Tourist wins against car hire company in a landmark case
Friday 16 November 2012
In a decision that is going to have significant ramifications for the car hire industry in Australia, a Brisbane Magistrate has found that East Coast Car Rentals has not only acted unconscionably in providing worthless insurance to one of its customers, but has also engaged in false and misleading conduct in representing that it offered insurance of great value. East Coast Car Rentals had refused to pay a claim by a New Zealand tourist who was involved in an accident in Brisbane in 2010 when he inadvertently went through a red light and caused almost $50,000.00 damage to a Mercedes, as well as damaging the hire car.
Mr Bruce Lee and his wife had read on East Coast’s website that ‘the majority of other car rental companies have little or no cover for single vehicle accidents, hail or storm damage or other incidentals which are easily assumed to be covered. We have the most comprehensive and best value covers available’. Although the car hire cost only $24.00 per day, the insurance component taken out by Mr and Mrs Lee was $21.00 per day and they assumed that they had bought comprehensive insurance for the duration of the hire.
After Mr Lee found himself in unfamiliar territory in the Brisbane CBD in peak hour traffic and he inadvertently caused an accident, East Coast relied on the fine print of the back of their rental agreement which said that the company would not grant cover if the customer drove without due care or attention or failed to comply with local traffic rules.
Subsequently Mr Lee was sued for the damages to the hire car by East Coast Car Rentals and also by RACQ for the damage to the Mercedes Benz. Both matters were heard together before Magistrate Cull in the Brisbane Magistrates Court on Tuesday, 13 November 2012.
When Judgment was handed down on Wednesday, 14 November 2012, Mr Lee was successful in his counter claim against East Coast Car Rentals, and whilst RACQ were successful in their claim against Mr Lee, Magistrate Cull ordered that Mr Lee be indemnified by East Coast Car Rentals. Magistrate Cull said “It is my view that the offer of the almost worthless damage waiver as comprehensive and best value cover was unconscionable, as well as being false and misleading”.
“East Coast conducts a hire car business. It has chosen to offer insurance to its customers. It should honour that offer”. When making her decision Magistrate Cull stated, “I conclude that in each claim, East Coast is liable to pay for the damage to the cars.”
Mr Lee’s lawyer Mr Travis Schultz from Schultz Toomey O’Brien Lawyers said, “This is a great result not only for Mr Lee, but for any person who hires a car and takes out the expensive insurance generally offered by hire car companies. People like Mr Lee take out insurance believing they are doing the prudent and sensible thing and with the understanding that should an accident occur they will be covered.”
“This Judgment should go a long way to bringing about changes to the practices of car rental companies who charge exorbitant prices for insurance which actually provide little or no cover at all. Car rental consumers are the winners from this significant decision and we can only hope that the industry realises that consumer protection legislation needs to be taken seriously”, Mr Schultz said.
East Coast Car Rentals was also ordered to pay Mr Lee’s costs.
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