Credit Hire Update – Cost of hire not recoverable for Claimant taxi company – damages limited to loss of profit.

joanna_hastie_pi By Joanna Hastie

 

I recently acted for the Defendant in a credit hire case where liability was admitted. The issue was quantification of damages – whether or not the Claimant should be able to recover the cost of hiring a replacement vehicle or whether the measure of damages should be limited to the loss of profit.

The Claimant taxi company hired out taxi vehicles in return for weekly rental and did not take a share of the taxi fares paid. One of its customers, a self-employed taxi driver, was involved in an accident caused by the Defendant.

Following the accident, repairs to C’s vehicle took two weeks to complete, during which time C lost approximately £450 in rental income from the damaged vehicle. C did not have a spare taxi and therefore hired an alternative vehicle to rent out at a cost of approximately £1800. The issue was whether C was limited to recovering the profit that it would have earned (£450) or whether C could recover the cost of hiring a replacement vehicle (£1800).

C submitted that it had acted reasonably in seeking to mitigate its loss by hiring a replacement as the failure to provide a replacement vehicle would have risked damage to its reputation, and the loss of further work as C’s driver may have gone elsewhere.

D argued that damages should be limited to net loss of profit where the cost of hire far exceeded the profit. C’s business was the straightforward hire of equipment, it must have been obvious to C that the cost of hiring a vehicle considerably exceeded the loss of profit and C had therefore failed to mitigate its loss.

Judgment: C was entitled to hire an alternative vehicle but D was not liable to pay the hire cost. C’s damages were therefore limited to the net loss of profit (£450).

A full transcript of the case can be found on Westlaw: A Line Taxis v Melissa Ward.

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