Mitigation of loss and lapsed MOT certificates: Ali v HSF

By Douglas Brodie - Posted on 21 January 2025

The decision of the Court of Appeal in Ali v HSF [2024] EWCA Civ 1479 dealt with the mundane instance of a minor road traffic accident. The defendant’s lorry had driven into the back of the claimant’s parked and unattended Volvo causing damage to the vehicle. That unremarkable scenario would normally have provoked little interest but the fact that the Volvo did not have a valid MOT at the time of the collision changed that position. The absence of a MOT allowed the defendant to invoke the defence of illegality.

The defence of illegality 

The defence of illegality may prevent a claim in negligence succeeding: “you cannot recover damage which is the consequence of your own criminal act.”  In Patel v Mirza [2016] UKSC 42 at paragraph 107 the Supreme Court explained that proportionality lies at the heart of the modern approach to the application of the defence:

Potentially relevant factors include the seriousness of the conduct…whether it was intentional and whether there was marked disparity in the parties’ respective culpability.

The decision of the High Court  

The defence can play a decisive part in lapsed MOT cases. If it had been fully deployed in the case at hand, it would have prevented recovery for all the losses caused by the collision.

In the High Court ([2023] EWHC 2159), the judge (Spencer J.) had held that the defence of illegality failed and compensation arose for the damage to the vehicle itself, applying a test of proportionality. This aligned with the approach adopted by the first-instance judge (Mr Recorder Charman) in the County Court at Warwick.

The claimant’s wrongdoing was not viewed as particularly serious given the circumstances surrounding the absence of a MOT. The conclusion on illegality was not contested by the defendant before the Court of Appeal though the Court indicate their agreement with it. Complete denial of a claim may well be too harsh, as the following hypothetical example given by Spencer J. (at paragraph 16) indicates:

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”.

The claimant’s victory though was only partial. The High Court accepted the argument that the hire charges incurred by the claimant for a replacement car were not recoverable. This was explained (at paragraph 10 of that judgment) in the following terms:

it was…not a reasonable act of mitigation of his loss to hire a replacement vehicle. It was argued that, in substance, he had no loss of use claim because he did not have a vehicle which he could lawfully use on the roads: he was not entitled to be put in the position of having a car which he could legally use on the road while his car was being repaired, because he could not legally use his own car on the road at the time of the accident.

The cause of that specific head of loss was viewed as the absence of the MOT and not the collision.

The view of the Court of Appeal

The sole issue which remained in contention before the Court of Appeal was whether the hire charges could be recovered given the law on mitigation of loss. The Court allowed the claimant’s appeal. There was little dispute as to the relevant principles to be applied. Lord Hope’s speech in Lagden v O'Connor [2004] 1 AC 1067 at paragraph 27 was referred to where the following was said:

[T]he principle is that he must take reasonable steps to mitigate his loss. The injured party cannot claim reimbursement for expenditure by way of mitigation that is unreasonable. So the motorist cannot claim for the cost of hiring another vehicle if he had no reason to use a car while his own car was being repaired.

In Ali v HSF (at paragraph 47), the Court stressed the importance of what they saw as the practical consequences of the damage to the car:

The defendant's tort causes the claimant to be deprived of the use of an item of property, which causes inconvenience in the form of inability to use it for private transport. The fact that a claimant does not have a valid MOT certificate for the car does not alter the fact that they have been deprived of its use or the fact that this deprivation would have caused inconvenience but for the hiring.

This assessment of the impact on the claimant is, in my opinion, misleading. It would have been far more accurate to say that the claimant was deprived of an asset which could not have been used lawfully (until a MOT certificate was obtained). The sanitised picture presented appears to colour the rest of the Court’s judgment. Had one framed the question in terms of whether inconvenience arose from the loss of a vehicle which he was not in a position to use lawfully a different answer might have emerged.

Irrespective of the depiction of the loss the fundamental question was whether it was reasonable in terms of the law on mitigation of loss to recover the hire charges.  The Court of Appeal accepted that “if in truth the claimant would have had no call to use a vehicle and would not have done so during the period that their car was off the road, it would not be reasonable to hire an alternative vehicle and the cost will not be recoverable from the defendant...”  (paragraph 16). However, unless the Claimant would have obtained a MOT during that period he should have formed the view that the car should not be used.

The Court took the view that a consequence of finding for the defendant would be that a variety of contraventions of the road traffic legislation to (such as defective lights) would also result in the rejection of claims. This was seen as unacceptable as relatively trivial offences would then be a bar to otherwise meritorious claims in respect of car hire. I do not accept this argument. Section 47(1) of the Road Traffic Act 1988 creates a criminal offence of using on the road a motor vehicle without an MOT. The other examples given by the Court do not prevent the vehicle being driven. As a result, there is a qualitive difference and a clear demarcation line. In addition, the original judgment from Warwick County Court (which is referred to in the judgment of Spencer J. at paragraph 9) reminds us of the pivotal role played by MOTs in road safety:

The underlying purpose of the requirement for an MOT is to ensure that cars on the public roads are roadworthy. Unroadworthy cars can cause injury and even death, as well as damage to property. The modern MOT test also includes emissions and the public purpose therefore extends to air quality, and arguably, carbon emissions and climate change.  

In allowing the appeal it was clear that the Court of Appeal thought that Spencer J. had relied on the defence of illegality by another route. I would maintain that such an analysis fails to give sufficient weight to the appropriateness of the claimant’s behaviour after the accident. It is that which should be key rather than the initial wrongdoing.  

Conclusions

The question before the Court was a very straightforward one: was the decision to hire a car to replace one that you were not entitled to use reasonable.

I believe that the approach of Spencer J. is to be preferred. The outcome in the High Court makes a good deal of sense whereby recovery for hire charges is restricted to the period where the damaged vehicle could have been used lawfully. The behaviour of the claimant subsequent to an accident should be assessed separately to the initial inquiry into illegality. The claimant was denied recovery for hire charges in the High Court because it was unreasonable for him to mitigate his loss in the circumstances.

The Court of Appeal expressed concerned that Spencer J did not approach matters from the perspective of proportionality. However, the concept of reasonableness is well suited to address the situation that arose and allows proper regard to be had to the interests of both parties. Ali leaves us with a situation where a claimant with no MOT “won a watch”.