A recent decision from Perth Sheriff Court provides useful guidance on credit hire claims involving taxis, particularly on the appropriate measure of loss, impecuniosity, the availability of alternative hire and mitigation.
In ABC v ASDA Stores Limited [2026] SC PER 109, liability for the accident was admitted. The dispute concerned £31,792.32 of credit hire charges incurred over 162 days while the pursuer's taxi was being repaired.
The Sheriff accepted that the pursuer had reasonably entered into credit hire and was impecunious (that is, he could not have afforded to hire a replacement vehicle if it was not on a credit basis). However, the Sheriff found that the full period of hire was not recoverable. The recoverable period was reduced to 117 days, resulting in an award of £23,001.12.
Loss of profit or replacement hire?
The pursuer was a self-employed taxi driver who held school and social care transport contracts with Perth and Kinross Council. He required a licensed taxi to continue working and was concerned that, if those contracts were allocated elsewhere while his vehicle was off the road, there was no guarantee that the work would subsequently return to him.
The defender argued that, as the taxi was a profit-earning vehicle, the appropriate measure of loss was loss of profit rather than the cost of replacement hire. On that approach, it was submitted that recovery should be limited to just £280.36, representing the loss of profit during the anticipated two-week repair period.
That argument fell to be considered against Hussain v EUI Ltd [2019] EWHC 2647 (QB). In Hussain, the High Court of England & Wales, held that loss of profit is the starting point where a vehicle is used as a profit-earning chattel, but recognised exceptions, including where replacement hire is reasonably necessary to protect valuable customers or contracts and where an impecunious professional driver simply cannot afford not to work.
Applying Hussain, the Sheriff found that the pursuer relied significantly on his Council contracts, could not afford to stop working, and reasonably sought to protect his existing business.
Importantly, the evidence also established that the credit hire organisation was the only provider of replacement plated taxis in the Perth area, meaning there was no realistic hire alternative available locally.
The decision therefore provides a useful Scottish application of the principles considered in Hussain.
While loss of profit may be the starting point for a working taxi, it is not necessarily the ceiling on recovery. The commercial circumstances of the pursuer's business, including the need to protect important contracts and continue earning, can justify the reasonable cost of replacement hire.
Could the pursuer have funded the repairs himself?
The defender also argued that while the pursuer could have funded the £3,146.58 repair costs himself, reducing or avoiding the need to remain in credit hire.
The Sheriff rejected that argument.
Although the pursuer had access to credit facilities and equity in his home, his wider financial circumstances included only £136 in savings, significant credit card debt and substantial ongoing personal and business commitments.
Significantly, the Court did not consider it reasonable to expect the pursuer to incur further borrowing against his home to meet the repair costs.
The decision demonstrates that the theoretical availability of credit or assets does not necessarily establish that a pursuer could reasonably have funded repairs or alternative hire.
Basic hire evidence must reflect the real market
The defender relied on hire rate evidence relating to plated vehicles available in London.
The Sheriff found that evidence of limited assistance. The relevant issue was what alternative was realistically available to this particular pursuer in Perth, where the evidence was that the only available replacement plated taxi was provided on credit hire terms.
This is a useful reminder that a basic hire rate challenge should not be considered purely by reference to price. Availability, location and whether the proposed alternative meets the pursuer's actual requirements are equally important.
Not all 162 days were recoverable
The decision nevertheless contains an important reminder for those pursuing credit hire claims.
Much of the initial delay was attributed to the defender, who had been placed on notice that credit hire charges were accruing. However, once funds had been provided and the garage instructed to undertake the repairs, there was an unexplained delay of more than two months.
The original repair estimate anticipated approximately two weeks of work. There was insufficient evidence explaining why the repairs subsequently took considerably longer.
The Sheriff therefore concluded that the pursuer had not justified the whole period claimed and reduced the recoverable hire period by 45 days, from 162 to 117 days.
This distinction is important. The pursuer succeeded in establishing need, impecuniosity and the reasonableness of entering credit hire, but that did not automatically establish that every day of hire was reasonably incurred.
What does the decision mean in practice?
The judgment highlights four points for those dealing with taxi and other commercial credit hire claims:
- Loss of profit is not necessarily the ceiling on recovery. The need to preserve valuable contracts and continue trading may justify replacement hire.
- Impecuniosity involves more than access to credit. The court will consider whether, in the pursuer's actual financial circumstances, it was reasonable to expect them to fund repairs or replacement hire themselves.
- Basic hire evidence must reflect a genuine alternative. Evidence of cheaper rates will carry limited weight if an equivalent vehicle was not realistically available to the pursuer in the relevant geographical market.
- Mitigation continues throughout the hire period. Establishing that it was reasonable to enter credit hire does not automatically justify every subsequent day of hire.
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