Key Takeaway
The High Court confirmed that when a vehicle is damaged through no fault of the owner, they can claim the cost of hiring a broadly equivalent replacement, not just any vehicle that gets them from A to B. But the decision left key questions unanswered, and how those gaps are being filled varies significantly across Australian states.
1. Why This Decision Matters
Before December 2021, credit hire in Australia operated in legal uncertainty. Could a third party whose prestige vehicle was damaged insist on hiring a replacement of the same make and model? Or were they limited to any basic vehicle that met their transport needs?
Insurers argued the latter. Credit hire companies argued the former. Lower courts were split. The industry needed a definitive answer from the highest court in the land.
That answer came on 8 December 2021, when the High Court of Australia handed down its decision in Arsalan v Rixon; Nguyen v Cassim [2021] HCA 40.
2. The Facts
The case actually involved two separate motor vehicle collisions heard together.
Mr Rixon owned an Audi A3 that was damaged in a collision caused by Mr Arsalan. While his vehicle was being repaired (a process that took around two months), Mr Rixon hired a replacement car of the same make and model through a credit hire arrangement.
In the companion case, Mr Cassim's BMW 535i was damaged by Mr Nguyen's vehicle. Mr Cassim similarly hired a prestige replacement on credit.
The central question was the same in both cases. Were the claimants entitled to recover the cost of hiring a vehicle equivalent to their own? Or should they only recover the cost of a basic vehicle sufficient for their transport needs?
3. What the High Court Decided
The High Court unanimously held that where a plaintiff is entitled to a replacement vehicle, they are entitled to a vehicle that is broadly equivalent to their damaged vehicle.
This was a significant win for third parties and credit hire providers. The Court rejected the argument that claimants should be limited to a vehicle that simply satisfies their "need" for transport. The loose concept of "need" was expressly rejected.
Instead, the Court identified two heads of damage when assessing the loss suffered:
- Physical inconvenience of not being able to use the damaged vehicle
- Loss of amenity or enjoyment of use, meaning not being able to use the functions and features of their specific vehicle
This second head, loss of amenity, is what makes the decision so important. It recognises that a person who drives a prestige vehicle derives a benefit from its features, comfort, and performance that goes beyond mere transport. Compensation should reflect that.
4. What the High Court Did NOT Decide
Here's where things get interesting, and where the real-world disputes continue.
The High Court provided minimal guidance on several critical practical questions:
What is "broadly equivalent"? The Court said third parties can hire a broadly equivalent vehicle but didn't define what that means in practice. Does a 2015 Audi A3 with 80,000km on the clock require a brand-new Audi A3 as replacement? Most would say no, but the Court didn't draw those lines.
How do you determine a "reasonable" rate? The Court acknowledged that hire charges might be unreasonable in some cases, but offered no framework for assessing reasonableness. This left the most commonly disputed element of credit hire claims, the daily rate, without clear guidance.
What about credit hire add-ons? Many credit hire providers bundle additional services into their rates, including claims management, roadside assistance, zero excess policies, and legal representation. The High Court didn't address whether these extras form part of recoverable damages.
5. How Different States Have Responded
Three years on from Arsalan, the picture across Australia is mixed.
New South Wales: The Small Claims Division of the Local Court has consistently awarded rates at the bottom of the range, both before and after Arsalan. NSW courts tend to take a conservative approach to quantum.
Victoria and Queensland: Less consistency. With a greater number of judicial officers deciding these disputes, outcomes vary more widely. Some follow the NSW approach. Others are more generous.
South Australia: The Magistrates Court held in 2023 (and maintained the same approach in 2024) that the lowest market rate should be used in calculating reasonable damages.
Western Australia: The Court of Appeal delivered a landmark decision in 2025 in Miller v McKnight [No 2] [2025] WASCA 61, which significantly narrowed what credit hire providers can recover. This decision could reshape the national landscape.
6. Practical Implications for Credit Hire Professionals
The Arsalan decision created both opportunity and risk for credit hire operators.
The opportunity: The "broadly equivalent" principle means credit hire companies can legitimately supply vehicles that match the make, model, and class of the damaged vehicle. This supports premium hire rates where justified.
The risk: Many providers have continued to supply vehicles based solely on make and model with little regard to the age or value of the damaged vehicle. A 10-year-old Toyota Camry worth $8,000 doesn't justify hiring a brand-new Camry valued at $35,000. Courts are increasingly scrutinising this gap.
Key considerations for operators:
Consider the age, mileage, and market value of the damaged vehicle when selecting a replacement. Ensure rates are defensible against mainstream market comparisons. Document the basis for vehicle selection and pricing. Be prepared for state-by-state variation in how courts assess quantum. Keep detailed records of how "broadly equivalent" was determined for each claim.
7. Where Things Stand Now
Arsalan settled the headline question. You can claim a broadly equivalent vehicle. But the real battles are being fought in the detail, and those battles are playing out differently across six states and two territories.
The 2025 Western Australian Court of Appeal decision in Miller v McKnight has added another dimension, particularly around bundled services and non-compensable benefits. If other jurisdictions follow the WA approach, credit hire operators will need to adjust both their pricing models and their evidence strategies.
For any credit hire professional operating in Australia, understanding Arsalan isn't optional. It's the foundation. But staying across how each state interprets and applies it is what separates a strong claim from a vulnerable one.
Key Authorities
- Arsalan v Rixon; Nguyen v Cassim [2021] HCA 40
- Miller v McKnight [No 2] [2025] WASCA 61
- McKnight v Miller [2023] WADC 107
- Patterson v Kenny [2017] WADC 58
CreditHire-Assist is an AI-powered legal assistant built specifically for Australian credit hire professionals. It draws on a curated knowledge base of Australian case law, legislation, and industry practice to support faster, more accurate claims handling.
Co-Founder, CreditHire Assist
Craig has more than thirty years inside credit hire and motor claims, from Glaisyers to AX. He writes about how credit hire actually works in practice, the operational discipline that wins files, and the BHR and intervention arguments that come up week after week.
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