A recent court ruling in Mazahar Hussain v EUI Limited, commonly referred to as Hussain II, has clarified and tightened the exceptions established in the 2019 Hussain v EUI case.
According to insights from HF, the decision is expected to strengthen insurers' ability to limit credit hire claims and reduce overall indemnity spend.
The original Hussain decision established that credit hire claims for profit-earning vehicles, such as taxis, should generally be capped at the claimant’s loss of profit.
However, claimants could bypass this limitation under three exceptions: if operating at a loss was necessary to preserve business relationships or contracts, if the vehicle was used for both private and business purposes, or if the claimant demonstrated they could not afford to stop working (impecuniosity).
In Hussain II, heard in October 2024 at Bradford County Court, taxi driver Mazahar Hussain pursued £33,140 in credit hire costs for a replacement vehicle hired over 162 days at £203 per day. His claim also included personal injury, storage, and recovery costs, although vehicle damage had already been settled.
The claimant relied on a letter from Barkerend Taxis to argue he met two exceptions: operating at a loss to preserve a trade or relationship and using the vehicle for mixed business and personal purposes.
The letter warned of disconnection from the dispatch system if Hussain did not return to work within seven days. However, the claimant provided no financial evidence to satisfy the third exception regarding impecuniosity.
At trial, Judge Malek delivered a reserved judgment and reinforced the strict application of the Hussain exceptions. He ruled that the first exception – operating at a loss to preserve trade – is not a complete exception to the loss of profit rule but instead requires courts to consider the duration and size of any loss alongside the likelihood of permanent harm to the business.
He also referenced Mahmood v Liverpool Victoria Insurance Ltd (2023), where a judge found that minimal profits rendered contracts unworthy of preservation.
In Hussain II, the court determined the claimant had not sufficiently demonstrated business profitability, noting the absence of profit and loss accounts or tax returns.
Judge Malek described the Barkerend Taxis letter as “woefully inadequate” and questioned the likelihood of a permanent business termination after one week of absence. As a result, the claimant failed to meet the first exception.
However, the judge also accepted that the claimant satisfied the second exception regarding mixed business and private use. A standard vehicle hire rate for a reasonable repair period was allowed, which the court assessed at five weeks.
Judge Malek observed the inherent conflict between proving profitability for the first exception and demonstrating impecuniosity for the third, adding that claimants must often decide early in proceedings which position to pursue.
Ben Elliot (pictured above), partner at HF, commented that the judgment clarifies the need for full financial disclosure.
“This is a welcome judgment and clarifies that any claimant who wishes to prove either the first or third exception in Hussain must provide full financial disclosure including their business accounts and tax returns. Any claimants relying on hearsay evidence in support of supposed lost business should now be given short shrift from the courts,” Elliot said.
Ryan Lewis, head of credit hire at Admiral, said the decision supports longstanding insurer arguments on loss of profit.
“It is pleasing to see that we have built upon the first decision of Hussain v EUI and the court accepted our arguments on the friction the first and third exceptions posed for insurers. We are hopeful that this will reduce the arguments on what is required for claimants to claim full credit hire rates,” Lewis said.
What are your thoughts on this story? Please feel free to share your comments below.
