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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ali v HSF Logistics Polska SP ZOO [2024] EWCA Civ 1479 (04 December 2024) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2024/1479.html Cite as: [2024] EWCA Civ 1479, [2024] WLR(D) 532, [2025] 4 WLR 8 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
Mr Justice Martin Spencer
Strand, London, WC2A 2LL |
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B e f o r e :
LADY JUSTICE NICOLA DAVIES
and
LORD JUSTICE STUART-SMITH
____________________
MAJID ALI |
Claimant / Appellant |
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- and - |
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HSF LOGISTICS POLSKA SP. Z O.O |
Defendant / Respondent |
____________________
Steven Turner (instructed by DWF) for the Respondent
Hearing date: 17 October 2024
____________________
Crown Copyright ©
Lord Justice Stuart-Smith:
Introduction
"Save as admitted, the Defendant avers that in hiring a vehicle the Claimant has failed to mitigate their loss in that they hired a vehicle when it was unnecessary to do so, hired for too long a period of time, hired a vehicle at a cost which was excessive, failed to demonstrate a need for a replacement vehicle and hired an inappropriate vehicle."
Paragraph 11 of the Defence then pleaded that:
"The Defendant avers that the Claimant's accident damaged vehicle did not have a valid MOT during the period of hire, as such the Defendant refers to the case of Agheampong v Allied Manufacturing (London) Ltd and states that the claim for hire charges are ex turpi causa. The Claimant is put to strict proof as to the existence of a valid policy of insurance and, in the absence of such documentation the Claimants claim for hire charges should be dismissed."
Relevant legal principles
Claims for hire charges
"But inconvenience is another form of loss for which, in principle, damages are recoverable. So it was open to him, as it is to any other motorist, to avoid or mitigate that loss by hiring another vehicle while his own car was unavailable to him. The expense of doing so will then become the measure of the loss which he has sustained under this head of his claim. It will be substituted for his claim for loss of use by way of general damages. But the principle is that he must take reasonable steps to mitigate his loss. The injured party cannot claim reimbursement for expenditure by way of mitigation that is unreasonable. So the motorist cannot claim for the cost of hiring another vehicle if he had no reason to use a car while his own car was being repaired-if, for example, he was in hospital during the relevant period or out of the country on a package holiday. If it is reasonable for him to hire a substitute, he must minimise his loss by spending no more on the hire than he needs to do in order to obtain a substitute vehicle. If the defendant can show that the cost that was incurred was more than was reasonable if, for example, a larger or more powerful car was hired although vehicles equivalent to the damaged car were reasonably available at less cost the amount expended on the hire must be reduced to the amount that would have been needed to hire the equivalent."
"The fundamental principle is that a person whose car has been damaged is entitled to compensation for the loss caused. In a case where such loss includes loss of use and he establishes a need for a replacement, he is entitled to the cost of hiring a replacement car … However, the basic principle is qualified by the duty to take reasonable steps to mitigate the loss. What is reasonable will depend on the particular circumstances."
"… [T]he claim by a corporation for loss of use of a car as a chattel employed in the course of the claimant's business, constitutes a separate class of case from that in which an individual claims in respect of a private vehicle used for convenience rather than profit. … In the former class, an award falls to be made to compensate for financial damage in respect of which the court (which no longer acts with a jury) must do its best to quantify, albeit only by approximation, the loss actually suffered by the business. In the latter class, albeit the court may be concerned with a degree of compensation for fares etc by way of special damage in a case where the owner has been obliged to use public transport rather than his damaged vehicle, the primary element of the award is that of compensation for non-pecuniary loss, ie, the lack of advantage and inconvenience caused by not having the use of a car ready at hand and at all hours for personal and/or family use: see Lagden v O'Connor [2004] 1 AC 1067, para 27, per Lord Hope, and Alexander v Rolls Royce Motor Cars Ltd [1996] RTR 95, 102, per Beldam LJ."
"[although] … it is not hard to infer that a motorist who incurs the considerable expense of running a private car does so because he has a need for it, and consequently has a need to replace it if, as a result of a wrongful act, it is put out of commission, there remains ample scope for the defendant in an individual case to displace the inference which might otherwise arise."
Mitigation and betterment
"It is for the defendant who seeks a deduction from expenditure in mitigation on the ground of betterment to make out his case for doing so. It is not enough that an element of betterment can be identified. It has to be shown that the claimant had a choice, and that he would have been able to mitigate his loss at less cost. The wrongdoer is not entitled to demand of the injured party that he incur a loss, bear a burden or make unreasonable sacrifices in the mitigation of his damages. He is entitled to demand that, where there are choices to be made, the least expensive route which will achieve mitigation must be selected. So if the evidence shows that the claimant had a choice, and that the route to mitigation which he chose was more costly than an alternative that was open to him, then a case will have been made out for a deduction. But if it shows that the claimant had no other choice available to him, the betterment must be seen as incidental to the step which he was entitled to take in the mitigation of his loss and there will be no ground for it to be deducted."
This analysis led to the conclusion in Lagden that the claimant was entitled to recover the additional benefits that came with the hire of a car on credit hire terms, since the claimant would have been unable to obtain a replacement car other than by use of a credit hire company which meant that he was not in a position to choose not to receive the additional benefits.
"To summarise, the questions are: (i) did the claimant need to hire a replacement car at all; if so, (ii) was it reasonable, in all the circumstances, to hire the particular type of car actually hired at the rate agreed; if it was, (iii) was the claimant "impecunious"; if not, (iv) has the defendant proved a difference between the credit hire rate actually paid for the car hired and what, in the same broad geographical area, would have been the BHR for the model of car actually hired and if so what is it; if so, (v) what is the difference between the credit hire rate and the BHR?"
Ex turpi causa
"I would say that one cannot judge whether allowing a claim which is in some way tainted by illegality would be contrary to the public interest, because it would be harmful to the integrity of the legal system, without (a) considering the underlying purpose of the prohibition which has been transgressed, (b) considering conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim, and (c) keeping in mind the possibility of overkill unless the law is applied with a due sense of proportionality. We are, after all, in the area of public policy."
"Punishment for wrongdoing is the responsibility of the criminal courts and, in some instances, statutory regulators. … The broad principle is not in doubt that the public interest requires that the civil courts should not undermine the effectiveness of the criminal law; but nor should they impose what would amount in substance to an additional penalty disproportionate to the nature and seriousness of any wrongdoing."
"The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather by than the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate."
"To my mind, both those cases are examples of what may be described as collateral or insignificant illegality. In my judgment an English court should not deprive a claimant of part of the damages to which he would otherwise be entitled because of the defendant's negligence or breach of duty by reason only of some collateral illegality or unlawful act."
On the facts of Hewison the illegality was neither collateral nor insignificant. In order to have earned money as a crane operator he would have had to deceive his employers and commit the serious offence of obtaining a pecuniary advantage by deception.
i) Hewison was a paradigm application of the principles underlying the maxim ex turpi causa and demonstrates that those principles may lead to a denial of the entirety of a claimant's claim ("actio") or a part of it ("damnum");
ii) Hewison is a good example of the flexibility of the common law, particularly in relation to its formulation of remedies and the need to adjust to reflect the harmony of the law and its division of responsibility between the criminal and civil courts: see too Patel at [108], cited at [20] above.
Absence of a current MOT and illegality
Previous decisions on the "causation defence" issue
The judgments below - Mr Recorder Charman
"48. [The Defendant's] submission was that it was not possible at the time of the accident for [the Claimant] to lawfully drive his car on the public highway. Therefore it was not a reasonable act of mitigation of his loss to hire a replacement vehicle. In substance, he had no loss of use claim because he did not have a vehicle which he could lawfully use on the roads. Mr Ali was not entitled to be put in the position of having a car which he could legally use on the road while his car was being repaired, because he could not legally use his car on the road at the time of the accident.
49. [The Defendant] also submitted that there was no evidence that [the Claimant] was about to obtain or would have obtained a valid MOT. I accept that submission so far as it goes. Indeed, nor was there any evidence as to whether or not it would have passed an MOT test.
50. [The Claimant's] main submission in response was that the causation defence was in substance the illegality defence in another form. I disagree. The causation defence is in my judgment a distinct defence which is capable of applying only to the credit hire element of the claim because it is based on the distinct nature of the credit hire claim. The diminution in value claim and the recovery claim are claims for losses caused directly by the accident itself in the case of the former, and an expense necessarily incurred in the case of the latter, because unless the car was recovered it could not be repaired. The credit hire claim is different. It is a claim founded in the principle of mitigation of loss. If it succeeds, it does so because it is an expense reasonably incurred by a claimant in mitigation or avoidance of a claim for loss of use of their vehicle. The question of whether a claimant acts reasonably in hiring a replacement vehicle is separate from any issue of illegality.
51. Even more fundamentally, in order for the issue of mitigation to arise, it is necessary for a claimant to have a loss of use claim in the first place. If immediately before the accident, a claimant does not have a vehicle which they were entitled to use on the public highway, they cannot claim for the loss of use of such a vehicle, because they have no such loss. Such a claimant did have a driveable vehicle which they could use on private land only, but very few claimants so use or need to so use their vehicles. It is not suggested that [the Claimant] does.
52. This is entirely legally distinct from the illegality defence and the fact that it follows from the same facts does not render it otherwise."
The judgments below - Martin Spencer J
"This passage demonstrates, in my judgment, that, as I have determined, there is a form of illegality relating not to the whole action but to the loss or damage claimed and which is not the result of an application of public policy. It is but a small step to ally this form of illegality to the principles of causation as was done by the Judge below and, before him, by Judge Lethem [in Agbalaya]."
Discussion and resolution
Lady Justice Nicola Davies
Lady Justice Macur