Not having a valid MOT does not preclude recovering credit hire arising from a road traffic accident (RTA). The recent case of Majid Ali v HSF Logistics Polska SP Zoo [2024] EWCA Civ 1479 provides important clarification for all credit hire practitioners on the impact of illegality (ex turpi causa) in the context of credit hire claims.

The claimant was involved in an RTA when their Volvo was hit by a lorry. Their vehicle was assessed by an engineer, who considered due to the damage the vehicle was no longer roadworthy. As a result, the claimant hired a replacement vehicle on credit while their vehicle was unroadworthy but later it became apparent that their own vehicle had no MOT at the time.

Accordingly, the defendant raised two defences: a ‘causation’ defence, in that the loss of use should not be recoverable in law as there was no compensable loss, as the Volvo was not roadworthy prior to the accident; and secondly, ex turpi causa, an illegality defence, on the basis that the vehicle in question had no valid MOT and therefore the whole claim should fail.

The Court of Appeal (COA ) considered the fundamental nature of a claim for credit hire, and summed up in paragraph 15, “the foundation of the claim being the inconvenience to the claimant caused by the defendant’s tort.”

When considering the duty to mitigate loss, they said at paragraph 16 “ It is the absence of reasonable necessity that underlies the claimant’s failure to recover even if the hire charges have been incurred.”

Criticising the ‘causation’ defence at paragraphs 54 and 55, Stuart-Smith LJ explained it was not that the causation defence addressed the loss of use, but instead that credit hire should not be recoverable where the vehicle in question would have had adverse consequences for the claimant in criminal law. Simply put, this was “ex turpi causa by another name, but without the essential element of proportionality”. Applying Lagden, there is a clear inconvenience and loss of use in absence of hiring a replacement vehicle and this was fatal to any suggestion that there was no compensable loss as a matter of ‘causation’.

Turning to the defence of ex turpi causa, the principles laid down in Patel v Mirza [2016] UKSC 42, highlight that a claimant should not be permitted to benefit from their own criminal actions, and that the interaction between criminal and civil law should not be self-defeating.

In paragraphs 30 and 31, the Stuart-Smith LJ court drew parallels between driving a car with no MOT, and driving a car which had passed its MOT, but had a defective headlight, windscreen wiper or number plate, all of which exposed the perpetrator to the same maximum punishment.

Grappling with the fine balance between compensating an individual deprived of the use of their vehicle in these circumstances, and the potential harm to the integrity of the law, the COA decided such harm is limited. To bar the claimant from recovering credit hire in this scenario on the basis of ex turpi causa would be disproportionate.

This was strengthened when the COA compared the potential penalty of not having an MOT with what the claimant would lose in recovery. The credit hire claim was just over £21,000, and the fine for the absence of an MOT was limited to £1,000. To refuse a claim on that basis raised “immediate and troubling questions of proportionality (paragraph 50)”.

To conclude, the court deemed minor traffic offences alone, such as failing to have a valid MOT or a defective headlight, would not preclude recovery of credit hire on the basis of proportionality. Furthermore, the court suggested that there could be valid argument for a reduction of damages in these situations. More serious offences such as driving with no insurance which have more serious criminal sanctions, are likely to result in the claim failing.