Ieuan Poole of DAC Beachcroft and Jake Coleman of Hailsham Chambers take the next step to clarify the standard of evidence and pleading required following the decision in Hussain v EUI Ltd [2019] EWHC 2647 (QB).
In the appeal of Baker v Hayward (2022), Her Honour Judge Walden-Smith allowed the appeal of the defendant against a finding that the claimant fitted into one of the Hussain exceptions, following evidence provided at the hearing that the claimant required the vehicle to fulfil a school contract.
The background
The claimant, a self-employed taxi driver, brought a claim for personal injury and £13,411.46 of credit hire.
The claimant had originally used a taxi from the fleet of his work provider/taxi company Enterprise Taxis, however began hiring on credit after the Christmas period. His evidence was that he merely entered the credit agreement for the taxi vehicle on the instructions of Mr Walker, the owner of the taxi company. Mr Walker provided a statement, however did not attend the hearing.
The claimant gave evidence at the hearing that 80% of the business of Enterprise Taxis was fulfilling school contracts, although he accepted that this was in fact a contract of Enterprise and not his own and he was not privy to the business operations. He further accepted that he was not aware of the availability of Enterprise’s fleet.
The claimant did not provide evidence of his earnings, however he estimated that he earned around £375.00 per week, which was considerably less than the £362.47 per day claimed for hire.
The Deputy District Judge at the first instance hearing drew an inference, by virtue of the claimant entering credit hire after using one of Enterprise’s other fleet vehicle for a period, that there were no available vehicles in the fleet. The Judge also found that the claimant fitted into the first exception in Hussain v EUI, in that there was a risk of future lost earnings if he was unable to perform the school contracts.
The appeal
The defendant appealed the decision of the Deputy District Judge on two grounds:
The first ground of appeal was that there was not any primary evidence upon which to draw the inference that the claimant needed to hire a replacement vehicle, in the absence of any evidence that there was not an available vehicle to the claimant from Enterprise Taxis’ fleet (that he had previously been utilising).
The second ground of appeal was that the Judge erred in finding that the claimant came within the first exception to the rule in Hussain so as to depart from the starting point that the correct measure of loss was loss of profit, on the basis that the evidence given of school contracts neither featured in the claimant’s pleaded case or was within his knowledge as a driver for Enterprise Taxis, to whom the contract belonged.
The decision
As to the first ground, HHJ Walden-Smith found that there was sufficient evidence from the claimant that allowed the Deputy District Judge to infer that there was not a vehicle available to the claimant at that time. Thus the first ground of appeal was not upheld.
When considering the second ground, the Judge considered whether it was open to the Deputy District Judge to rely upon the claimant’s assertion that there was a risk to his future earnings by virtue of the potential to lose the school contract, advanced for the first time at trial:
[23] Even giving all latitude to the DDJ, the determination that the claimant had done all that was reasonable could not be made out on the basis of the evidence before him. This is not challenging the claimant’s credibility or the DDJ’s finding that he was a highly credible witness. That is a matter for the judge of first instance and would not lightly be interfered with. This is a challenge as to whether there was the evidence to make the determination the DDJ made, and in my judgment there simply was not that evidence available.
[24] The claimant was taken through his average earnings in cross-examination but had not provided any evidence in support of the same. Allowing for the claimant to be correct in his assessment of his earnings (and there was no documentary evidence provided to support his own calculations) it is clear that the cost of the hire very significantly exceeded the profit. In order to show that it was, in those circumstances, reasonable to hire the replacement vehicle, the court could not simply rely upon assumptions and the hearsay evidence of the claimant given in the course of the trial.
The judge went on to state that the claimant had not previously through the course of the proceedings, in the form of pleadings, disclosure or witness statements, provided any evidence or prior indication that he would be relying upon the first exception of Hussain:
[24][…] The defendant was properly entitled to know the case it had to meet and had no prior indication in the pleadings or by disclosure, or through the witness statements, that it would be argued on behalf of the claimant that there was good justification for the hire of this expensive vehicle as it would otherwise result in a significant, and potentially permanent, loss of work. The other evidence of the claimant made it clear that he knew little about the operation of the business and had no involvement in the running of Enterprise and it was consequently not open to the DDJ to place reliance upon the oral evidence of the claimant as he did.
(emphasis added)
In stating ‘the defendant was properly entitled to know the case it had to meet’, the judge in this appeal applied and echoed the words of Lord Justice Coulson in Diriye v Bojaj [2020] EWCA Civ 1400, which was further referred to in the judgment on damages, where he stated:
[53] They are entitled to know the case they have to meet. They should not be expected to have to prepare for a trial where the critical item of claim depends on a one line assertion, and hoping that, as a result of the cross-examination of the appellant, the judge will reject the claim. That is not how civil litigation is supposed to work post-CPR.
In applying this clear principle, HHJ Walden-Smith makes clear the requirements to properly plead and evidence the exceptions relied upon following Hussain.
The claimant’s claim for hire failed in the absence of any evidence of his earnings. He was not awarded anything for credit hire or loss of profit.
The defendant subsequently beat their Part 36 offer and as a result of the credit hire being the issue in dispute, QOCS was disallowed and the defendant given an enforceable costs order. The defendant will however be seeking their costs by way of a non-party costs order against the financial beneficiary of the claim, the credit hire company.
What this means in practice
Claimants need to properly state through pleadings, witness statement and evidence the exceptions on which they intend to rely. The defendants are entitled to know the case they have to meet and are entitled to the opportunity to challenge such assertions should they wish.
It is not permissible, if it ever was, for defendants to be blindsided by oral evidence at trial that should have formed part of the claimant’s pleaded case.
This is a positive step towards continuing the early ‘cards on the table’ approach, towards taxi claims that is becoming more prevalent in the industry. By reiterating the principles set out by Coulson LJ in Diriye and not rewarding those who fail to properly deal with the established law in this area, we can expect further early collaboration between parties, as well as providing a warning to those who choose not to set out relevant facts at the appropriate stage.
For more information or advice, please contact one of our experts in our Vehicle Hire & Damage Team.
