Humayum Hussain v Eui Ltd

Hearing date: 31 July 2019

Approved judgment

I direct that pursuant to CPR PD39A para. 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.

This appeal concerns the proper approach to the financial losses suffered by a self-employed professional driver while his or her car is off the road pending its repair or replacement following an accident for which another party is at fault. Humayum Hussain is a self-employed taxi driver, but similar issues arise in the case of self-employed chauffeurs, delivery drivers or hauliers.

THE FACTS

Mr Hussain drove a BMW 320D car. He was a B-class driver, meaning that he could be allocated airport runs and other longer jobs. The pre-accident value of his car was £7,450.

On 28 September 2016, Mr Hussain's car suffered moderate damage in a road traffic accident. The damage was inspected by a licensing officer and the vehicle's private-hire licence was suspended pending repairs. Repairs costing £1,527.74 were completed on 15 October 2016. Meanwhile, Mr Hussain hired a Mercedes E220 car for a period of 18 days from a specialist provider of plated vehicles. The hire was on credit terms at a total cost of £6,596.50.

Mr Hussain's claim against the insurer of the driver responsible for his accident was tried by Her Honour Judge Wall sitting in the County Court at Birmingham on 4 April 2018. Judge Wall found for Mr Hussain on liability but held that his claim for hire charges was limited to £423, being the loss of profit that he had avoided by hiring a replacement car. Rejecting his claim for hire charges of over £6,500, Judge Wall found that Mr Hussain had not acted reasonably in incurring hire charges over an 18-day period that almost equated to a full year's profit. If wrong in her primary findings, the judge accepted the insurer's evidence as to basic hire rates thereby limiting the hire claim in any event to £975.

Mr Hussain appeals the judge's findings on quantum with the permission of Martin Spencer J. He argues that Judge Wall was wrong to limit damages to the avoided loss of profit. If successful upon this argument, Mr Hussain further argues that Judge Wall was wrong to accept the insurer's evidence as to the basic hire rates.

GROUND 1: LIMITING DAMAGES TO THE AVOIDED LOSS OF PROFIT

The core of Judge Wall's reasoning was at [30]–[32]:

“30. I have concluded that this taxi was a profit-earning chattel in a true sense. It was not the only family car. The claimant lives with his wife and two small children. His wife owns and drives a Toyota Yaris which is sufficient for four people to use. The claimant says in his witness statement that he used his taxi for work, for family trips and longer journeys. He works, he told me, five to six days each week, but there is no evidence before me that any long journeys or family holidays were planned during this relatively short 18-day period for repair and that is unlikely, in view of the fact that the claimant did hire this very expensive credit-hire taxi.

31. So am I not satisfied on the evidence before me that the claimant has discharged the burden of showing that he had a need for a second car for domestic and social use during the hire period. 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.

32. The claimant's accounts show that he was self-employed as a taxi driver. I have seen that his net profits in consecutive years were £7,644 for the 2015/2016 year and £6,429 for the 2016/2017 year. I accept the claimant's evidence that he is a very hard worker. He takes little time off work and he often works six days per week. The average net profit for those two years is £7,036.50 and on the claimant's evidence that represents a 50-week year, which would make his loss of profits £141 per week. The 18 days represents three working weeks and so I assess his loss of earnings at £423.”

Benjamin Williams QC, who appears for Mr Hussain, challenges this finding:

7.1 First, he argues that the judge's approach to need was too exacting and that the judge should have found that Mr Hussain reasonably needed a second car for social and domestic purposes whatever the business need.

7.2 Secondly, he argues that the judge was wrong to limit damages to the profit that Mr Hussain would have lost.

THE NEED FOR A REPLACEMENT CAR

Mr Hussain explained in his evidence that he was a married man with two young children. He provided the family's sole income. When he was working, his car was of course unavailable to the family. He said that his wife had a small Toyota Yaris, and added:

“… it is not a family car and is not a suitable substitute vehicle for me for my work or for family trips and longer journeys and normally we would use my BMW for this.”

While a claimant must prove the need for a replacement vehicle in order to justify hire charges, this is not a significant hurdle in most cases. Indeed, the court will readily infer need from the claimant's actions in acquiring, insuring, taxing and maintaining a private car: Giles v. Thompson [1994] A.C. 142, per Lord Mustill at page 167D.

Mr Williams relied upon dicta in Giles v. Thompson and Lagden v. O'Connor [2003] UKHL 64, [2004] 1 A.C. 1067 that need might not be established where the claimant was in hospital or abroad. These are, however, no more than examples of occasions when a private motorist might not need a replacement car.

Need for social and domestic purposes is not self-proving and, in this case, cannot simply be inferred from Mr Hussain's actions in acquiring, insuring, taxing and maintaining his BMW since the car was primarily required for business use. Given that the family ran a second car exclusively for private use and there was no evidence that any holidays, family trips or longer journeys were anticipated during the hire period, the judge was entitled to find that Mr Hussain had failed to prove the need for a second car for private use and that the only evidence of need was for a replacement taxi.

CAPPING DAMAGES AT THE AVOIDED LOST PROFIT

Mr Williams accepts that the starting point where a profit-earning vehicle is damaged is that the claimant should recover the loss of profit while the vehicle is repaired or replaced. Further, he accepts that a claimant may be limited to such loss of profit where he fails to mitigate his loss by spending a significantly greater sum on a replacement hire vehicle. Mr Williams argues, however, that the duty to mitigate is undemanding and that the court should recognise that many people on modest incomes have a very small cushion against loss of income. He submits that the court should not expect a claimant to throw himself and his family on to the state and that trial counsel's suggestion that Mr Hussain should have taken a...