Tag: accelerated depreciation

More on ICBC Claims and Accelerated Vehicle Depreciation


As I’ve previously written, when a vehicle is involved in a crash and is then repaired it is generally worth less than it would be had it not been in the crash.  The reason for this is quite simple, when a buyer is looking to purchase a vehicle, those that have previously been damaged and repaired carry a stigma.  This stigma generally results in a lower resale value.
The law recognizes this lost value.  If your vehicle was damaged due the the actions of others you can sue to recover your damages for “accelerated depreciation“.  Reasons for judgement were released today discussing this area of law.
In today’s case (Signorello v. Khan) the Plaintiff owned at Mercedez-Benz SL65 AMG.  The vehicle cost $210,000.   On route to a business trip in 2007 he left the vehicle with a valet service.  The valet crashed the vehicle causing $26,000 of damage which was ultimately repaired.
The Plaintiff then claimed damages for accelerated depreciation.  The Defendant argued that the vehicle was repaired properly and to the highest standard therefore there was no accelerated depreciation.  Mr. Justice Grauer disagreed and found that, despite the sufficient repairs, the vehicle was now left with a reduced value and awarded the Plaintiff $16,000 for this loss.  In reaching this verdict Mr. Justice Grauer gave the following reasons:

[11]         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.

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

[13]         The plaintiff’s claim under this heading was supported by expert evidence from Mr. Garry Cogbill of C/S Automotive Appraisals.  It was his conclusion that the loss amounted to 15% of the vehicle’s value at the time of the collision, varying between $12,500 and $18,000 depending upon whether one takes wholesale or retail.

[14]         The defendants’ contention that the plaintiff has suffered no loss in this regard was supported by expert evidence from Mr. Tom Cino of T.C. Consultants.  Mr. Cino expressed the view that so long as a vehicle damaged in an accident has been repaired properly, as this one clearly was, then there is no loss due to accelerated depreciation regardless of the amount of the damage.

[15]         Having read their reports and listened to the evidence of both experts, I find that I prefer the evidence of Mr. Cogbill to that of Mr. Cino…

[19]         The issue is whether, in the marketplace, people prepared to pay a six-figure sum for an exotic performance motorcar such as Mr. Signorello’s are likely to pay less for one that they learn has sustained $26,000 worth of damage, then they would for one that had never been in an accident, all else being equal.

[20]         The thrust of Mr. Cino’s opinion seems to be that a reasonable person who is as knowledgeable about motor vehicles as he most certainly is, would not think that a car that had been properly repaired is worth less than a like vehicle that has never been damaged.  That does not answer the question of what is likely to happen to this car in the marketplace, where reason does not necessarily prevail, and where few have his depth of knowledge.

[21]         Mr. Cino further based his opinion in part on the proposition that the majority of the repair work performed on Mr. Signorello’s Mercedes was to repair cosmetic damage rather than mechanical damage or damage to the frame.  He included in his description of “cosmetic damage” damage that could be repaired by the removal and replacement of the damaged part.  Mr. Cogbill, on the other hand, described most of the damage as other than cosmetic.  I prefer Mr. Cogbill’s approach.

[22]         To my mind, to be of significance in this context, cosmetic damage must mean damage that pertains only to the vehicle’s appearance, and need not be repaired in order for the vehicle to operate properly.  On that basis, I can well imagine that a potential buyer’s approach to a vehicle that had suffered $20,000 worth of cosmetic damage would be different from his approach to a vehicle that had suffered $20,000 worth of damage of a type that had to be repaired in order for the vehicle to be operable.  In this case, it is clear that the majority of the damage to the SL 65 was of the latter type, even if it consisted largely of the removal and replacement of mechanical parts.  I therefore found Mr. Cino’s approach in this regard to be less than convincing.

[23]         Finally, Mr. Cino sought to support his opinion by making a comparison to people purchasing very expensive vintage collector car, such as a 1967 Plymouth Barracuda, that has had all kinds of work put into it to restore what was a rusted hulk to like-new status.  With the greatest respect, that is not an apt comparison to a discriminating purchaser considering a near-new exotic luxury sports car….

[29] The law does not require that the plaintiff demonstrate the loss precisely by having sold the vehicle.  It is enough for him to establish, as I find that he has, a reduction in its value:  seeCummings v. 565204 B.C. Ltd., 2009 BCSC 1009.  I accept Mr. Cogbill’s conclusion in that regard, and doing the best that I can with his figures, I assess the reduction at $16,000.

Another interesting part of this judgement was the Court’s award of costs.  Usually when a Plaintiff is awarded less than $25,000 they are deprived their costs because they could have sued in Small Claims Court.  Despite this usual result, Mr. Justice Grauer awarded the Plaintiff costs finding it is reasonable to bring accelerated depreciation lawsuits in the BC Supreme Court even if the claim is worth below $25,000.  The Court provided the following useful reasons:

[52] On the matter of costs I am satisfied, in all of the circumstances of this case, that it was appropriate to commence this action in Supreme Court.  It was subject to former Rule 66, indicating an attempt to reduce expense.  It concerned an area that is not well traversed in fact or in law, particularly given the rarity and unusual nature of this motor vehicle.  Therefore, I find that the plaintiff is not limited to disbursements only, as though the action should have been brought in Provincial Court.  He is entitled to costs in the ordinary way under the Supreme Court Rules.

Vehicle Damage and the Law of "Accelerated Depreciation"

When a vehicle is damaged in a BC car crash and subsequently repaired, the repaired vehicle may have a lower market value than it otherwise would have.  Can the owner of such a vehicle be compensated for this loss?  The answer is yes and is dealt with under a head of damage known as ‘accelerated depreciation’.  Reasons for judgment were released today by the BC Supreme Court dealing with this legal principle.
In today’s case (Cummings v. Daewoo Richmond) the Plaintiff was injured in a 2008 motor vehicle collision.  The Plaintiff purchased a used vehicle from the Defendant Daewoo.  Seven days later she lost control of her vehicle and was injured as a result of the crash.  Madam Justice Gerow found that the Defendant sold the Plaintiff a vehicle with defective tires.  The court then concluded that “the accident was caused by a loss of friction due to the wear on the rear tires of the vehicle, and that Daewoo has failed to establish that Ms. Cummings’ operation of the vehicle either caused or contributed to the accident.”
The court went on to award the Plaintiff just over $38,000 in total damages including $7,600 for ‘accelerated depreciation’ of her vehicle.  I set Madam Gerow’s discussion out of this area of the law below:

Accelerated depreciation

[70] Ms. Cummings is claiming the amount of $7,600 for accelerated depreciation of the Nissan due to the damage it sustained in the accident. For the following reasons, I have concluded that an award in that amount for accelerated depreciation is appropriate.

[71] The cost to repair the Nissan following the June 2006 motor vehicle accident was in excess of $13,000. Ms. Cummings tried to trade the Nissan in following the accident but was told by Dean Dodd, the lease manager at the Richmond Honda dealership, that the dealership is not interested in a vehicle that had sustained more than $5,000 in damage in an accident. Mr. Dodd confirmed that the dealership does not accept cars for trade that have in excess of $4,000 damage.

[72] Mr. Haffenden testified that the owner of a vehicle that has been involved in an accident where the damages exceed $2,000 must declare the damages, whether selling privately or to a dealer. In his opinion, the Nissan would have suffered a depreciation of approximately 20% or $7,600 on the date of the accident as a result of the damage it sustained.

[73] It is not necessary for a plaintiff to sell a vehicle in order to make out a claim for accelerated depreciation. The assessment of a claim for accelerated depreciation should be made on the day of the accident:  Reinders v. Wilkinson (1994), 51 B.C.A.C. 230.

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ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

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