This was a high court case in which judgment was given on the 29th of August 2023. It is a binding court decision. The case has been reported in some circles on social media as meaning: “No MOT = No credit hire”, which is an overly simple summary of what this decision actually means. It is therefore very important that those involved in the credit hire industry understand the true impact of the case.
The Claimant's vehicle was parked when it was hit by the Defendant's lorry. There was no dispute on liability. The Claimants MOT had lapsed four months before the accident and there was no evidence that the Claimant had any intention of obtaining an MOT certificate.
At first instance the Recorder dismissed the credit hire claim of over £20,000.
He found that the defence of illegality could not succeed, as it was not proportionate to dismiss the credit hire claim - (pursuant to Patel v Mirza Patel v Mirza [2015] 2 W.L.R. 405). But, he found that the credit hire claim would be dismissed on the basis of causation.
The High Court upheld that decision and stated in paragraph 17:
“What has been decided in this case, however, is that even if there is not this all-embracing form of illegality which deprives the Claimant of all claims arising from the accident, there is a second, more targeted, form of illegality which can be directed towards a particular aspect of the claim being made. This form of illegality does not involve considerations of public policy or proportionality because, by its nature, it allows the courts to distinguish between the "meritorious" Claimant – the Jaguar owner in my example in the preceding paragraph – and the "unmeritorious" Claimant who has no intention to obtain an MOT in the near future, or at any rate during the period of hire of an alternative vehicle” – [underline are my emphasis only].
The High Court mentioned that the lower court had found that there was no “...evidence that the Claimant had any intention to obtain a MOT certificate in the near future.” - paragraph 3 of the judgment.
The High Court referred to the “all-embracing form of illegality” which can dismiss all claims, due to public policy reasons. This illegality can lead to dismissal of the entire hire claim, repair costs and recovery charges. However, there is a very high threshold for this defence of “ex turpi causa non oritur action” (translates into English as “no cause of action arises from illegal or flagrantly immoral acts”) which needs to be satisfied – please see my article on Credit Hire and Illegality which deals with this aspect.
The High Court then refers to a more “targeted” form of “illegality”. Whilst having upmost respect for the language of the High Court, I am not sure it assists in understanding the issue of causation which is separate to illegality. Further the distinction between the “meritorious” claimant and “unmeritorious” claimant also in my view potentially confuses what is essentially an issue of causation.
For the purposes of this article, I will offer my understanding of what the practical implications of the decision appear to be. It certainly does not mean anything as simple as words to the effect of: “No MOT = No credit hire”. The situation is far more nuanced and layered than that!
(1) The defence of ex turpi causa (defence of illegality) is an “all or nothing” defence. In order words, the successful outcome of this defence would mean the entire claim for credit hire would be dismissed. It’s a defence based on public policy reasons, namely that society so disapproves of the claimant's actions that s/he ought to receive no damages. You could say it’s a mark of disproval from the courts. This type of defence requires a particularly high threshold to be successful, though it depends on the type of illegality and the facts surrounding the illegality.
(2) Separate to this issue is the argument that the claimant cannot prove that the loss is related to the index accident. In other words, the claimant cannot prove that the loss (i.e. the hire) was caused by the index accident. To class this argument as a “targeted” form of “illegality” is in my view confusing in understanding the issue of causation – if you were to take out the word illegality altogether it would make no difference to this defence. It's simply an issue of causation. By way of example:
Claimant A has never had an MOT for the last 5 years and there is no evidence that s/he was ever going to have MOT for the car. The court may find that the evidence suggests that the claimant was never going to have a MOT for the vehicle anyway, as this had not been done for the last 5 years, therefore there was never a loss of use claim (or hire claim) as the claimant cannot show that s/he would have been entitled to use the vehicle on the road during the hire period. Thus, as a matter of causation, the loss cannot be proved.
In contrast to this, claimant B has always had a MOT for the vehicle apart from one week before the index accident. Claimant B states in evidence that s/he would have but for the accident, obtained an MOT certificate for the vehicle at one week after the index accident, as the renewal reminder for the road tax would have prompted and reminded him/her of the need for a MOT certificate. The court may in claimant B’s case find that it was likely that the claimant would have obtained a MOT certificate at one-week post-accident. The court therefore decides to reduce the hire claim by a period of seven days. This is because the court takes the view that the claimant would have been able to legally use her/his vehicle at about 7 days after the accident. This is all about the factual issue of causation.
(3) Referring to a “meritorious” claimant and “unmeritorious” claimant is a recipe for confusion. All the High Court actually means is that a “meritorious” claimant in the context of causation will get some if not all the hire charges, depending on when the court finds that the claimant would have obtained the MOT certificate post-accident. All the High Court actually means is that a “unmeritorious” claimant in the context of causation cannot prove that s/she would ever have obtained a MOT certificate during the period of hire – therefore nil damages are awarded for hire charges. This case is all about causation and is separate to the defence of ex turpi causa, which deals with the “all or nothing defence” of illegality.
(4) This distinction between the causation issues in relation to no MOT, and the illegality defence for lack of MOT have previously been referred to in the county courts. The significance is that the High Court has now confirmed that already well recognised distinction in the county courts.
(5) The causation argument and the illegality defence should never be confused.
(6) The case certainly does not mean “No MOT = No Hire”. It all depends on the factual matrix of the case.
Please note this post does not constitute legal advice for any specific case or cases or for any circumstances.
© Mohammed Azeem Ali 2023 01/12/2023