duty to minimise his or her loss.

If the claimant requires another vehicle for work, that party should take reasonable steps to obtain an alternative vehicle and should not simply wait until his or her vehicle is repaired. If a claimant wishes to claim this type of loss, they should see a lawyer.

CLAIMS THAT ARE CONTESTED IN COURT

Court proceedings are quite often complicated and may cause much anxiety. If a person has to go to court to prove a claim, they ought to consider carefully instructing a lawyer who has the experience to handle the case. This is especially so if the other party has a lawyer. If a claimant has carefully followed the steps set out above, they would only need to instruct a lawyer to appear in court for them so the fees would not be so extensive. It is recommended that the lawyer be asked what their costs would be.

LIABILITY AND COURT PROCEDURE

Claims for motor vehicle property damage will usually be dealt with in the Magistrates Court (formerly the Local Court). Where the matter in dispute is less than $7,500 they will usually come under the minor cases procedure contained in Part 4 of the Magistrates Court Act 2004 (WA). Disputes under this procedure are dealt with in a private and informal manner. Agents, including lawyers, may not represent parties unless the Court gives its approval. Only if the matter is not resolved privately by negotiation or mediation will the Court proceed to formally hear and determine the dispute. Matters over $7,500 are dealt with under the general procedure in the Magistrates Court.

In any court proceedings involving a claim for damages as the result of car accident, evidence is given orally at the hearing by those people who are directly involved in the accident or who witnessed the accident. The drivers of each vehicle and their passengers can give evidence of what they saw and what they heard. Courts tend to give more weight to the evidence of independent witnesses to an accident (persons such as drivers of other vehicles in the immediate vicinity or pedestrians who may have been in the area at the time, who were not personally involved).

If any claim is made for damages the onus of proving that the other party was negligent rests upon the person making the claim – that party must establish to the satisfaction of the court that the other party has been negligent. The burden of proof is on the balance of probabilities. This means that the plaintiff will have to establish to the satisfaction of the court that it is more probable than not that the other party was negligent.

To make certain that a witness will attend the court, a witness summons should be issued as soon as the hearing date is known. It is best to have that summons served by a Magistrates Court Bailiff, as conduct money must be given to the witness before the summons becomes enforceable. In the witness summons the witness can be asked to bring any relevant documents with him or her to Court.

A very useful witness is often the police officer, if any, who attended the scene. A person can find out who the officer is (and also who the police believe is responsible for the accident) by applying for a police accident report (see above).

Frequently, as a result of a car accident, a police prosecution is commenced against one of the drivers concerned. These proceedings are quite separate from the civil proceedings where a party claims damages. In civil proceedings for damages the court looks at all the circumstances of the accident before deciding which party or parties are at fault, and can decide that both parties are at fault in varying degrees. Police prosecutions, on the other hand, solely concern the criminal liability of one party involved in the accident, and a conviction, rather than damages, is the potential result.

WRITE-OFFS

Sometimes a vehicle will be so severely damaged that the repair cost will exceed the market value of the vehicle, so it will be uneconomical to repair (called a write-off). In such cases a person is only able to claim the pre-accident value of the vehicle less the wrecking value. A person must be able to prove the current market value of the vehicle at the time of the collision, and this is usually proved by a certificate of valuation from a repairer who inspected the vehicle, or a certificate from some other qualified person such as an RAC officer.