On 26 December 1985, the plaintiff, a goldsmith, needing a new car for business purposes, bought a Nissan Skyline 2.4GT Sedan, registration number BH6277. The price was $20,000. He bought the new car on hire-purchase. He traded in his old car, valued at $5,000, borrowing the balance of $15,000 from a finance company.

He insured the new car with Borneo Insurance Sdn Bhd. In the policy, the car was stated to have been manufactured in 1984 and the 'insured's estimate of value' was given as $20,000. Under the policy, the insured was liable for the first $1,200 of any loss. The insurance company had an option, in the event of a total loss, to 'pay in cash the insured value less 25% depreciation or the market value of the vehicle, whichever is less'; and less also the $1,200 excess to which I have referred.

On 19 January 1986, the plaintiff met with an accident in the new car. The other vehicle involved was being driven by the first defendant, an employee of the second defendant. The plaintiff's new car was a total loss.

On 5 February 1986, the plaintiff's insurance company wrote to the plaintiff offering to pay him $13,800, made up as follows: Sum insured$20,000.00 Less depreciation 25%$ 5,000.00 $15,000.00 Less excess$ 1,200.00 $13,800.00

The plaintiff accepted this sum from his insurers, and brought an action in the subordinate court claiming damages against the first defendant and the second defendant. He included in his claim for damages a claim for loss of use, on which he failed. There were two other items in his claim. One was for the loss of $1,200 under the excess clause of his policy. The second defendant brought in its own insurers as third party, and the third party admitted liability for this sum, so I am not concerned with this. There remains $5,000, the difference between the sum of $20,000, which the plaintiff paid for the new car, and $15,000, the sum which (less the $1,200) he received from his own insurance company.

At the trial of the action, before the chief magistrate, the chief magistrate dealt with this claim for $5,000 in the following terms:

As for the loss of $5,000. It was no fault of his (the plaintiff's) that he sustained this loss. Under the terms of his insurance policy there was no way for him to seek a decrease in the written-off value of the car. The terms are written into the policy. There is no disputing it. He has had to bear that loss. So also the loss under the excess clause. The words in the policy are clear. But to whom does he look to recover his losses?

The plaintiff bought a brand new car. Through no fault of his own he met an accident. It was written off. He has been deprived of it. I do not think it would be fair to say that he should go and buy another without being reimbursed for it. To my mind $5,000 could be used to put as a down-payment for another car. He could have borrowed it and made the down-payment and then claimed for it. Either way if he bought or did not buy another car he sustained a loss. One has to look at the loss sustained at the time of the accident. There was a loss of under two heads, $5,000 and $1,200. I think he should be compensated for the loss.

Basing himself on this reasoning, the chief magistrate (before whom there was no evidence as to what it would have cost to replace a three-week-old car, the same or substantially the same as the car written off) awarded the plaintiff $5,000 damages under this head. The chief magistrate ordered that the second defendant should pay the plaintiff the sum of $6,200 (and costs of $800); and he further ordered that the third party should pay the second defendant the sum awarded to the plaintiff (and further costs of $400). From this decision, the third party now appeals.

The case for the appellant is simply that the proper measure of the plaintiff's damages was the market value of the plaintiff's car at the date of the accident. The appellant says it was for the plaintiff to prove at the trial what the market value