Accelerated Depreciation Claim Succeeds From Crash Causing $18,000 in Vehicle Damage

Reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, awarding a Plaintiff damages for accelerated vehicle depreciation following a significant collision.
In this week’s case (Pan v. Shihundu) the Plaintiff was involved in two collisions, the first causing significant vehicle damage resulting in over $18,000 of repair costs.  The Plaintiff was injured and sued for damages.  Among these was a claim for ‘accelerated vehicle depreciation’ arguing that the vehicle’s market value was deflated due to the Defendant’s fault.  ICBC opposed this claim however the Court sided with the Plaintiff.  In awarding damages for this loss Mr. Justice Punnett provided the following reasons:
160]     The plaintiff purchased the 2004 BMW M3 for $30,000 US in March 2008. As noted above, the vehicle required $18,421 in repairs following the First Accident. After that accident the plaintiff attempted to sell the BMW. He listed it on Craigslist for three months at an asking price of $27,000. It was his evidence that he had a few inquiries but no offers after advising prospective buyers of the damage caused by the First Accident. He made similar attempts to sell it in 2011 but received no response. As a result, he still owns and drives the vehicle.
[161]     The plaintiff provided an expert report from Carey Scarrow, who was qualified as an expert in the field of automotive appraisals and automotive collision repairs. He opined that as a result of the 2009 accident the vehicle sustained an accelerated depreciation of $4,000 due to the stigma associated with the BMW having been in the accident.
[162]     In examining the vehicle Mr. Scarrow noted uneven body panel alignment in the front of the vehicle and other minor deficiencies including flaws in the refinished body panels with inconsistent coating thickness. He commented that the overall repair quality was of acceptable industry standards for the calibre of car but not representative of its previous pre-accident factory standard.
[163]     Mr. Scarrow noted that it was mandatory for the seller to declare any damage over $2,000 to a prospective purchaser. He stated that the repaired areas will deteriorate at varying rates, making the repairs more evident as the vehicle ages.
[164]     He then provided his opinion that the collision repairs resulted in a value of $15,000, an accelerated depreciation of $4,000 when compared with an estimated value of $19,000 for a BMW of that make, age, and mileage but without the accident damage. In his report Mr. Scarrow indicated that he based this opinion on his inspection of the vehicle itself, references to the Sanford Gold Book, July 2013 edition (a used car valuation guide), as well as what he referred to as “local market comparable research.” In cross-examination he expanded somewhat on this methodology, noting that he relies on his years of experience in used car valuation and sales to determine the valuation numbers. In this case he said that he also posted the car for sale for a period of three to four days and gauged the response from potential buyers. He noted that potential buyers for vehicles of this type are particularly “fussy” about the details of previous damage and repairs.
[165]     The plaintiff relies on Signorello v. Khan, 2010 BCSC 1448, and Cummings v. 565204 B.C. LTD., 2009 BCSC 1009. Signorello stands for the proposition that a vehicle need not be sold in order to demonstrate an accelerated depreciation loss (para. 29); see also Cummings, at para. 73.
[166]     The defendants acknowledge that claims for accelerated depreciation are good in law. However, they submit there is a heavy burden on a plaintiff to adduce sufficient evidence to prove that accelerated depreciation has actually taken place. They rely on Miles v. Mendoza, 1994 CanLII 419 (B.C.S.C.), and Burrard Import Ltd. v. Budget Rent-A-Car of B.C. Ltd, 2001 BCPC 75. In Miles, the court noted that “difficulties of proof” arise where the car is not sold after the accident, as the depreciating effect of the accident declines over time. The court also said that expert evidence of that only spoke to the general “stigma” attaching to damaged vehicles was not sufficiently persuasive proof to award damages for accelerated depreciation: “it cannot be “assumed”, by virtue of the occurrence of an accident requiring extensive repairs, that a properly repaired vehicle has suffered accelerated depreciation” (para. 40).
[167]     Burrard followed Miles in finding that the evidence did not meet the necessary standard given the claimant’s expert’s opinion amounted to no more than a simple proposition and as a result was not the type of persuasive evidence contemplated by the jurisprudence.
[168]     The defendants submit that the plaintiff must prove that the accelerated depreciation actually occurred by adducing evidence that goes over and above the simple proposition that a car which has been in an accident, even though properly repaired, carries a stigma. They say that in this case the plaintiff’s evidence does not go beyond asserting the existence of such a stigma.
[169]     I cannot accept this submission, for two reasons. First, in my view, the evidentiary standard as described in Miles has not been applied quite so strictly in recent decisions. In Cummings, for example, Madam Justice Gerow awarded $7,600 in damages for accelerated depreciation. There the evidence consisted of an automobile valuation expert’s opinion that the plaintiff’s vehicle had suffered an accelerated depreciation of 20% following the accident. There is no comment in the decision as to the factual basis for this opinion and no suggestion that it went beyond the expert’s experience of the “stigma” in the marketplace. The owner had also attempted to trade the vehicle in but was informed by the dealership that they did not accept trade-ins on vehicles with more than $5,000 in damage.
[170]     In Signorello the car was an extremely rare exotic high-performance luxury sports car, manufactured by Mercedes-Benz. The valuation expert set a value based on conversations he had with various Mercedes-Benz dealers in the province. The court identified some concerns with this evidence, noting that the defendant had argued that the expert’s opinion was based on hearsay and opinion evidence itself. Justice Grauer then said at para. 25:
[25]      … the starting point for any vehicle appraisal is the Canadian Black Book, a guide to the wholesale value of used vehicles in Canada relied upon by dealers across the country. This car is so rare, however, that it does not appear in theBlack Book. Of course the figures in that book could also be described as opinion evidence … In the particular circumstances of the case, it is my conclusion that it was not an inappropriate way for Mr. Cogbill to approach the problem, although it would have been preferable had he included the specifics of his conversations. As it was, he did indicate the dealers whom he consulted, …
[171]     From this I take that the expert may rely on the Black Book or similar valuation guides in coming to an opinion as to the value of the vehicle. It also suggests that the “difficulties of proof” that may arise if the car is not sold can be overcome by an expert’s opinion.
[172]     Second, even if one accepts that the standard from Miles still applies, I am of the view that the evidence tendered here does go beyond a “bare” opinion that the car has suffered depreciation due to a “stigma.” Mr. Scarrow based his valuation on a long history of appraising cars, including BMWs. He also relied on the Gold Book, a valuation guide, and market research that he described in cross-examination. The plaintiff also provided evidence that he had attempted to sell the vehicle at a reduced price following the accident and received no offers.
[173]     I conclude that the plaintiff’s evidence is sufficient to establish accelerated depreciation in value for the BMW. I accept Mr. Scarrow’s figures and award damages of $4,000.