Compensation For Plaintiff’s Impecuniosity (Lack of Financial Resources) ?
NewsIs a defendant liable to compensate an impecunious plaintiff for losses that may have been avoided or reduced had the plaintiff been in a better financial standing when the loss occurred? This scenario occurs in numerous situations, for example when a business incurs a loss of profits if it closes until compensation is paid following a fire or flood.
The general rule in tort was that damages should be assessed at the date of breach. The House of Lords in Leisbosch Dredger case determined that the Plaintiff should be put, so far as possible, in the position that it would have been, had the loss not been inflicted, but subject to the rules of law as to remoteness of damage. The Court determined that the actual loss arose from the Plaintiff’s impecuniosity as a separate and concurrent cause, extraneous to and distinct from the tort and decided that the impecuniosity was not traceable to the Defendant’s act and was therefore too remote to be regarded as a consequence of the tort.
The Courts did, from time to time, attempt to distinguish the Leisbosch decision, or set limits in relation to its scope and one of the matters that has been considered by the Court is whether the Defendant has been wrongly maintaining a denial of liability.
The most recent line of decisions are on the issue of car hire and commence in 2003 with the case of Lagden v O’Connor. The House of Lords concluded that a Plaintiff had a duty to take reasonable steps to mitigate his loss. However, the House of Lords would have to consider what the position would be if the Plaintiff’s pre-existing impecuniosity meant that he had no choice in the way in which he mitigated his loss and, as a result, he gained an additional benefit or incurred an additional loss. In this case the majority of the House of Lords decided that the Defendant had to take the Plaintiff as he found him and where the Plaintiff’s lack of financial means had left him no choice as to how to mitigate his loss, any related additional cost was recoverable. The House of Lords, in that case, criticised the Leisbosch decision and determined that Leisbosch was no longer good law. It was determined that the proper approach was to ask whether or not damages were reasonably foreseeable. The majority of the House of Lords in that case took the view that it was reasonably foreseeable that some car owners would not have a suitable debit or credit card or money available to pay in advance for hire and would therefore have no choice but to go to credit hire companies.
The issue of impecuniosity and mitigation of losses has been considered more recently and more locally by the High Court, on Appeal from the County Court, in the cases of Kelly v Mackle [2009] NIQB 39 and Gilheaney v McGovern and Another [2009] NIQB 46. In Kelly v Mackle the Court determined that the Plaintiff was not entitled to pursue the claim for the full cost of hire and stated that this was economic folly. In the case of Gilheaney v McGovern Stephens J. specifically considered the issue in relation to impecuniosity and did accept, in that case, that the Plaintiff, an 18 year old student, was impecunious and, as a result, that he had no choice but to use the services of a credit hire company and therefore did determine that the Plaintiff could recover at the credit hire rate.
These Judgments were based upon the facts and evidence before the Court and the issue therefore is one open to argument on a case by case basis.
Victoria Mclean