From time to time, claimants in credit hire cases, are found to have been driving their cars, without insurance, or without an MOT or without a licence. Do such offences act to bar the claimants from recovering hire charges?
In the case of Agheampong -v- Allied Manufacturing London Limited (Judgement 30th June 2008 HHJ Dean QC) the court found, that by application of the principle of ex turpi causa non oritur damnum, the claimant was barred from claiming credit hire charges, as he was driving without insurance at the time, even though he was a blameless victim of the negligence of another driver. This decision has been followed in at least two further cases in the County Court.
Turning to consider the offence of not having an MOT certificate, using a vehicle without there being a necessary MOT certificate, is a criminal offence contrary to section 47 of the Road Traffic Act 1988.
Whilst undoubtedly anti-social behaviour, it is not regarded by Parliament as the most serious of offences: the penalty prescribed is a fine of £1000, it is summary only and it is not possible for a court to send someone to prison for not having a valid MOT certificate.
Section 47 provides as follows:
47.— Obligatory test certificates.
(1) A person who uses on a road at any time, or causes or permits to be so used, a motor vehicle to which this section applies, and as respects which no test certificate has been issued within the appropriate period before that time, is guilty of an offence.
The exact scope and nature of the principle of ex turpi causa in tort which is in play, as an argument when a claim is subsequently brought, is notoriously difficult to summarise.
There are two main branches of the doctrine: ex turpi causa non oritur action, which bars the entire claim and ex turpi causa non oritur damnum, which bars a particular head of loss. It is this latter doctrine which has particular application to a claim for credit hire charges.
Put simply, however, recovery of compensation may be defeated on public policy grounds where a claim or part of a claim is so closely related to substantial wrongdoing that the court cannot be seen to condone it. The onus of persuasion is on the party raising the defence: the burden of proof is on that party to prove any facts which are in dispute. The notion of outlawry has no place in the jurisdiction of England and Wales.
Nor will all offences, engage the doctrine. In Vellino -v- Chief Constable of Greater Manchester  1WLR 218, Stuart-Smith LJ stated at paragraph 70:
“The operation of the principle arises where the Claimant’s claim is foundered upon his own criminal or immoral act. The facts, which give rise to the claim, must be inextricably linked with the criminal activity. It is not sufficient if the criminal activity merely gives occasion for tortious conduct of the Defendant”.
He went on to say this at paragraph 73:
“In the case of criminal conduct this has to be sufficiently serious to merit the application of the illegality principle. Generally speaking a crime punishable with imprisonment could be expected to qualify.”
It should be clear law that not every unlawful act will establish the illegality defence. In an earlier case Saunders –v- Edwards (1987) 1WLR 1116 Bingham LJ at page 1134 B-C declared:
“Where issues of illegality are raised, the Courts have (as it seems to me) to steer a middle course between two unacceptable positions. On the one hand it is unacceptable that any Court of law should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits. On the other hand it is unacceptable that the Court should, on the first indication of unlawfulness affecting any aspect of a transaction, draw up its skirts and refuse all assistance to the Plaintiff, no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct.”
There are respectable arguments for that driving without a valid MOT certificate, without more, does not warrant the application of the principle of ex turpi causa.
These are grounded in the notions, that illegality per se, has no application, that any illegality is collateral and that, in any event, the illegality is insufficiently serious to justify a bar on the recovery of damages on policy grounds.
There is no domestic authority, which states in terms that a driver without a valid MOT certificate may not bring a claim against a negligent motorist. Per the Vellino decision, as this is a summary only offence, punishable by a fine, the first point is that the offence is not sufficiently serious to engage an illegality defence.
In the case of a motorist lacking an MOT certificate, pursuing a claim for credit hire charges, the claimant seeks to recover a loss consequential on his vehicle having been destroyed in circumstances where he did not have the wherewithal to replace it immediately. In order to prove this claim, the claimant needs to prove that his vehicle was destroyed and that he needs a vehicle going forward.
Thus the recovery of hire charges does not require the claimant to rely on past illegal use of the vehicle such that any illegality would arguably be collateral. In this sense, it is not even really the occasion for the tort. Clearly there can be no question of the hire transaction itself being illegal either in formation or performance.
Further when analysing what a claim for credit hire charges amounts to, it is the right to recover damages for loss of use of the car which accrues at the time the vehicle was destroyed and would be recoverable even if the vehicle was not used per the decision in The Mediana (1900) OC113 at 117-118, where damages for loss of use were held to be recoverable even when a chattel would not, as a question of fact, have been used.
It can be argued that the actual car hire charges as claimed are a liquidated measure of loss incurred and not tainted by illegality and the position is distinguishable from other authorities, where the claimant has to carry on committing a crime in order to accrue the loss, or in other words has to rely on his own criminal conduct to make out his case. Thus the real point of distinction is the argument that any illegal usage of the vehicle cannot be a complete defence for damages resulting from its deprivation: because the claimant is entitled to compensation when deprived of a valuable chattel regardless of whether he would have used it at all.
The leading case on illegality is now that of Hounga.v.Allen and another  1 WLR 2889, where the Supreme Court analysed the illegality defence in terms of a (1) reliance test and (2) an inextricable link test and (3) a policy test. It is appropriate to consider each of these in turn.
The reliance test was formulated in these terms by Lord Wilson:
28 For six years the public conscience test was applied to defences of
illegality to claims both in tort and in contract: see for example Howard v
Shirlstar Container Transport Ltd  1 WLR 1292. But in Tinsley v
Milligan  1 AC 340 all members of the House of Lords, including
the two dissenting judges, agreed that the public conscience was, as Lord Browne-Wilkinson observed at p 369, too imponderable a factor. The majority of the House considered that, once that test was stripped out of the law, a reliance test was laid bare, namely that, in the words of Lord Browne-Wilkinson at p 376, a claimant is entitled to recover if he is not forced to plead or rely on the illegality, even if it emerges that the title on which he relied was acquired in the course of carrying through an illegal transaction. Before the House was, indeed, a claim to property, namely by Ms Milligan to a joint and equal equitable interest in a home which she had agreed to be vested in the sole name of Ms Tinsley, her cohabitant, only in order that she, Ms Milligan, could represent herself to be Ms Tinsleys lodger and claim state benefits accordingly.
29 In the wake of the Tinsley case the reliance test has inevitably taken hold; and it has been applied to claims in tort. In Stone & Rolls Ltd v Moore Stephens  AC 1391, a company sued its auditors for negligence in failing to detect fraudulent transactions into which its former controlling director had caused it to enter. It was held both in the Court of Appeal and, by a majority, in the House of Lords that the conduct of the director was to be attributed to the company; and that the defence of illegality defeated it. In his judgment in the Court of Appeal, with which Keene and Mummery LJJ agreed, Rimer LJ referred at para 16 to the reliance test and described its effect in stark terms as follows:
The relevant question it identifies is whether, to advance the claim, it
is necessary for the claimant to plead or rely on the illegality. If it is, the
Tinsley case decided that the axe falls indiscriminately and the claim is
barred, however good it might otherwise be. There is no discretion to
permit it to succeed.
In the House of Lords, Lord Phillips of Worth Matravers concluded at para 86 that the illegal conduct formed the basis of the company’s claim, in other words that the company was forced to rely on it. He had, however, observed at para 25:
I do not believe . . . that it is right to proceed on the basis that
the reliance test can automatically be applied as a rule of thumb. It is
necessary to give consideration to the policy underlying ex turpi causa in
order to decide whether this defence is bound to defeat [the company’s claim.
The next formulation considered by Lord Wilson was the inextricable link test:
36 In Gray v Thames Trains Ltd  AC 1339, the House of Lords,
while not disapproving the inextricable link test, expressed reservations
about it. The claimant was injured in the Ladbroke Grove rail disaster and
in consequence suffered post-traumatic stress disorder. This led him to
commit manslaughter, for which he was ordered to be detained in hospital.
He sued two railway companies for negligence, which they admitted. The House held however that the defence of illegality barred such part of his claim as sought general damages arising out of his detention and damages for the loss of earnings which followed it. It held that the defence precluded compensation for losses arising from the sentence passed on him for a criminal act for which he had had responsibility, albeit diminished. So, as Lord Rodger of Earlsferry pointed out at para 63, the case was different from the National Coal Board case  AC 403 and the Cross case The Times, 5 April 2000, in which the claimant had been engaged in an unlawful activity at the time when the defendant committed the alleged tort. Nevertheless reference was made to the inextricable link test. Lord Hoffmann said  AC1339, para 54:
It might be better to avoid metaphors like inextricably linked or
integral part and to treat the question as simply one of causation. Can
one say that, although the damage would not have happened but for the
tortious conduct of the defendant, it was caused by the criminal act of the claimant? . . . Or is the position that although the damage would not
have happened without the criminal act of the claimant, it was caused by the tortious act of the defendant?
In the same vein Lord Rodger observed at para 74 that opinions were likely
to differ about whether the alleged tort was inextricably linked with the
claimant’s criminal conduct.
I agree but am not convinced that the alternative inquiry suggested by Lord Hoffmann is any more likely to secure consistency of decision-making.
What is new about the defence of illegality in the Hounga case, is the test formulated by Lord Wilson himself, which makes it an expressly public policy driven defence:
42 The defence of illegality rests on the foundation of public policy.
The principle of public policy is this . . . said Lord Mansfield by way of
preface to his classic exposition of the defence in Holman v Johnson (1775) 1 Cowp 341, 343. Rules which rest on the foundation of public policy, not being rules which belong to the fixed or customary law, are capable, on proper occasion, of expansion or modification: Maxim Nordenfelt Guns and Ammunition Co v Nordenfelt  1 Ch 630, 661 (Bowen LJ). So it is necessary, first, to ask What is the aspect of public policy which founds the defence? and, second, to ask But is there another aspect of public policy to which application of the defence would run counter?
In the case of a claimant whose original vehicle was lacking an MOT, it might be argued that the public policy reason for the defence to apply, is non-existent: the claimant when driving a properly MOT’d and insured credit hire vehicle, is doing nothing wrong. Neither the reliance test or the inextricable link tests, would appear to warrant a different conclusion.
There is no requirement of public policy, that the claimant should be precluded from recovering the value of his vehicle.
So logically there is no requirement that the claimant should be barred from recovering his consequential loss of use and hire charges.
Conversely, there is a very strong public policy requirement that tortfeasors compensate their victims to the full extent of the loss that they cause by their wrongful conduct.