Horton versus Sadler And Another [2006]

FACTS:-

On the 12th April 1998, the Claimant was injured in a road traffic accident for which the First Defendant, Mr Sadler was wholly responsible. Mr Sadler was uninsured. The MIB nominated insurers to act as its agents and the Claimant’s solicitors corresponded with them. In October 2000, the MIB made an interim payment to Mr Sadler. On the 10th April 2001 the Claimant’s solicitors issue proceedings against Mr Sadler but they did not give notice of issue of proceedings to the MIB as they were required to do under the then 1988 MIB Uninsured Drivers Agreement (now replaced by the 1999 MIB Uninsured Drivers Agreement). The MIB were joined as a party to proceedings, and they served a defence relying on the failure to give notice. They also counterclaimed for the return of the interim payment.

In September 2001, the Claimant issued a second action against Mr Sadler and they gave the necessary notice to the MIB, which duly applied to be joined as a party to the action. The MIB claimed in their defence that the action was statute barred by reason of section 11 of the Limitation Act 1980. The Claimant responded by seeking an order dis-applying the ordinary 3 year time limit under section 33 of the Limitation Act 1980.

At first instance the court said that the MIB was under no liability in the first action and that the Claimant should repay the interim payment. In relation to the second action the court said that it could not exercise its discretion under section 33 of the Limitation Act 1980 to disapply the time limit because of the case of Walkley v. Precision Forgings Ltd [1979] 1 WLR 606.

The Claimant appealed to the Court of Appeal, which agreed with the lower court, but permission to appeal was granted by the House of Lords.

HELD:-

The Claimant’s appeal was allowed. Lord Bingham gave the lead judgment. He considered the operation of the MIB Agreements and the way in which the statutory law on limitation had developed over the years. He then considered in detail the provision of section 33 of the Limitation Act 1980 and the case of Walkley. In that case the Claimant had first issued proceedings in October 1971 for personal injury. His first solicitors told him that he had a weak claim so he instructed a second solicitor. Those solicitors were told by the Defendant they would apply to strike out the claim for want of prosecution. No further steps were taken and the second solicitors ceased to act. Mr Walkley then found a third set of solicitors and issued a second set of proceedings in December 1976. The House of Lords said that Mr Walkley, having previously started an action for the same cause of action within the primary limitation period, could not make use of section 2D of the Limitation Act 1975 (now section 33 of the Limitation Act 1980) to get over the limitation barrier on his second claim.  However this decision had created a legal anomaly, and since that case, the Court of Appeal had striven to distinguish similar cases in order to avoid injustice. Lord Bingham quoted from the Law Commission’s Report on Limitation of Actions (Law Com No. 270, 10 July 2001 para 3.166).

“However we consider that some amendments should be made to the current form of the discretion [in section 33]. An artificial distinction exists under the current law between the claimant who has not issued any proceedings within the limitation period (in which the discretion applied) and the claimant who has issued proceedings, but failed to serve them within the limitation period (in which case the discretion does not apply).”

Lord Bingham considered whether the House of Lords could properly depart from its own precedent. This was not a case where contracts, settlements of property or fiscal arrangements had been entered into on the faith of a settled legal rule. The criminal law would be unaffected and there would be no detriment to public administrant. He set out his reasons as to why the Lords could depart from the decision in Walkley:-

• The decision in Walkley unfairly deprived Claimants of a right that Parliament intended them to have and subverted the clear intention of Parliament.
• The decision had driven the Court of Appeal to draw fine distinctions which reflected no credit on this area of the law.

Lord Bingham considered the operation of section 33 and in particular the issue of the Claimant’s rights against his own solicitors in negligence, which was very relevant. The trial judge in this case, Judge Cooke had indicated that he would exercise his discretion on the following grounds:-

• The delay in issuing proceedings after the expiry of the limitation period was small and was caused by the “technical but vital requirements” of clause 5(1)(a) of the MIB Agreement.
• The effect on the trial would be minimal
• The MIB would lose a fortuitous limitation defence

Judge Cooke then considered whether the Claimant claim against his insurers tilted the balance the other way. The MIB had been on notice of the claim, and had no evidential problem, and they were simply losing the windfall of a limitation defence, whereas the Claimant, if he could not get over the limitation barrier would have to bring a further action against a new Defendant (his solicitors).

The MIB had argued that the loss should fall on the insurer who had received a premium (i.e. the professional indemnity insurers) rather than on the MIB who had not.

What in fact had happened was that the Claimant had received a payment from his solicitors’ indemnity insurers following the judgement at first instance, but since that had occurred after the judgement, it could have no bearing on the judge’s decision.

If the judge had accepted the MIB’s argument, his conclusion might well have been supportable. However he was guilty of no misdirection. He was entitled to see some prejudice to the Claimant in having to make a new claim against his insurers where even though liability was not in dispute, but the quantum of damages was at issue.

Article 6 of the European Convention had been argued for the Claimant. Lord Bingham did not think that this applied since the Claimant had always had untrammelled access to the court.

It was also argued by the MIB that the bringing of a second action was an abuse of process. The trial judge had indicated that if he were giving permission for the second action to continue, he would require the first action to be discontinued. Lord Bingham said that this was the correct response.

Lord Carswell also giving judgment dealt with the judge’s exercise of discretion and in particular, the MIB’s argument that the loss should fall on the insurer who had received a premium (i.e. the professional indemnity insurers) rather than on the MIB who had not. The trial judge had not been persuaded by that argument. The MIB should not be regarded differently from motor insurers or professional liability insurers.

Related posts:

1. Norman v Aziz; Norman v Ali [2000]
2. Richardson v Watson And Another [2006]
3. Evans v Secretary Of State For The Environment Transport And The Regions And Another [2006]
4. Gurtner v Circuit [1968]
5. Mohindra v Director Of Public Prosecutions; Browne versus Chief Constable Of The Greater Manchester Police [2004]