Your hired equipment has been damaged by the customer - can you prove it?
This article was published in the Hire and Rental Industry Magazine February 2026, page 24
When equipment is hired out but later damaged, hire businesses face a familiar challenge: who says the equipment wasn’t already faulty, who bears the risk, and can the hirer recover the cost of repair?
The NSW Supreme Court’s decision in Civiltrak Sydney Pty Ltd v Orange Equipment Pty Ltd t/as Orange Hire offers valuable guidance to solving this puzzle.
Background
Orange Hire supplied Civiltrak with a diamond saw cross hired from the owner, Ground Tek. After several days, Civiltrak reported the saw leaking oil. Orange Hire collected it and issued a replacement saw, which was also reported as damaged a few days later.
Both saws were returned to Ground Tek, which repaired them and invoiced Orange Hire for the repairs. Orange Hire paid the repair costs ($18,000) and sought reimbursement from Civiltrak and its Director under a Director’s guarantee.
Civiltrak disputed liability, alleging both saws were ‘faulty’ and challenging the contractual basis of the claim.
The arguments
Orange Hire relied on its General Terms of Hire (General Terms), and a guarantee which was contained in Civiltrak’s application to Orange for “30 day Commercial Credit”.
Clause 10 of the General Terms placed responsibility for any loss, theft, or damage “in any way, or by anyone, during the Hire Period” on the customer.
Pursuant to clause 7.5 of the General Terms the customer was deemed to be satisfied as to the suitability, condition and fitness for purpose of the equipment hired unless Orange Hire was otherwise notified within 24 hours of the commencement of the hire period.
No such notice had been given by Civiltrak.
Civiltrak contended that despite clauses 7.5 and 10, Orange Hire had to prove that the saws weren’t faulty when they were hired, and that Orange Hire couldn’t rely on the invoices issued by Ground Tek to prove the cost of repair.
It said evidence had to be given to explain how each item in the invoices was calculated.
Decision
The Court held that the General Terms in clause 7.5 expressly provided for the allocation of risk as to damaged equipment between Orange Hire and its customer. Failure to notify defects within 24 hours meant the customer was deemed satisfied with the equipment’s condition. This allocation of risk was commercially reasonable.
Nonetheless, there was evidence that the saws were not faulty at the time of hire and had been damaged by Civiltrak including:
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evidence as to Ground Tek’s processes regarding maintenance and servicing of its equipment
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the fact that not one but two diamond saws had been damaged while in possession of Civiltrak
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if the saws were faulty from the start Orange Hire would have been called back immediately.
Unless Civiltrak could prove a defect existed and was reported in accordance with the General Terms, they would bear the consequences.
As to proof of the cost of repairs, there was no suggestion that the invoices from Ground Tek were inflated. The tender of repair invoices is an orthodox and effective way of proving loss, particularly for relatively small amounts.
Practical takeaways for hire businesses
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Use clear, comprehensive hire terms that expressly allocate risk for loss, theft and damage.
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Require defects to be reported within a stipulated time.
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Document equipment condition on delivery and return (photos, checklists).
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Keep maintenance and service records.
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Obtain detailed repair invoices from an independent party.
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Insist on director’s guarantees, especially where customers are small companies.
Authors: David Creais and Yasmin Humaidan
This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.