• In the case of Lagden v O’Connor [2004] 1 AC 1067, it was established that the ‘thin skull’ / ‘eggshell skull’ rule also includes the consideration of the V’s financial situation. In this case it was to do with a credit agreement.

Facts of Lagden v O’Connor [2004] 1 AC 1067

  • D, Mrs O’Connor, crashed into C, Lagden’s, parked and unoccupied car
  • It was damaged to such an extent that it had to be taken in for repairs
  • C was unemployed at the time and, requiring a car, entered a contract with a credit-hire company
  • This provided him with a car at no cost by way of them recovering charges from the D
  • C was looking at the damages to also cover this agreement
  • D disputed this agreement’s charge, and claimed that this extra charge was due to C’s situation prior and thus nothing to do with her

Issues in Lagden v O’Connor [2004] 1 AC 1067

  • Did the ‘thin skull’ rule apply here, bringing in the pre-existing conditions of the C being unemployed
  • Or did that not apply to the financial vulnerability of the person(s) claiming?

Held by the House of Lords

Appeal dismissed by a 3 to 2 majority. C was entitled to recover costs in full due to the ‘thin skull’ rule; this would cover the credit-hire agreement.

Lord Nicholls

Financial vulnerability:

  • “A financially well placed plaintiff will be able to hire a replacement car, and in the fullness of time obtain reimbursement from the negligent driver’s insurers, but an impecunious plaintiff will not. This cannot be an acceptable result.” [6]
  • “In the case of the impecunious plaintiff someone has to provide him with credit, by incurring the expense of providing a car without receiving immediate payment, and then incur the administrative expense involved in pursuing the defendant’s insurers for payment.” [7]
  • It cannot be held as authoritative anymore that financial vulnerability is not considered in the ‘think skull’ rule [8]
  • ‘impecunious’: “In the present context what it signifies is inability to pay car hire charges without making sacrifices the plaintiff could not reasonably be expected to make … Motor insurers and credit hire companies should be able to agree on standard enquiries, or some other means, which in practice can most readily give effect to this test of impecuniosity” [9]

Lord Hope

It was not wrong for the C to seek out a means to another car whilst his was indisposed, “inconvenience is another form of loss for which, in principle, damages are recoverable. So it was open to him, as it is to any other motorist, to avoid or mitigate that loss by hiring another vehicle”. He was minimising his loss, spending no more on the hire than necessary. [27]

Citing Harbutt’s “Plasticine” Ltd v Wayne Tank and Pump Co Ltd [1970]: If, C did have a choice, and his choice/efforts in mitigating were the more costly ones, there would be a deduction available for the D [34]

Lord Scott and Lord Walker dissenting

“The starting point is the majority view … in Dimond v Lovell [2002] 1 AC 384 that the additional benefits which the claimant obtained (additional, that is, to the use of the replacement car provided by the accident hire company), although obtained by a course of action which was reasonable, were not compensatable loss. The correctness of that view is not challenged.” [103]

“As a matter of principle, it would not in my view be right to permit a claimant’s impecuniosity, however much it may attract sympathy, to enable him to obtain compensation under a head which English law does not regard as part of his compensatable loss.” [104]