On 4 December 2024 the Court of Appeal delivered its decision in the case of Majid Ali v HSF Logistics Polska SP Zoo [2024] EWCA Civ 1479.

Background

A lorry for which the defendant was liable was negligently driven into the claimant’s vehicle when it was parked and unattended, causing damage which rendered it undriveable. While the claimant's vehicle was being repaired, he hired a replacement vehicle on credit for a period of 36 days.

The claim advanced by the claimant contained three heads of loss:

1. Vehicle repairs of £2,184.22;
2. Recovery charges of £354; and
3. Credit hire in the sum of £21,588.72.

Issues in the case

Need: The claimant said he needed a hire vehicle as he did not have an alternative vehicle available to him and that it was reasonable for him to hire a replacement whilst his vehicle was being repaired.  

Illegality: The defendant asserted that there was no evidence that the claimant’s vehicle was unroadworthy prior to the accident but the MOT on the claimant's vehicle had expired some four and a half months before the accident. Accordingly, the claim was defended on two grounds:

1. Ex turpi causa or illegality pursuant to the decision in Agheampong v Allied Manufacturing (London) Ltd [2009] Lloyds Rep IR 379.
2. As there was no valid MOT certificate for the claimant's vehicle at the time of loss, the claimant suffered no compensable loss when this vehicle was rendered unroadworthy by the defendant’s negligence - referred to as the 'causation defence'.

The decision at first instance

At trial in the county court the judge, Mr Recorder Charman, made the following determinations:

Need: Expressly without prejudice to the defendant's grounds for defending the claim, it was reasonable for the claimant to hire a replacement vehicle in mitigation of any loss by reason of being unable to use his vehicle because of the accident.

Illegality: While the claimant had been “careless”, there was no positive finding that he was aware that the MOT had expired and there was no evidence that he intended to obtain a new MOT certificate in the near future.

In his judgment, he held that:

1. The doctrine of ex turpi causa did not preclude recovery of any of the three heads of damage. (That finding was not challenged on the first appeal to Martin Spencer J and was not considered by the Court of Appeal.)
2. The claimant could not recover the hire charges as the causation defence succeeded, although he could recover the costs of recovery and repair.

In paragraph 58 of his judgment, he reiterated that the credit hire claim failed “because he had no loss of use claim, by reason of not having a vehicle which he was entitled to use on the public highway at the time of the accident by reason of the absence of an MOT certificate, and he has not established that he could and would [have] obtained a valid certificate at any time during the hire period. He therefore has no claim for loss of use, so cannot have reasonably [incurred] hire charges to avoid or mitigate such a claim.”

First appeal

On the claimant’s first appeal, Martin Spencer J in the High Court upheld the decision of the judge at first instance.

The question and decision before the Court of Appeal

The Court of Appeal held that the previous judges had come to the wrong decision.

The defendant’s causation defence rested upon the illegality surrounding the claimant’s use of his vehicle.

Lord Justice Stuart-Smith, who delivered the leading judgment, was of the view that there was a fatal flaw at the heart of the defendant’s submissions on the causation defence, namely the assertion that the claimant suffered no loss as a result of the defendant’s tort.

In his view, the defendant’s tort caused the claimant to be deprived of the use of an item of property, which caused inconvenience in the form of an inability to use it for private transport. The fact that the claimant did not have a valid MOT certificate for the vehicle did not alter the fact that he had been deprived of its use or the fact that this deprivation would have caused inconvenience but for the hiring.

What the absence of the valid MOT did mean was that he would have been committing an offence and thereby exposed himself to the risk of prosecution, but that was a relatively minor offence which did not carry a very great weight.

Whilst he accepted that allowing the claim for hire charges may 'just about' be said to tend towards being harmful to the integrity of the legal system, any harm in his view was strictly limited, leading clearly to his conclusion that it would be disproportionate to refuse the claimant’s hire claim on the grounds of ex turpi causa.

In his final comments he stated that the causation defence was ex turpi causa by another name but without the essential requirement of proportionality.

Practical implications for defendant practitioners

After many years of satellite litigation, we now have clarity from the Court of Appeal as to the approach which should be taken in cases where the claimant does not have a valid and current MOT at the time of the accident and during the period of hire. Indeed the court indicated that their approach was a general one and it extended to other minor forms of illegality, for instance, a broken windscreen wiper or a defective number plate etc.

Credit hire claims handlers may, if appropriate, be better placed to negotiate settlement of such claims pre-litigation to avoid the cost of frictional litigation now that guidance has been given. Whilst non-binding in Scottish Courts, it is highly likely that a similar approach will be taken in that jurisdiction.

The decision is not binding in Northern Ireland. However, there is no doubt that the decision will be relied upon by claimant solicitors, alongside the decision of Magill v Donnelly [2019] NICTY 2. Each case will turn on its own facts of proportionality but negotiation tactics should be explored to avoid increased litigation costs.  

Whilst the Agheampong decision (involving a vehicle with no insurance) was discussed, it is unclear whether the court agreed with the same. It is possible that claimants may now use this decision as a shield to avoid disclosure of insurance documentation on the basis that no insurance is also a low level type offence.