WA Court of Appeal: RAC wins $2,000 insurance dispute in costly legal fight with CompassCorp hire car company

WA’s largest insurer has taken a $2000 dispute with a hire-car company from six years ago all the way to the State’s highest court — and won. The bizarre and expensive legal case, which attracted a top Sydney silk and a prominent barrister who’s now a Federal Judge, began in 2019 when a Perth woman crashed her car. The collision — between Elaina Miller’s vehicle and a small Opel hatchback driven by Melanie McKnight — unfolded on May 13, 2019. It was indisputably caused by Ms Miller’s negligence. Ms McKnight, who was pregnant at the time, was advised by a tow truck driver at the scene to reach out to accident-hire company CompassCorp. Shortly after doing so, and skimming over a rental agreement, a Toyota Camry was delivered to her Alkimos home. Ms McKnight used the replacement car for 39 days while her own vehicle underwent repairs, ultimately sending the $3832.66 bill to Ms Miller’s insurer, RAC. But RAC footed just under half that claimed amount ($1901.85), prompting Ms McKnight to take Ms Miller to the Magistrates Court. After a trial, a magistrate concluded Ms McKnight was entitled to recover the cost of hiring a replacement car, but not Compass’ additional credit hire costs associated with a range of other, rather non-traditional benefits (compared to mainstream car rental firms) provided by the accident-hire company. But on appeal, a District Court judge ruled Ms McKnight, the crash victim, was entitled to recover the whole of Compass’ costs, including the credit hire charges. Now, the case has travelled all the way to the WA Court of Appeal, with Ms Miller claiming the rental agreement Ms McKnight had entered into was unreasonable. The court ultimately sided with Ms Miller. Judges said though the dispute over the relatively small sum was “nominally between Ms Miller and Ms McKnight”, as a matter of commercial substance the dispute was also between RAC and Compass and involve “a matter of general importance to their businesses” — with the result to force substantive changes to the losing side. The Court of Appeal also found Compass’ total charges substantially exceeded the amount that would have been due had Ms McKnight used a mainstream hire-car company. It also concluded the charges she had claimed should have covered only the daily cost of the rental car, and the one-off delivery fee, and not the costs associated with additional services, such as the ability to hire the replacement car on credit and premium roadside assistance. Barrister Nicholas Owens SC, now a Federal Court judge, argued that a person who incurred additional costs by using a credit hire company, and as a result obtained additional benefits, could not claim those extra charges. But Ms McKnight’s legal counsel, top silk Bret Walker SC, argued none of the alleged additional benefits provided by Compass made the mum “better off” than before the crash, caused by Ms Miller’s “wrongdoing”. The Court of Appeal was not convinced, however, concluding that it was not Ms Miller’s insurer, RAC, who owed Compass the outstanding amount of $1,930.81, but Ms McKnight. “The magistrate’s ultimate conclusion that Ms McKnight’s claim should be dismissed was correct. The primary appeal judge should have affirmed the magistrate’s decision,” court documents read. The case comes amid broader scrutiny on how WA’s tow trucks operate. Despite changes to State Government laws, 7NEWS this week highlighted rogue operators still existing and holding cars ransom.