Court of Appeal Allows Credit Hire Charges Despite Absence of MOT Certificate

Introduction

The Court of Appeal, on 4 December 2024, delivered judgment in the case of Ali v HSF Logistics Polska SP. Z O.O [2024] EWCA Civ 1479. It addressed the issue of whether a claimant can recover credit hire charges when their vehicle lacked a valid MOT certificate at the time of the accident. The honourable Court’s decision provides clarity on the boundaries of the doctrine of ex turpi causa and elucidates upon the central role of proportionality in assessing defences rooted in illegality.

Background

The case arose from a road traffic accident on 20 February 2021, where the Defendant's lorry negligently collided with the Claimant's Volvo (car). The vehicle, which was parked and unattended at the time, sustained damage that rendered it undriveable and required repair.

The Claimant, who regularly used the vehicle for both work and personal purposes, was found to have a genuine need for a replacement vehicle. The judge at first instance, Mr Recorder Charman, determined that the Claimant had no alternative vehicle available that it would have been reasonable for him to use while the Volvo was undergoing repairs. In those circumstances, the Recorder held that hiring a replacement vehicle on credit hire terms for 36 days - at a total cost of £21,588.72 - was, on the face of it, reasonable, without prejudice to the Defendant’s two main defences.

A critical issue in dispute was the absence of a valid MOT certificate for the Claimant’s vehicle, which had expired 4½ months prior to the accident. The Recorder made the following findings in respect of this:

1. The Claimant had been “careless” in failing to obtain an MOT, but there was no positive finding that he was aware of the expired certificate.

2. There was no evidence that the Claimant’s vehicle was unroadworthy prior to the accident or that he intended to rectify the expired MOT imminently.

The Defendant advanced two distinct arguments:

1. Ex Turpi Causa – That the absence of a valid MOT barred recovery of the hire charges on the basis that the Claimant’s use of the vehicle was unlawful.

2. Causation Defence – That the Claimant’s inability to lawfully drive the vehicle meant he suffered no compensable loss of use, as he was not entitled to use the vehicle on the public highway.

The Recorder at first instance accepted the Defendant’s causation defence. He concluded that the Claimant could not recover the hire charges because, in the absence of a valid MOT, he had no legitimate loss of use claim. However, the Recorder rejected the ex turpi causa argument in relation to all heads of damage, including the recovery and repair costs, on the basis that barring recovery for these claims would have been disproportionate.

On the Claimant’s first appeal, Martin Spencer J upheld the Recorder’s decision. He endorsed the causation defence as a valid basis for denying the hire charges. However, on second appeal to the Court of Appeal, the Claimant successfully argued that the causation defence was fundamentally flawed and that the Recorder’s reasoning was wrong in principle.

The Judgment of the Court of Appeal

The Court of Appeal overturned the decision of the Recorder at first instance and determined that the Claimant was entitled to recover the credit hire charges despite the absence of a valid MOT certificate. The Court discussed (in great depth) the implications arising out of two key issues: the boundaries of the doctrine of ex turpi causa and the Defendant’s so-called “causation defence.”

Stuart-Smith LJ clarified that proportionality must be central to the analysis of illegality defences. He noted that depriving the Claimant of a substantial claim for £21,588.72 due to a minor regulatory offence carrying a maximum fine of £1,000 would be disproportionate. At [50], he stated:

“Refusing a claim for just over £21,000 because of the absence of a valid MOT which exposes the Claimant to a potential fine of £1,000 raises immediate and troubling questions of proportionality.”

In the same paragraph, Stuart-Smith LJ further reinforced the importance of the criminal and civil courts maintaining their respective roles. Denying the claim, he observed, would effectively impose an additional penalty far beyond what the criminal law envisages:

“Allowing recovery of the hire charges in the present case does not undermine the effectiveness of the criminal law; but there is a real risk that denying recovery… may amount in substance to an additional penalty disproportionate to the nature and seriousness of any wrongdoing.”

In relation to the “causation defence,” the Court rejected this argument as fundamentally flawed. It reaffirmed that the essence of a loss of use claim lies in the inconvenience caused to the claimant by the defendant’s tort. At [47], Stuart-Smith LJ explained:

“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.”

The Court also addressed the broader implications of accepting such a defence. It cautioned that trivial regulatory breaches, such as defective lights or windscreen wipers, could similarly be used to deny claims, leading to absurd outcomes. At [54], Stuart-Smith LJ observed:

“If the Defendant’s case on the causation defence is right, it cannot be confined to cases involving the lack of an MOT… There is no obvious distinction to be drawn between use of a car in the absence of a valid MOT but in respect of which there is no evidence that it is not roadworthy, on the one hand, and cases of cars not otherwise shown to be unroadworthy but having (a) a defective light or (b) defective windscreen wipers or (c) having a non-conforming number plate.”

The Court’s decision firmly rejected the Defendant’s arguments. It concluded that the Claimant’s inconvenience and loss of use were the direct consequence of the Defendant’s negligence, wholly unaffected by the absence of an MOT certificate.

Analysis and Commentary

This judgment provides an essential clarification on the boundaries of the doctrine of ex turpi causa and the role of proportionality when illegality is raised as a defence in civil claims. Its implications will likely stretch beyond the facts of this case and carry significant weight for both practitioners and insurers who must navigate the (increasingly) contentious and complex practice area of credit hire litigation.

Proportionality and the Doctrine of Ex Turpi Causa

The judgment highlights a crucial principle: proportionality must remain at the heart of illegality defences. Historically, ex turpi causa has often been characterised as an inflexible doctrine that tends to bar claims where the claimant's wrongdoing is intrinsic to their cause of action.

However, Lord Toulson’s tripartite test in Patel v Mirza [2016] UKSC 42 - requiring courts to consider (1) the purpose of the transgressed rule, (2) the impact on public policy, and (3) proportionality - introduced much-needed nuance.

Stuart-Smith LJ’s application of this test in Ali illustrates its adaptability. The absence of a valid MOT was undoubtedly a breach of statutory law, but Parliament's treatment of such breaches as minor summary offences is instructive.

The Court recognised that using ex turpi causa as a blanket shield in cases of minor infractions risks distorting the doctrine’s purpose and undermining the coherence of the law. As Stuart-Smith LJ observed, a fine of £1,000 cannot reasonably justify depriving the claimant of compensation for losses exceeding £21,000. This reasoning reinforces the principle that the civil courts must avoid imposing disproportionate “penalties” on claimants under the guise of public policy.

What is particularly striking here is the Court’s sensitivity to the balance between private rights and public interests. By refraining from elevating a minor illegality to the level of a substantive defence, the judgment avoids the “overkill” Lord Toulson warned against in Patel. This provides reassurance that the courts will continue to exercise restraint in cases where the claimant’s wrongdoing is collateral to the loss caused by the defendant’s tortious conduct.

The Limits of the Causation Defence

The so-called “causation defence,” rejected by the Court in this case, exposes a trend in credit hire litigation - namely, the inclination of defendants to repackage ex turpi causa arguments in alternative forms.

This is not merely a technical issue but a matter of legal principle. As Stuart-Smith LJ highlighted, the essence of a claim for loss of use lies in the claimant’s inconvenience arising from the defendant’s tort. The Claimant in Ali was deprived of the use of his vehicle, regardless of the regulatory status of his MOT certificate, and this deprivation was compensable.

The rejection of the causation argument is significant for two reasons. First, it reaffirms that inconvenience, not the legality of the claimant’s usage, is the touchstone for loss of use claims. Second, the Court’s reasoning anticipates and precludes broader mischief. As the judgment observes, accepting the causation defence would create a “slippery slope” that would allow defendants to exploit trivial breaches - defective lights, bald tyres, or expired tax discs - to evade liability entirely.

From a practical perspective, this clarification places the burden squarely on defendants to engage with the real issues in credit hire claims - namely, the reasonableness of the hire charges and the claimant’s actual need for a replacement vehicle. It indicates that attempts to derail claims through peripheral technicalities are less likely to generate favour with the courts.

The Role of Public Policy and the Criminal-Civil Divide

The Court of Appeal’s judgment also reflects a deeper principle about the division of responsibility between the criminal and civil courts. The regulation of roadworthiness and MOT compliance falls squarely within the remit of the criminal law, which provides clear and proportionate sanctions for breaches. To deny civil recovery on the basis of such breaches risks conflating two distinct legal regimes and undermines the proper role of the criminal courts.

Stuart-Smith LJ’s concern that rejecting the claim could amount to an “additional penalty” is particularly compelling. It aligns with the broader public policy aim of ensuring that defendants remain accountable for the consequences of their tortious conduct, without civil courts effectively imposing punitive sanctions on claimants. This approach reinforces the principle that compensation in tort is a matter of restorative justice and not retribution.

The Reinforcing of Doctrinal Coherence

This judgment also allows one to glean further into the nature of tort law itself: its purpose is to remedy harm caused by wrongful conduct, not to provide defendants with an escape route based on incidental breaches of regulation. The Court’s rejection of the causation defence is critical in this respect. By focusing on the claimant’s inconvenience - the heart of loss of use claims - it preserves the conceptual clarity of tort law and prevents fragmentation. Allowing peripheral breaches to vitiate claims would risk incentivising defendants to scour claimants’ conduct for minor irregularities, creating unjust and incoherent outcomes.

This decision therefore can be taken as a reminder that proportionality and coherence are not abstract ideals in English law, but they are, indeed, practical necessities. They ensure that tort law remains predictable, fair and focused on its core purpose: compensating those harmed by the wrongful acts of others. It reinforces a broader message to defendants and insurers alike: liability should remain tethered to the harm caused by the tort rather than what may be described as technical distractions.

Practical Implications for Practitioners and Insurers

For practitioners, this judgment is a reminder that illegality defences, particularly in credit hire claims, must be approached with caution. Defendants seeking to rely on ex turpi causa must not only establish the claimant’s wrongdoing but also demonstrate that barring the claim is a proportionate response. Arguments that elevate minor infractions into complete defences will likely face close judicial scrutiny.

Insurers, on the other hand, should take note of the Court’s rejection of the causation defence. While the judgment does not close the door entirely to challenges based on claimants’ conduct, it draws a firm line against defences that obscure the real issues in dispute. Moving forward, insurers would be well-advised to focus on established principles such as the reasonableness of hire costs and period of hire rather than technical irregularities - as tempting as this may be.

Conclusion

The judgment in Ali is both principled and practical. By affirming the centrality of proportionality and rejecting the misuse of causation arguments, the Court of Appeal has sought to strike a balance between protecting claimants’ rights and upholding public policy. It provides welcome clarity for an area of law often characterised by contentious technical arguments. It also reinforces the importance of fairness and proportionality in civil litigation more generally.

This analysis was composed by Abdul Qadim, a Barrister at 25 Canada Square Chambers.