Hussain v EUI Ltd

For a self-employed driver whose vehicle is damaged, the usual measure of loss is the profit lost while the vehicle is reasonably off the road. Replacement-vehicle hire is recoverable as mitigation where it is reasonable. If hire costs significantly exceed the avoided loss of profit, damages will ordinarily be limited to that profit loss.

The claimant may nevertheless recover disproportionate hire costs where the expenditure reasonably protects future trading, meets a proved private or family need, or is justified by impecuniosity. An impecuniosity argument requires proper financial disclosure and evidence. The court should assess mitigation reasonably and should not scrutinise emergency decisions with undue precision.

The claimant, a self-employed taxi driver, appealed against a County Court decision limiting his claim for 18 days’ replacement-vehicle hire to £423, representing the profit allegedly saved by continuing to work. The hire charges were £6,596.50, while the vehicle repairs cost £1,527.74.

The County Court found that the claimant had proved a business need for a replacement taxi but had not proved a separate social or domestic need. It also rejected the reasonableness of incurring hire charges equivalent to almost a year’s profit. The appeal concerned whether damages were properly limited to avoided loss of profit. A challenge to the basic hire rates did not arise if that ground failed.

1. The appeal was dismissed. The claimant’s vehicle was a profit-earning chattel. The starting point was recovery of the profit lost while it was reasonably off the road pending repair or replacement: [1922] 2 A.C. 242.

2. Hiring a replacement vehicle is expenditure incurred in mitigation of the primary loss and is prima facie recoverable where reasonably incurred: [2003] UKHL 64; [2014] EWCA Civ 357. If hire costs are lower than the hypothetical loss of profit, the lower figure is recoverable.

3. The claimant is not required to weigh mitigation options with precision. However, where hire costs significantly exceed avoided loss of profit, damages will ordinarily be limited to the lost profit. The relevant question is whether the claimant acted reasonably in the circumstances, applying the ordinary mitigation principles in [1912] A.C. 673, (1878) 9 Ch. D. 20 and [1932] 1 A.C. 452.

4. Disproportionate hire may nevertheless be reasonable where it protects important future business, satisfies a proved private or family need, or is necessary because an impecunious claimant cannot afford to stop working. An impecuniosity claim requires disclosure and evidence concerning income, outgoings, assets, liabilities and access to credit. The claimant could not rely on that argument because he had failed to comply with directions and had conceded the point.

5. The County Court was entitled to find that no private or domestic need had been proved, given the family’s second car and the absence of evidence of anticipated trips or holidays. On the evidence, the hire charges were unreasonable and the claim was properly limited to avoided loss of profit. The challenge to basic hire rates therefore did not arise.

6. The judge observed, without deciding the point, that loss of profit may include unavoidable fixed overheads incurred while trading ceases, rather than merely the pro rata net profit shown in accounts.

• High Court (Queen's Bench Division) — The appeal from the County Court at Birmingham was dismissed.
• County Court at Birmingham — Her Honour Judge Wall found liability but limited the hire claim to £423, representing avoided loss of profit.