Lagden v O’Connor [2004] 1 AC 1067

O'Connor negligently damaged Lagden's parked car. He needed a replacement while it was repaired but, being unemployed and short of money, could not reasonably pay ordinary hire charges in advance. He entered a credit-hire arrangement providing a temporary vehicle while recovery was sought from the responsible driver. The cost included services beyond basic hire. O'Connor disputed liability for those additional elements, relying on authority limiting recovery where an ordinary hire option was available. The appeal concerned how Lagden's actual financial position affected reasonable mitigation and the measure of his loss of use.

Could the reasonable cost of credit hire be recovered where the claimant's lack of means left no reasonable way to fund an ordinary replacement vehicle?

The House of Lords majority held that the reasonable costs of credit hire could be recovered where Lagden's lack of means left no reasonable alternative for obtaining a replacement vehicle. The assessment could not assume access to money he did not possess or require financial sacrifices he could not reasonably be expected to make. His position differed from a motorist who could afford ordinary hire but chose additional credit-hire services. The award remained compensation for loss of use and reasonable mitigation expenditure; it was not automatic reimbursement of any rate, vehicle or hire duration selected. The majority rejected a rigid exclusion of financial circumstances from assessing the consequences of the defendant's negligence.

Reasonable mitigation of tortious loss is assessed in the claimant's actual financial circumstances. Where impecuniosity makes credit hire the reasonable means of replacing a damaged vehicle, its reasonable cost may be recoverable; need, duration, rate and available alternatives still matter.

Lagden qualifies the idea that a claimant's lack of money is irrelevant to damages. It also gives practical content to reasonable mitigation: the law does not demand an option unavailable without unreasonable sacrifice. Its credit-hire context matters, and the decision should not be stated as an unlimited financial version of the eggshell-skull rule. Compare Dimond v Lovell and later credit-hire decisions when analysing additional benefits, proof of impecuniosity and the reasonableness of the substitute vehicle and charges.