Court of Appeal overturns strike out decision
Barry Cable v Liverpool Victoria Insurance Co Ltd [31.07.20]
This decision illustrates the considerable reluctance of the courts to strike out claims, with such orders whilst available, being very much orders of last resort.
Mr Cable suffered injury following a road traffic accident on 1 September 2014.
The claim was pursued via the MoJ Portal process and liability for this accident promptly admitted. As settlement had not been achieved and in light of limitation, Part 8 proceedings (as modified by Part 8B) were issued on 25 July 2017, and subsequently stayed until 20 August 2018, ostensibly to allow the claimant to comply with the portal process.
Despite the claimant having obtained a number of medical reports which indicated that the claim did not reasonably fall within the portal process, it was not until four days prior to the expiry of the stay, that the claimant’s solicitor first indicated that the claim should no longer proceed within the process. The claimant lodged an application on 18 August 2018 seeking to transfer the matter to Part 7, and which was subsequently granted on 21 August 2018.
The defendant made an application to set aside the order, re-impose the stay and strike out the claimant’s claim.
The application, heard at first instance by District Judge Campbell on 17 October 2018 was successful.
This decision was appealed before Judge Wood QC and the decision upheld and the claimant’s claim remained struck out.
The matter came before the Court of Appeal on 15 July 2020 with judgment handed down on 31 July 2020.
Lord Justice Coulson concluded that the correct questions to consider, and which had not been properly considered by the lower courts, were those set out by the Court of Appeal in Asturion Fondation v Alibrahim [24.01.2020]. The court must first determine whether the claimant’s conduct was an abuse of process, and if it was, whether to exercise its discretion to strike out the claim.
In the present case, the claimant solicitor’s conduct amounted to an abuse of process because at the point they issued proceedings under Part 8, they knew or ought to have known that the claim should proceed under Part 7; they sought a stay to comply with Stage 2 of the RTA Protocol, when they knew, or ought to have known it was inapplicable to the claim; and they did not intend to and did not use the stay of proceedings for the purposes for which it was sought and granted.
Lord Justice Coulson stating:
Having established that there was an abuse of process, the second step for the court is the usual balancing exercise, in order to identify the proportionate sanction. Striking out the claim is an available option, but as we have seen, it is not the only, or even the primary solution.
In the Court’s opinion, the only prejudice to the defendant was the delay of one year between the autumn of 2017 and the autumn of 2018 when the claim should have transferred to be dealt with under The Pre-Action Protocol for Personal Injury Claims. Whilst this delay required some form of sanction, there was nothing to indicate that a sanction in costs or in relation to interest would not have dealt with this adequately. Conversely, in striking the claim out, the claimant would be deprived of his claim and left pursuing a loss of chance claim, in relation to a claim where liability had been admitted long ago, and for a catalogue of errors and delays for which he was not responsible.
Accordingly, the appeal was allowed and the claimant was ordered to pay the defendant’s costs on the indemnity basis and debarred from recovering interest on his special damage claim to reflect the abuse of process, with the stay of proceedings lifted and the case transferred to Part 7.
The Supreme Court said in Summers v Fairclough Homes Limited  (a case where a claimant had significantly exaggerated his ongoing disabilities) that: “The draconian step of striking a claim out is always a last resort…..”.
Medical evidence obtained a number of years earlier should have alerted the claimant’s solicitors to the fact that the MoJ Portal was no longer the suitable process for the claim to follow.
The court identified three separate abuses of process, but notwithstanding this, concluded that the prejudice to the defendant amounted to no more than delay, and the appropriate sanction was to deal with this by way of costs.
One factor considered by the Judge at first instance which she considered caused prejudice, was that the defendant was unable to properly set a reserve for the claim because there had “never been any earlier indication from the claimant’s solicitor as to the value of this case”.
Lord Justice Coulson found that there was no evidence before the court to make such a finding and the Judge:
…was not entitled to find prejudice where it was not alleged. If there had been a failure to set a proper reserve in this case, or if the misrepresentation that this was a low value RTA claim had given rise to particular issues or difficulties for the respondent insurer, then there needed to be specific evidence of that before she could make the finding she did.
Nevertheless, insurers, and in particular self-insured entities, may wish to consider whether the inability to properly reserve a claim creates prejudice for them, and if so, evidence of this prejudice would need to be provided to the court. In reality however, the inability to set a reserve is highly unlikely to be regarded as creating sufficient prejudice to justify a strike out (see Cain v Francis [18.12.2008] where the court noted issues concerning a reserve created little, if any prejudice).
The pleaded value in this claim was approximately £2.2 million, but given liability had been conceded, it is reasonable to assume that the courts will remain very reluctant to strike out claims when such applications are pursued.
Defendants will need to establish that the abuse has created sufficient prejudice to their ability to properly deal with the claim, and that the abuse cannot be adequately remedied other than by a strike out.
By way of example, in the recent decision in Tandara v EUI Ltd t/a Admiral Insurance [29.07.20] the court at first instance struck out the claimant’s claim where there had been a delay of many years (and considerably more it will be noted than in Cable). The District Judge in that case observed that EUI Ltd “critically have lost the opportunity to contemporaneously consider the seismic changes” in the claimant’s condition. The Judge considered that the defendant’s prejudice could not be remedied in costs, since the defendant had lost the opportunity to contemporaneously examine the claimant against a background of additional injuries being attributed to it, such that a fair trial of the issues could not be achieved. It remains to be seen whether this case will now be subject to an Appeal.
Such cases where a strike out will be ordered however, are likely to be few, and very far between.