I am grateful to Liam Davidson of Winn Solicitors for sending me the case of Hussain v EUI Limited [2024] EWCC 16. In this 2024 Bradford County Court decision, HHJ Malek valiantly grappled with one of the more challenging areas of credit hire law – the treatment of profit-earning chattels.
Mr Hussain, a private hire driver, had his Toyota Avensis written off and proceeded to hire a replacement Toyota Auris for £203.46 per day for about five months, accumulating costs of over £33,000. The defendant insurer, EUI Ltd, understandably questioned whether such substantial hire charges were recoverable when the vehicle was primarily used for business purposes.
The case turned on whether Mr Hussain could fit within one of the three exceptions established by Pepperall J in the High Court decision of Hussain v EUI Ltd [2019] EWHC 2647 (QB) – confusingly, a different Hussain case that created the very framework being applied here. Judge Malek ultimately found that this Hussain failed on all fronts and limited his recovery to basic hire rates for private use over five weeks, plus £4,000 for personal injuries.
While Judge Malek’s desire to provide clarity in this complex area is commendable, his judgment raises some significant concerns about the practical application of established legal principles. The judge himself acknowledged that he was reserving judgment “to provide further clarity and, I hope, some help to parties as to the likely approach of the court.” However, the result may have achieved the opposite effect.
To understand the issues, we need to revisit what Pepperall J established in the original Hussain case. The High Court recognised three circumstances where professional drivers might recover credit hire costs even when they exceed lost profits: first, where continuing to work is necessary to maintain valuable business relationships; second, where the vehicle serves both business and private purposes; and third, where the driver cannot afford not to work due to impecuniosity.
Judge Malek’s analysis of the first exception demands a level of financial sophistication that may be unrealistic for most self-employed taxi drivers. He required claimants to provide detailed evidence of profitability, likelihood of permanent business impairment, and essentially perform a cost-benefit analysis worthy of a management consultancy. The judge stated that claimants must come to court “fully prepared to evidence” their profitability and “hypothetical loss of profit in the event his trade was compromised.”
This approach, while theoretically sound, encounters what might be called the “audited accounts unicorn” problem. In practice, self-employed taxi drivers typically operate on a cash basis, maintain basic records, and would struggle to produce the sophisticated financial analysis that Judge Malek appears to require. You’re genuinely more likely to encounter a unicorn than a taxi driver with detailed profit projections, business plans with risk assessments, or audited accounts that would satisfy corporate governance standards.
The typical taxi driver’s financial record-keeping consists of a rough understanding of weekly takings, some receipts for fuel (when remembered), annual accounts prepared economically, and an intuitive sense of whether business is good or struggling. Demanding detailed financial evidence from this demographic may inadvertently create an insurmountable barrier to recovery.
Judge Malek was particularly critical of a letter from “Barkerend Taxis” threatening to disconnect Hussain from their dispatch system if he didn’t return within seven days. The judge questioned whether any taxi base would adopt such a harsh policy, noting the letter was signed by an unidentified “A M Khan” and appeared commercially implausible.
More concerning is Judge Malek’s interpretation of the dual-use exception. He understood Pepperall J’s judgment as meaning that professional drivers using vehicles for both business and private purposes would only be entitled to basic hire rates for non-taxi vehicles. This interpretation appears to misread what the High Court actually decided.
Pepperall J was clear that where claimants prove they needed replacement vehicles for private and family use, “a claim for reasonable hire charges, even if in excess of the loss of profit that was avoided by hiring the replacement vehicle, will ordinarily be recoverable in the event that a private motorist would have been entitled to recover such costs.” The emphasis on “reasonable hire charges” suggests recovery of costs actually incurred, and not a formula limiting recovery to basic rates for vehicles that cannot perform the business function.
Judge Malek’s approach effectively undermines the second exception. Under his interpretation, taxi drivers who use their vehicles privately gain no meaningful benefit – they remain limited to basic hire rates for cars that cannot serve their business needs. This seems to contradict the commercial reality that Pepperall J sought to address.
The burden of proof allocation also raises questions. Judge Malek placed the burden entirely on claimants to prove they fell within exceptions, reasoning that relevant evidence lay “almost entirely in the preserve of the Claimant.” However, this may reverse the established approach. As the skeleton arguments in related cases demonstrate, defendants should first prove relevant differences between credit hire rates and locally available alternatives. Only then do questions of impecuniosity or exceptions arise.
The judge’s approach sits uncomfortably with established mitigation principles. The Court of Appeal has consistently held that claimants need not weigh mitigation factors “to a nicety” and that reasonable steps taken in crisis situations should be recoverable. McGregor on Damages describes specifically how the second law of mitigation, allows recovery for mitigation expenses even when resulting damage exceeds what would have occurred without mitigation.
Pepperall J’s exceptions were designed to give practical effect to these principles in the profit-earning chattel context. Judge Malek’s technical approach may inadvertently undermine this by creating evidential hurdles that are unrealistic for most claimants in this sector.
The fundamental tension lies between legal precision and commercial reality. The taxi industry operates through informal arrangements, basic record-keeping, and immediate decision-making under pressure. While legal certainty is valuable, imposing corporate-level evidential standards may effectively deny most claimants realistic prospects of success.
Judge Malek’s decision also seems inconsistent with the Court of Appeal’s emphasis on not counting pennies when claimants act reasonably in mitigation. The original Hussain framework was meant to inject commercial sense into an area that had become overly harsh toward professional drivers. This judgment may inadvertently swing the pendulum back in the opposite direction.
The irony is palpable. Judge Malek explicitly stated his intention to provide clarity and assistance to practitioners, yet the decision may have created more confusion than guidance. Where Pepperall J provided workable exceptions grounded in commercial reality, this judgment establishes obstacles that may prove insurmountable for typical claimants.
None of this suggests Judge Malek was wrong to scrutinise the evidence carefully or to question dubious claims. Courts must guard against fabricated evidence and exaggerated losses. However, the evidential standards applied here may be unrealistic for the sector involved and inconsistent with higher authority’s approach to mitigation. The decision should perhaps be viewed as an outlier reflecting one judge’s particular approach rather than reliable guidance on settled law.
My final thought is that there is a philosophical underlying question which requires consideration: whether the law should adapt to serve real people in real situations, or whether claimants must somehow transform their business practices to satisfy legal requirements that may be fundamentally incompatible with their industry’s operating methods. Judge Malek’s judgment, however well-intentioned, seems to favour the latter approach in ways that may prove ultimately unworkable.