This paper presents a compelling combination of the two negative-imaginary (NI) control systems: a consensus-based formation control framework for a hybrid multi-vehicle system and a new dynamic obstacle detection and avoidance algorithm. The incorporation of the two techniques permits robots to self-detect collisions and then self-create a safe path to overcome any unexpected obstacles while traveling to the destination in a given formation. Moreover, owing to the distributed and dynamic architecture, our NI obstacle avoidance method has better adaptability to the change of environment conditions or obstacle/robot dynamics. Also, a rigorous comparative study on the performance of our obstacle avoidance method with respect to that of the artificial potential field function and switching formation-based NI obstacle avoidance algorithms is performed as a benchmark. Finally, simulation and experimental results are then implemented to demonstrate the effectiveness of the proposed theories.