Shadbolt v Stefanatica (unreported)
When a person is involved in a non-fault road traffic accident, they are usually entitled to two vehicle related heads of loss; diminution and loss of use. Diminution is usually (although not always) quantified using the reasonable cost of repairs required to put the vehicle back into its pre-accident condition. Loss of use, the compensation awarded for a vehicle being rendered unroadworthy, is more complicated. There are a number of recognised methods for quantifying this head of loss including the cost of hiring a replacement vehicle or lost profit when the vehicle is an income generating chattel. The quantification method which most often generates litigation is credit hire.
Where a Claimant is engaged in an illegal act, a claim for damages may be extinguished on the grounds of public policy under the doctrine of ex turpi causa non oritur damnum (from a dishonourable cause damages do not arise). This doctrine was extended to the issue of credit hire by the case of Agheampong -v- Allied Manufacturing London Limited [2009] Lloyd’s Rep IR 379.
Not every illegal act will establish a viable defence of illegality. In Vellino v Chief Constable of Greater Manchester [2002] 1 WLR 218, a case unrelated to credit hire, the Court of appeal confirmed that ‘the facts, which give rise to the claim, must be inextricably linked with the criminal activity’. The Court is also entitled to consider all the circumstances of both the case and the illegal act before applying the doctrine (see Patel v Mirza [2016] UKSC for a non-exhaustive list of considerations).
The illegal acts usually associated with road traffic accidents and claims for credit hire are a lack of insurance contrary to s.143 of the Road Traffic Act 1988 (RTA 1988) and driving without an MOT contrary to s.47 RTA 1988. In Agheampong driving without insurance was considered sufficient to debar a credit hire claim and in the Northern Irish case of Morgan v Bryson Recycling [2018] NIQB 12 a lack of MOT was considered relevant when it invalidated the driver’s insurance. There is no domestic binding precedent assessing a lack of MOT in isolation as sufficient to activate the doctrine, but it is clear that such a determination would turn on the individual facts of the case in any event.
In the recent case of Shadbolt v Stefanatica (unreported) the court refused to apply the doctrine of ex turpi causa, where the illegality was limited to a failure to obtain an MOT but accepted submissions on a novel way of viewing loss of use where illegality exists.
In Shadbolt, the Claimant’s vehicle was involved in a non-fault road traffic accident, whilst parked and unattended, which rendered it unroadworthy. The Claimant utilised the services of an accident management company and hired a replacement vehicle on a credit basis for 23 days at a total cost of £2650.89. The Claimant had, however, failed to renew his own vehicle’s MOT and as such had been driving the vehicle illegally for a period of 3 months.
Under cross examination the Claimant confirmed that he had been unaware of the error despite being a car mechanic and accepted that this mistake was a criminal offence. He expressed the opinion that the car would have passed its MOT had it been presented for testing and importantly, that his insurance had not been invalidated by this mistake.
Weighing all of the circumstances of the case the Judge concluded that the Claimant’s illegal act failed to reach the threshold necessary to render the credit hire unrecoverable on public policy grounds. The Judge was particularly persuaded by the evidence that his insurance status had been maintained.
The claim was, however, successfully defeated after the Judge accepted submissions that no damage flowed from the accident.
Although described by the Judge as a novel and compelling argument it was in reality a twist on ‘back to basics’ thinking. It is long settled law that damages are awarded to put the Claimant back in the same position but for another’s negligence. If the negligent act caused no loss, then no damages can be awarded, and the claim must fail.
By understanding that credit hire simply represents a method for quantifying loss of use rather than being a head of loss in its own right allowed the fundamentals of litigation and damages to be applied to the facts of the current case.
In this case scenario the Claimant had an unroadworthy vehicle before the accident, as a consequence of its lack of MOT, and an unroadworthy vehicle after the accident due to the accident damage. The Claimant was, therefore, in the same position irrespective of the negligent act. Any award would, therefore, represent a betterment and the claim for loss of use should fail. The Court accepted the Defendant’s submissions that the cause of the unroadworthiness was irrelevant to the assessment of loss of use.
The claim for credit hire was, therefore, dismissed.
Permission to appeal was granted although it is understood that an appeal was not lodged within the necessary time limits.
Article care of https://www.pumpcourtchambers.com/2019/03/13/credit-hire-loss-of-use-and-illegality/
