The High Court has permitted a motor insurer to put up security for the disputed balance of motor vehicle storage costs in order to enable the insurer to get release of the vehicle and to stop storage charges being incurred.
The insurer paid out the insured for the full value of the seriously damaged vehicle and, now as owner, sought to get the vehicle from the panelbeaters. The panelbeater’s initially claimed storage costs of R95 220 at the daily rate of R600. A subsequent invoice claimed R43 700 at R250 per day for a five month period. The reduced amount was disputed by the insurer which offered R26 220. The disputed amount eventually came down to R5 244 which amount the insurer’s offered to put up as security by paying that amount in trust to the panelbeater’s attorneys pending resolution of the dispute. The offer was refused and the insurer went to court.
The court found that where a lien (a right of retention of possession) is exercised, the court has a discretion to substitute security for payment as a temporary measure whilst considering any objection to an offer. The court will assess the bona fides of the person holding the asset. It was not disputed that a salvage lien, such as the panelbeater asserted, allows a party to claim repayment of necessary and reasonable expenses incurred by it in preventing property from perishing. The court found, that if it dismissed the application, it would leave the insurer with an election either to pay the panelbeater’s disputed claim or to reconcile itself to an ever-escalating claim for storage charges coupled with litigation burdens whilst its vehicle remained in the panelbeater’s possession in perpetuity or until the end of litigation. The court exercised its discretion in favour of the insurer in those circumstances and found that the tender of security of the balance of the panelbeater’s claim and further storage charges up to the date of the court’s order was not a trivial offer. The tendered security was adequate. The panelbeater would have to decide whether to pursue an action in respect of their alleged claim.
The court gave an order of attorney and client costs against the panelbeater noting that the panelbeater’s conduct was consistent with an unreasonable attempt to bring about grudging payment of disputed storage costs.
The action was clearly and usefully pursued by the insurer’s to create a precedent that prevents towing companies or repairers from impounding vehicles until their disputed claim for storage charges is paid.