Importance of proof in taxi hire claims and consideration of Hussain v EUI – £346 out of £107,000 hire recovered

Mehmood v AIG Europe Ltd & Anor [2023] EW Misc 1 (CC) 

The Claimant brought a claim for substantial hire costs of £107,340, recovery and storage costs of £13,860 and £1,800 for vehicle damage. HHJ Malek made a finding of 50% contributory negligence. The Claimant was a taxi driver and the judge therefore considered the principles set out by Pepperall J at paragraph 16 of Hussain v EUI [2019] EWHC 2647 (QB). Accordingly, the judge held that the starting point was that the vehicle was a profit-earning chattel and that the true loss was therefore the loss of profit suffered whilst the Claimant’s damaged vehicle was reasonably off the road, pending repair/replacement. As the cost of hire significantly exceeded the Claimant’s hypothetical loss of profit during this period, the Claimant was limited to a claim for loss of profit, unless the Claimant could still succeed in establishing that he had acted reasonably (frequently referred to as the so-called “exceptions” set out at paragraph 16.6 of Hussain).

HHJ Malek made a number of interesting remarks when considering the application of the principles:

• The overall test remains whether the Claimant has acted reasonably in hiring a vehicle where the cost of hire far exceeds the loss of profit. The “exceptions” identified by Pepperall J “go to show whether the Claimant has acted reasonably and nothing more” and the court “must consider whether, overall, the claimant has acted reasonably as well as considering the “exceptions””.
• The burden of proving the exceptions lies with the Claimant (which may, perhaps, be obvious from the language used in Hussain).
• The first exception “would not apply simply because s/he might risk being dropped by the taxi company that provided him or her with most of his/her work. That might be a starting point, but the exception will only truly apply where a claimant is able to demonstrate that future trading […] would itself be compromised.”
• The second exception, where the vehicle has a mixed business and private use – “subject to an argument that either use is minimal or de minimus, there ought to be apportionment between the two uses and the proper measure of damages for the loss of business use is loss of profit. Therefore, save where it can be shown that the loss of business use was de minimus there is, in my view, no reasonable basis for awarding the cost of hire as an appropriate measure of damages for the loss of both business and private use.”
• The third exception, where the Claimant could not afford not to work – HHJ Malek came to the “tentative” conclusion that whilst impecuniosity in this context often has the same meaning as given in Lagden v O’Connor, it may not always be so, because the (in)ability to pay car hire charges without making unreasonable scarifies may give rise to a different answer as to the Claimant’s (in)ability to give up work without making unreasonable sacrifices (although the point was not fully argued).

As to the mixed use exception, the judge found that the Claimant had “failed to demonstrate that any private use of the vehicle was no more than minimal” and considered that his vehicle was used “exclusively, or almost exclusively” for business use. The judge was also satisfied that the Claimant was not impecunious, in either sense, highlighting the lack of / poor quality evidence in support. Accordingly, the judge found that the Claimant had not acted reasonably in incurring £107,340 of hire charges, and he was limited to recovering his loss of profit of £346 (reduced by 50% on account of the contributory negligence). The Claimant recovered £600 for recovery and storage charges, but failed to prove his vehicle damage claim.

Whilst this decision is not binding, the judge added a gloss to the principles set out in Hussain, and it will remain to be seen whether this approach will be followed. Whilst it is largely favourable to Defendants, there are points to take from both sides. For example, it purports to take the second (mixed use) exception a step further, in imparting both a requirement that private use must be more than de minimis and an apportionment between the two uses. However, it also opens the door for Claimants to have the potential to be able to prove the third exception (that they could not have afforded not to work) even if they are not found to be impecunious in the traditional, Lagden sense. The practical import of this may not be significant, given that many impecuniosity cases fail on the sufficiency of evidence produced, and would therefore fail on the third exception for the same reasons.

The full judgment can be accessed here.

For any other enquiries, or to discuss instructing the Civil Team at Atlantic Chambers, please contact clerks@atlanticchambers.co.uk