A TARGETED FORM OF ILLEGALITY AS A DEFENCE TO DAMAGES: CAR DRIVER WHO HAD NO MOT FOR DAMAGED CAR COULD NOT RECOVER COSTS OF HIRE OF ALTERNATIVE VEHICLE

In Ali v HSF Logistics Polska SP ZOO [2023] EWHC 2159 (KB) Mr Justice Martin Spencer considered the question of whether there was a “targeted” defence of illegality to a claim for damages which was not as all embracing as ex turpi causa.  He upheld the trial judge’s decision that such a defence exists.  The claimant’s car was damaged.  It had no MOT and the claimant had not established any intention to obtain one.  This meant that the claim for hire charges could not be recovered.

“This alternative form of illegality is thus flexible and enables justice to be done by balancing the interests of the Claimant in receiving compensation for a loss reasonably incurred and the interests of the Defendant in not being required to compensate a driver for the period of use of a vehicle which was or would have been (but for the accident) unlawful, and it does this through the well-rehearsed application of the doctrine of causation. In my judgment, this is not ex turpi causa in disguise, but a different entity altogether.”

THE CASE

The claimant’s car was damaged in a road traffic accident.  At trial the judge allowed the costs of repair. However the judge did not allow the £21,588.72 costs of hire. The hire costs were disallowed on the basis that the damaged car did not have a MOT Certificate and the claimant had no intention of obtaining one during the period of car hire, had the accident not happened.

THE JUDGEMENT ON APPEAL APPEAL

The claimant appealed arguing that the this was not a case of ex turpi causa and the trial judge had erred.  On appeal Mr Justice Martin Spencer found that  the trial judge was  in fact correct. This was a more targeted form of illegality and was properly applied on the facts of this case.

1. 1. Whilst I have found this a difficult issue to resolve, and was certainly attracted at one stage by Mr Williams’ powerful argument that there is no scope in law to allow in, through the back door of causation as it were, an illegality argument which has been refused admission through the front door of the doctrine ex turpi causa, I have in the end concluded that Judge Lethem in Agbalaya and, following him, the Judge in the present case, were correct. The answer, as it seems to me, is that what is being considered are, in reality, two different forms of illegality. The first form is the one represented by the tag “ex turpi causa”: this is an all-encompassing defence which deprives a Claimant of any form of redress. It is a form of punishment, perhaps, derived from the circumstances in which the claim was born. What the law is saying is that, for reasons of public policy and in order to protect the integrity of our legal system, the courts will not entertain a claim for damages made in certain circumstances and I refer again to common examples: where the Claimant was engaging in drug-dealing or burglary at the relevant time. It is an extreme defence, which is why it involves a consideration of proportionality, balancing the all-encompassing effect of the defence against the loss of which the Claimant is being deprived and, indeed, how heinous is the illegality in question. One can well understand that if a Claimant, perhaps the owner of a 4-year-old Jaguar which is otherwise in perfect condition, had inadvertently allowed his MOT to expire for a few days – which I surmise may not be uncommon where no MOT reminder is automatically sent out to vehicle owners and the alert comes when, for example, the vehicle needs to be taxed or insured – it would be regarded as disproportionate to disallow all claims, including for recovery, repair and hire costs, which would potentially run into many thousands of pounds, on the grounds of “ex turpi causa”. Indeed, some motorists might regard it as bringing the law into disrepute for the courts to disallow the claim in its entirety on that ground. There is a world of difference between that example and a motorist in the circumstances found by Judge Lethem in the Agbalaya case where the vehicle was unroadworthy, the owner could not afford the repairs necessary to remedy the position and thereby enable the vehicle to pass the MOT, and therefore decided to use the vehicle illegally (and potentially dangerously) with no intention to obtain an MOT in the foreseeable future.

1. 1. 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. Thus, the court can do two things: first, it can look at the claim that is being made and ask whether that claim is affected at all by the fact that the car’s MOT had expired and could not lawfully be driven on the road. If the claim is not affected by this consideration, then the lack of a valid MOT is irrelevant and the Claimant will recover in full – for example, for the recovery and repair costs. Secondly, in respect of a claim which is affected by the lack of a valid MOT, and this includes a claim for hire charges arising from the loss of the ability to drive the car on the public roads, the court can ask itself the questions raised by the law of causation: for how long would, but for the accident, the car have remained without a valid MOT and therefore could not lawfully have been driven on the road. This then delimits the period of compensation and distinguishes between the meritorious Claimant (perhaps deprived of only a few days of car hire charges) and the unmeritorious Claimant (who fails to recover his credit hire charges at all). This alternative form of illegality is thus flexible and enables justice to be done by balancing the interests of the Claimant in receiving compensation for a loss reasonably incurred and the interests of the Defendant in not being required to compensate a driver for the period of use of a vehicle which was or would have been (but for the accident) unlawful, and it does this through the well-rehearsed application of the doctrine of causation. In my judgment, this is not ex turpi causa in disguise, but a different entity altogether.

1. 1. In so deciding, I do not lose sight of the position of motor insurers who agree to provide their policy-holders who are the innocent victims of a road accident which is entirely the fault of the other driver with a replacement hire car, in the expectation of being able to recover those hire charges from the insurer of the driver at fault. It seems to me that those insurers can easily protect themselves by making it a term of the policy that the right to a replacement hire car is conditional on the damaged car having a valid MOT certificate at the date of the accident. Whilst I doubt (without having had the point argued) that a clause would be valid which invalidates the policy of insurance altogether in the event of the car needing, but not having, a valid MOT certificate, I can see no objection to a clause depriving the policy-holder of a right to a hire car in those circumstances. Indeed, this would be an additional incentive to motorists to ensure that they have a valid MOT at all times and that their use of the vehicle is entirely lawful.

1. 1. Mr Williams KC, having seen a draft of the above judgment, rightly and properly drew to my attention the case of Hewison v Meridian Shipping [2002] EWCA Civ 1821, [2003] ICR 766. That case was referred to in Mr Williams’ skeleton argument, but I was not taken to it in argument. Conscious of the principle that, having received a draft of the judgment, the invitation to make corrections is not an opportunity to re-argue the case, Mr Williams considered – rightly in my view – that he should draw this case to my attention so that it could not be said that my decision was reached per incuriam. In Hewison’s case, the claimant was deprived of his full loss of earnings claim (but was allowed a more modest one) because he had illegally concealed his epilepsy so as to work at sea as a crane operator in particularly lucrative employment. Mr Williams’ point is that my analysis at paragraph 17 above is arguably irreconcilable with Hewison because there, even where the issue only went to an aspect of the claim (loss of earnings), that issue was analysed by reference to the principles of ex turpi causa with the answer lying in considerations of public policy.

1. 1. In my judgment, the decision of the Court of Appeal in Hewison in fact supports my analysis at paragraph 17 and the analysis of the Judge in the court below and that of Judge Lethem in Agbalaya. Hewison was subjected to detailed analysis by HHJ Dean QC in the case of Ageampong v Allied Manufacturing (London) Limited (unreported), an analysis which I adopt and which it is unnecessary to repeat in full for present purposes. The leading judgment in Hewison was delivered by Clarke LJ who, having referred to the decision of the Court of Appeal in Clunis v Camden and Islington Health Authority [1998] QB 978, continued:

“26. As can be seen from those passages, the courts have not adopted the suggestion that, at any rate in a case where the maxim ex turpi causa non oritur actio applies, the correct approach is to identify whether the public conscience would be affronted. We have been shown no case in which the courts have adopted such an approach to a case of this kind. In these circumstances I, for my part, do not think that it is appropriate to adopt it.

27. The correct principle seems to me to be substantially the same as that identified by Beldam LJ as being applicable to cases in which the maxim ex turpi causa non oritur actio applies. It is common ground that that maxim does not itself apply here because it is correctly agreed that there is no principle of public policy which prevents the appellant from pursuing his cause of action for damages for negligence or breach of duty against the respondents. The question is not whether he can recover at all but whether he is debarred from recovering part of his alleged loss.

28. However, as I see it, the principle is closely related. It is common ground that there are cases in which public policy will prevent a claimant from recovering the whole of the damages which, but for the rule of public policy, he would otherwise have recovered. The principle can perhaps be stated as a variation of the maxim so that it reads ex turpi causa non oritur damnum , where the damnum is the loss which would have been recovered but for the relevant illegal or immoral act. A classic example is the principle that a person who makes his living from burglary cannot have damages assessed on the basis of what he would have earned from burglary but for the defendant’s negligence.

29. To my mind the authorities support that approach. They seem to me to support the proposition that where a claimant has to rely upon his or her own unlawful act in order to establish the whole or part of his or her claim the claim will fail either wholly or in part. In the present context the principle can be seen from the decision of this court in Hunter v Butler [1996] RTR 396.”

This passage demonstrates, in my judgment, that, as I have determined, there is a form of illegality relating not to the whole action but to the loss or damage claimed and which is not the result of an application of public policy. It is but a small step to ally this form of illegality to the principles of causation as was done by the Judge below and, before him, by Judge Lethem.

1. For the above reasons, the appeal is dismissed. It would be remiss of me, before ending this judgment, not to pay tribute to the careful, well-reasoned and insightful judgment of Mr Recorder Charman in the court below.