Suing  for  accelerated   depreciation  of  a  car  after  an accident

 

This article deals with claims by car owners that involves receiving compensation from the people who caused the accidents for diminished value of damaged vehicles—a claim for damages that owner of cars rarely seek from those responsible for the accidents.         

When a vehicle is damaged in an accident, especially when the damage is really extensive, the insurance company has two options. They can replace the car by paying the policy holder what the insurance company believes is what the car is worth if it didn’t have the accident or alternatively, if the cost of repairs doesn’t exceed the value of the car, they will fix it.

If your car is fixed and later you wish to sell it to another person, in Canada (and probably elsewhere) there are two kinds of documents in which you should show at least one of them to your potential buyer. They are called, Carfax and CarProof. Both documents serve the same purpose. Insurance companies report damages to the companies that prepare these documents so that potential buyers of these vehicles know that the vehicles have suffered from damage. For example, would you really want to buy a car that suffered damages which included alignment problems?

In British Columbia, a person wishing to sell a used motor vehicle that has sustained damage in an accident costing $2,000 or more to repair must declare that to any potential buyer.  Other matters that must be declared include whether the vehicle has been leased or rented, whether it has been used as an emergency vehicle, and whether it has been registered out of province.

Raymond Signorello had leased a Mercedes-Benz SL65 AMG that is the stuff of a young man's fantasy, and an older man's crisis.  It is a limited-production roadster.  Each one is hand-signed.  It is powered by a twin-turbocharged 600 horsepower, 6 litre, 36 valve V-12 engine, capable of moving from 0 to 100 km/h in 4.2 seconds.  In 2005, it was the fastest production motor car in the world.  Few are produced, and very few find their way to Canada.  They are manufactured and finished to an extremely high quality.  They are expensive, and appropriately described as 'exotic high-performance luxury sports cars'. He paid $210,094.36 for this car; the kind of car very few of us can afford to purchase.

Since any person considering the purchase of Raymond’s Mercedes would presumably investigate further and thereby become aware of its history and the cost of its repairs, Raymond maintained that the market value of his vehicle has been reduced, a phenomenon known as accelerated depreciation. Since any person considering the purchase of Raymond’s Mercedes would presumably investigate further and thereby become aware of its history and the cost of its repairs, Raymond maintained that the market value of his vehicle has been reduced, a phenomenon known as accelerated depreciation.

Now someone may still want to buy your car even though it suffered from an alignment distortion but they would want you to reduce the amount you are asking for because of the alignment distortion. This means that the true value of your car would be reduced because of the accident even though the car was fixed and the alignment distortion doesn’t exist anymore.             

Raymond who lived in the province of British Columbia, Canada, was the lessee of a 2005 Mercedes-Benz SL65 AMG Convertible, a sports-luxury vehicle he now owns in which he paid $210,094.36.  While he was still leasing the car, he drove it to the Vancouver Airport to leave on a business trip.  The car was in pristine condition with only 21,000 km on the odometer when he turned it over to Gateway Valet Service, operated by Imperial Parking Canada Corporation.  Shortly thereafter, while being driven by the valet parker, the defendant Khan, the vehicle was damaged. 

Mr. Khan was driving Raymond’s Mercedes along Terrace Road to the parking lot used by Gateway Valet Service.  This was the route normally taken for that purpose. Terrace Road is flat and straight, and consists of one lane in each direction traveling on east/west axis.  It was raining.  Ahead, Mr. Khan saw a food truck approaching from his left and turning right onto Terrace Road, towards him.  He slowed down while he passed the food truck, and then accelerated.  When he did so, he lost control.  The back wheels spun out, causing the car to spin 180°.  It then drifted across the oncoming lane and left the road.  Still out of control, it crossed a small concrete barrier, which was no doubt particularly damaging for a low sports car that had been lowered still further, and came to rest on top of a row of 3 foot trees.  He should never have accelerated, especially on a wet road while driving a very powerful car.

The repairs to the car took more than two months and cost $26,000.00, enough to cause many vehicles to be written off.  But in this particular case, Raymond wanted to keep the car he had leased.

The repairs, carried out by Mercedes-Benz, were of the highest standard, restoring the vehicle to factory specifications.  Their cost was fully covered.  The issue in this case is whether Raymond was entitled to more.  He claimed damages for accelerated depreciation, loss of use, and emotional distress.  In addition, he alleges gross negligence (ordinary negligence is admitted automatically), and he also claims aggravated and punitive damages. 

                                                                                                 

Raymond sued for damages in one of the Superior Courts in British Columbia. The defendants in this case were Wajahat Ahmad Khan, (the man who was parking the Mercedes-Benz) and his employer, Imperial Parking Canada Corporation.

Mr. Khan denied trying to race the vehicle.  I believe him. I think he simply didn’t know just how powerful that engine was when he depressed the gas pedal. A few days after this, he was discharged from his employment, at least partly on account of this accident, and because he was issued a ticket by the police for driving without consideration of others on the road. In Ontario, that is called careless driving.  He was able to obtain a reduction of the fine when he appeared in court to contest the ticket however he was still convicted of the charge.

We have to be mindful of the fact that that when Raymond sued for damages, he actually own the car outright but at the time of the accident, he was still leasing it.  

At the end of his lease, Raymond had the option to purchase the vehicle for a buyout of $90,000 plus taxes and miscellaneous charges.  But it was not a situation where he could simply walk away instead.  If he turned in the vehicle, he had to pay the difference between $90,000 and the amount for which the leasing company could sell the vehicle.  He testified, and which the trial judge accepted, that he was told by the leasing company that they would be lucky to get $60,000 for the vehicle given its accident history, so that he would have to pay them $30,000 if he chose not to exercise his option.  On that basis, he bought the vehicle.

The law does not require that the plaintiff has to demonstrate the loss precisely by having sold the vehicle.  It is enough for him to establish that there is a reduction in its value.

Raymond pointed out that he was deprived of the use of his vehicle for two months following the accident, during which time he had to maintain his lease payments of $2,957.76 per month.  In addition, he had to return the car several times for adjustments, including one longer period of time to repair a problem with the suspension that had not been fully resolved.  He was not interested in a rental car from Budget or Enterprise as a replacement.  For part of the time he was without a vehicle, he was given a replacement SUV by Mercedes-Benz at no charge.  At other times, he relied on his friends or took taxis.  Although he cannot be precise about dates, he testified that he maintained his normal schedule of being out of the city on business for approximately two weeks a month.  In all of the circumstances, he claims the equivalent of two months' lease payments as damages for the loss of use and inconvenience caused him by the accident.  The total came to $5,915.52.

The plaintiff was paying money for the use of his car on a lease basis.  The use of the vehicle was taken from him by the actions of the defendant.  What better measure of his loss is there than the monies he was forced to continue paying without benefit of use and without gaining any advantage - an advantage, I would suggest, that he would have got if he had been buying the car and was simply continuing the payments.  I do not think the car payments would have been a measure of damages but in my view lease or rent payments would be.

The judge ruled that “on the evidence, a portion of the monthly lease payment did go to pay down the residual value of the Mercedes, giving the plaintiff an advantage.  Second, the plaintiff was out of town for close to half the time in question, during which period he suffered minimal loss.  Third, he did enjoy the use of a Mercedes-Benz vehicle, albeit lower on the prestige scale, for a significant portion of the time.” The judge awarded Raymond $3,000 since Raymond incurred a loss in this regard, including loss of use and the inconvenience of having to return the vehicle on several occasions.

Raymond also claims damages under this heading on the following basis: he was greatly inconvenienced by the accident; he was shocked, angry and upset for months thereafter; the accident distracted him from his business and his busy schedule; his trust in the valet parking has been eroded, and the accident received local media coverage which was embarrassing to him.

In the absence of evidence of actual psychological injury attributable to the defendants' breach, the kind of complaint put forward by Raymond is not compensable in law.  Therefore the judge didn’t award damages under this heading. If you are claiming damages for psychological damages, you better have a report from a psychologist or a psychiatrist. Your word and those of other laymen isn’t sufficient evidence that would justify an award for damages.

Aggravated damages are compensatory in nature and are intended to compensate an injured party for the intangible injuries that the tortfeasor (person who did the wrong act) ought to have foreseen, for such elements as pain, anguish, grief and humiliation.  Such losses are non-pecuniary in nature, and must be sufficiently significant in depth, duration or both to justify the making of such an award.  It must flow from the aggravation of the plaintiff's injury by the defendant's high-handed conduct. 

Punitive damages, on the other hand, are intended to punish the defendant, not to compensate the plaintiff.  But since the money goes to the plaintiff, it constitutes a windfall for the plaintiff. However, they can be awarded only under certain rare and exceptional circumstances. As a matter of law, punitive damages may be awarded only where there has been conduct on the part of a defendant that is so outrageous as to deserve condemnation beyond his liability for compensatory damages, in order to achieve the objectives of retribution, deterrence and denunciation.

Moreover, the law dictates that any award of punitive damages must serve a rational purpose.  The question is whether Mr. Khan's conduct was so outrageous that punitive damages are rationally required to achieve the purposes of retribution, deterrence and denunciation.

I personally don’t think punitive damages would apply in this particular case. Mr. Khan was careless in the manner of his driving but he wasn’t deliberately racing the vehicle after he passed the truck.

The judge ruled; “While Mr. Khan's conduct undoubtedly was negligent, and admittedly so, I am unable to find anything in the evidence that would elevate it to the status of gross negligence, or to the level of outrageousness or high handedness that would justify an award of either aggravated or punitive damages.”

Had the accident occurred under circumstances that indicated that Mr. Khan had taken Mercedes for a joyride, or was racing it in a manner that deliberately put it at risk, the judge’s decision might have be different. 

The judge also ruled that Raymond was entitled to an award of $1,607.61 for expenses incurred in relation to repairs to the Renntech modifications.  The defendants had in fact tendered this amount to the plaintiff, but he did not cash the cheque out of fear that doing so would somehow restrict his claim.  His logic may be open to question, but his entitlement was not in doubt.

He was awarded $20,607.61 plus interest. Out of that, he would have had to pay his lawyer for the two and a half days in court along with the preparation of the case. He also had to pay some of the costs of the defendants.

He should have sued in the Small Claims Court. That court is a ‘do-it-yourself’ court, where members of the public who are not lawyers can handle their own cases for amounts under $25,000. It is a court of law, but its rules and procedures are designed to make it as easy as possible for people to resolve their disputes.  The court process is also intended to be less expensive and less demanding than other courts, such as the Supreme Court of British Columbia. Certainly the court fees are less expensive in the Small Claims Court.

In my opinion, his lawyer failed in his duty towards Raymond. He should never have sued the two defendants for anything other than the accelerated loss of value and the Renntech modifications. Suing for the non-pecuniary damages was a pointless exercise. A competent lawyer would have foreseen the consequences of going in that direction when the law is quite clear on what is needed to win those arguments. He should have done his homework by researching past decisions on matters involving non-pecuniary claims.  He charged his client for an extra ½ a day’s attendance in court for his claim for aggravated and punitive damages when it was obvious that such damages would not be awarded since there was no evidence other that Mr. Kahn was simply careless and not criminally negligent. With the lawyer suing for those unsuccessful awards, it would bring the case into the higher court and that being as it is, his fee would be much higher.