UK & Europe
Insurance & Reinsurance
In a decision which will impact insurers’ and defendant strategies where there has been a potential abuse of the Practice Direction 8B process, the Court of Appeal has overturned the decision in Cable v Liverpool Victoria.
Cable v Liverpool Victoria Insurance  EWCA Civ 1015
The Court of Appeal held that striking out the Claimant's claim was not the appropriate or proportionate sanction in this instance, albeit the Court accepted that a strike out may be appropriate in certain circumstances for similar claims.
The Court found that whilst the Claimant's solicitors had abused the court process by issuing a Part 8 claim form when the claim should have been issued under Part 7, this had not prejudiced the Defendant. Similarly, the Claimant's failure to change from the RTA Protocol to the Personal Injury protocol due to the value of the claim did not affect the Claimant's treatment or possible rehabilitation.
The Claimant was injured in a road traffic accident in September 2014. Following the submission of a Claim Notification Form, liability was admitted in October 2014. The claim did not progress to Stage 2 of the Claims Portal, and despite requests, the Claimant's solicitors failed to update the Defendant.
Unbeknownst to the Defendant the Claimant issued a Part 8 claim form on 25 July 2017 requesting a stay of proceedings as compliance was not possible with the RTA Protocol before limitation expired. At this point the Claimant's loss of earnings claim was in excess of £200,000, meaning the claim was not suitable for the RTA Protocol or Part 8. The stay was granted until August 2018, although the Defendant was not sent the claim form until February 2018.
On 16 August 2018, the Defendant was informed about the Claimant's substantial loss of earnings, and was then served medical evidence describing as being in a "severe neurological state".
On 18 August 2018, two days before the stay expired, the Claimant made an application to lift the stay and for the matter to proceed as a Part 7 claim. The Claimant's claim was now valued at £2.2 million. District Judge Doyle lifted the stay and required the documents to be served by 4 September 2018. The Claimant did not serve until 26 September 2018. The Defendant issued an application to keep the stay in place and to strike out the claim.
District Judge Campbell heard the Defendant's application and ordered that the Claimant's claim be struck out. On appeal, Judge Wood QC refused the Claimant's appeal and was satisfied that District Judge Campbell "applied the correct test to determine whether or not the Claimant should be entitled to proceed with his claim".
The Claimant appealed to the Court of Appeal.
Court of Appeal
The Court of Appeal considered the appropriate tests for abuse of process, and the correct discretionary approach to disputed stays, transfers and applications to strike out.
Abuse of process
Regarding the alleged abuse of process, the Court of Appeal referred to the case of Asturion Foundation v Alibrahim  EWCA Civ 32 which sets out the correct approach to an application to strike out for an abuse of process. Firstly the court has to determine whether the claimant's conduct was an abuse of process. The court may then exercise its discretion to choose to strike out the claim. The Court of Appeal found that DJ Campbell had not adopted the correct two stage test.
Reconsidering the first stage, Lord Justice Coulson held that the Claimant had abused the court proceedings by issuing a Part 8 claim, when a claim under Part 7 should have been issued, and by not using the stay of proceedings for the purposes for which it was sought and granted. There was also an abuse of the RTA Protocol process in seeking a stay for an unsuitable claim.
However, when considering the exercise of the discretion by DJ Campbell, the Court of Appeal found there was no evidence that the Claimant's failure to switch to the PI protocol in autumn 2017 caused the Defendant any prejudice; nor had the Defendant been deprived of a limitation defence. This was an "admitted claim where the highest that it can be put is that a fully detailed claim was provided a year later than it should have been".
The Claimant had started his claim under the RTA Protocol in good time and liability was admitted. He was not responsible for the "catalogue of errors and delays since then".
In these circumstances, striking out of the claim was not "an appropriate or proportionate sanction", and caused prejudice to the Claimant. Lord Justice Coulson held the appropriate sanction was that the Claimant pay the Defendant’s costs on an indemnity basis up to and including the date of the hearing before DJ Campbell (17 October 2018), and recover no interest on special damages for the claim up until that same date.
Relief from sanctions
The Claimant's application for relief from sanctions for failing to comply with DJ Doyle's order (service of the amended claim form) was also considered. This was a "significant default….only exacerbated by the unhappy history". However, "the heart of the detailed amended claim" in the form of medical reports and the Claimant's statement was provided to the Defendant on 17 August 2018. Whilst this did not obviate the need for proper service of the amended claim form it lessened the effect in the delay. The Court of Appeal granted relief from sanctions.
The Court of Appeal ordered the stay be lifted and the case transferred to Part 7.
However, to reflect the conduct of this case, the Court of Appeal decided the Claimant should pay the Defendant's indemnity costs up until the day before the hearing before District Judge Campbell, and that the Claimant should recover no interest on special damages for the same period.
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