It must be noted that since providing my clients with information/necessary requirements in order to substantiate their credit claims, a number of legal changes have occurred more recently which will undoubtedly affect how they provide evidence to support their credit hire claims.

To begin, I must commence with the case of Hussain v EUI [2019] EWHC 2647 (QB), whereby the High Court has now established clear principles applicable to self-employed taxi drivers when credit hire forms part of their recovery claim. These principles are most applicable when the inherited credit hire charges may appear to exceed what would have been the claimant’s profits during the same period of credit hire.

In order to speak further about this particular case, it would be wise to allow the reader to attain some factual understanding, thus in this instance the claimant’s vehicle was involved in an accident in which liability was accepted by the opposing side. Now as the claimant’s vehicle, a BMW 320D was undergoing the necessary repair works which amounted to £1,527.74, they were temporarily placed into a credit hire agreement which allowed them to continue their normal day-to-day working duties with the use of a plated credit hire vehicle. The claimant was placed into this credit hire agreement for the duration of 18 days, and had inherited a credit hire charge of £6,596.50.

At the hearing, the claimant’s own vehicle was deemed to be ‘profit earning chattel’, thus the need of his replacement vehicle was to ensure this position continued, therefore allowing him to maintain his income as a taxi-driver as he would have done had it not been for the incident. It was then ascertained that the total loss of profit the claimant would have earned in his own vehicle during the dates of credit hire would have been limited to £423.00. Noticeably, rather a stark difference when comparing this amount to that of the credit hire invoice of £6,596.50.

In the first instance, Her Honour Judge Wall found that,

“The need was for a taxi for business use, and where the loss is of a profit-earning chattel, then the measure of damages is kept at the loss of profits and it is unreasonable mitigation to expend more in attempting to make a profit than the profit itself. So here the damages claimed grossly exceed the loss of profit which would have followed for 18 days and so I cap the level of damages at the loss of profits level.”

It is of incredible importance to speak here of the claimant’s inability to rely on the financial status of impecuniosity as they had previously failed to comply with a Court Order to disclose the same. Further, Her Honour Judge Wall continued to find that even in the event that the credit hire charges had been recoverable, the claimant would have been limited to the basic hire rates as disclosed by the defendant.

Following this judgment, the claimant appealed to the High Court on two grounds –

  1. The judge was wrong to limit the damages to what the profit would have been, and
  2. That the judge was wrong to accept the defendant’s evidence of basis hire rates.

Here, Mr Justice Pepperell made the judgment which provided guidance as to the correct principles which should be applied to the recoverability of credit hire charges in taxi cases.

Generally, the starting point when assessing such cases is the following, as per paragraph 16.5,

“Where the cost of hire significantly exceeds the avoided loss of profit, the court will ordinarily limit damages to the lost profit.”

This general starting point is however subject to three potential circumstances, which may deem the claimant to have acted reasonably in hiring even if the credit hire charges clearly exceed the loss of profit, thus validate the application pertaining to the recovery of the true credit hire invoice. These consist of –

  1. Where there is a “real risk of a greater loss”. This would be applicable in cases where the continuance of work would be adversely affected or the loss of important customers would be highly likely.

“For example, a chauffeur might not want to let down a regular client for fear of losing her. Equally; a self-employed taxi driver might risk being dropped by the taxi company that provides him with most of his work.”

  1. Where the claimant evidences that their vehicle was not only needed for business use, but also for social and domestic purposes.

“Where a claimant proves that they need a replacement vehicle for private and family use, they will be entitled to recover the cost of hire as any private motorist would be even if it is in excess of the loss of profit.”

  1. Where the claimant has proven their impecunious financial state.

“It might be reasonable to hire a replacement in circumstances where the driver simply could not afford to be out of work. Impecunious self-employed claimants cannot be expected to be left without any income.”

In the case of Hussain v EUI [2019] EWHC 2647 (QB), none of these circumstances applied. Accordingly, the High Court upheld the decision of Her Honour Judge Wall and thereby restricted the claimant’s recovery to loss of profit and dismissed the claimant’s appeal.

No further grounds of appeal were considered, simply as the first ground of appeal was rejected.

Summarising, we cannot form any other opinion but for this judgment clearly placing the burden of proof firmly onto the claimant who is seeking full recovery of credit hire charges, with the assistance of one or more of the above-mentioned circumstances which may validate the same.

Naturally, Din Solicitors are more than prepared to ensure our self-employed PCO claimants are completely prepared for such scrutiny and evidential requests. We have therefore embedded the necessary into our success strategies, which our clients will be more than aware of upon the inception of their cases.

For further clarity, then please contact Stephanie Harris.

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