UK & Europe
Insurance & Reinsurance
The High Court recently considered issues of limitation in Scottish law in circumstances where the personal injury claim was issued in England. The decision is of interest in those proceedings where the substantive law and applicable procedure are of different jurisdictions. The judgment of Mrs Justice Stacey concluded that in this instance, it is the jurisdiction of the substantive law which determines the question of whether a limitation period has expired.
Kevin Michael Johnson v (1) Johannes Berentzen and (2) Zurich Insurance Plc (UK)  EWHC 1042 (QB)
In this instance, the High Court exercised the discretion available in Scottish law to allow the claimant’s claim to proceed in England. This was despite the claim not being served in time in accordance with Scottish law, where the accident occurred.
Mrs Justice Stacey concluded there would be material and significant prejudice to the claimant resulting from the inevitable delays if he was forced to bring a negligence claim against his solicitors, whereas the defendants were unable to show any prejudice other than having to defend the claim. As such, a short extension was granted to allow the claimant’s late served claim to proceed.
For the avoidance of doubt, any reference to the Scottish legal term ‘pursuer’ refers to a claimant, and the term ‘defender’ refers to a defendant within the England and Wales court system.
On 15 June 2016 the claimant was seriously injured in a road traffic accident whilst on holiday in Scotland when his motorcycle collided with the first defendant’s (D1) vehicle. D1 was insured by the second defendant (D2). Liability was denied and contributory negligence pleaded, although interim payments totalling almost £190,000 were made to the claimant in July and August 2018.
A joint settlement meeting took place in December 2018. By early February 2019, subject to final confirmation between counsel, the defendants’ solicitors advised that settlement was agreed in principle.
On 12 January 2019 the claimant was admitted to hospital after a heart attack. By the middle of March, the defendants were aware of the claimant’s heart problems and subsequently withdrew all offers so that the consequences of the claimant’s serious heart attack could be established.
The claimant resides in England and issued proceedings in England on 8 April 2019; a copy of the claim form was sent to the defendants’ solicitors. Proceedings were served on the defendants on 7 August 2019. The defendants took issue with limitation and asserted that the claim was statute barred because it had not been served within three years of the accident as is required by Scottish law.
The claimant initially responded that service of the claim was a procedural matter not a substantive law issue and was therefore to be governed by the procedural rules and provisions of England and Wales as this was where litigation was being conducted. The claimant had therefore served in time as service took place within four months of issue. Alternatively, the claimant sought an extension of time pursuant to s.19A Prescription and Limitation (Scotland) Act 1973.
The parties agreed that the limitation issues should be dealt with at a preliminary hearing.
At the time of the hearing there was now “a considerable measure of agreement between the parties”. The parties agreed that pursuant to the Rome II Regulation, the applicable law was that of Scotland and that the limitation period was to be determined in accordance with Scottish law.
Both parties’ Scottish legal experts agreed there was a three-year limitation period and that time ran from the day of accident. As the proceedings were not served until 7 August 2019, outside of the three years required by Scottish law, the Scottish legal experts agreed that the action was time barred. Unlike English law, in order to prevent limitation applying, service needs to be effected on the defender.
The claimant argued service of the proceedings was a procedural step, referring to the exception in Article 1(3) of the Rome II Regulation and therefore would be governed by English law as that was where proceedings began.
The judge referred to the case of Pandya v Intersalonika General Insurance Co SA  EWHC 273 (QB). In this case limitation was governed by Greek law. The claim had been issued but not served within the Greek limitation period; Greek law requires the claim form to be issued and served to stop limitation. The claim was found to be time barred and was dismissed.
The claimant accepted that if Pandya was correctly decided the claimant could not succeed as it could not be distinguished on the facts.
The judge stated she was not “persuaded in the argument that service was a matter of procedure, not substantive law in Scotland”. She agreed with the defendant that the date when proceedings have been issued and served determines whether the action has been commenced within or outside the three-year limitation period and this is “key to the Scots law of limitation.”
For the purposes of limitation, Mrs Justice Stacey found that that claimant’s action was commenced outside of the relevant limitation period.
The court’s discretion to allow the action to proceed out of time was considered pursuant to section 19A of the Prescription and Limitation (Scotland) Act 1973. It was acknowledged that the availability and strength of an alternative remedy (such as a negligence claim) against a pursuer’s solicitors are “strong and important” factors to consider but will not automatically mean a court refuses to exercise its discretion.
The claimant argued there would be no prejudice to the defendants, that terms of settlement had been agreed following a JSM and proceedings were necessitated due to the claimant suffering a serious heart attack. At the time the claim was issued the defendants’ solicitors were sent a copy of the claim form; the failure of the Court to exercise its discretion would prompt a significant prejudice to the claimant by the loss of his claim.
It was held that it was “of some relevance that the bulk of the claim is for the claimant's future care needs and treatment needs which are not being met by the NHS”. Furthermore, the claim was at an advanced stage. Mrs Justice Stacey concluded there was no prejudice to the defendants by the claim being served late by a few weeks.
It was not accepted that the claimant’s submission that the failure to serve within three years was “trivial”, noting that it is “apparent from the Scots authorities that service of proceedings is an essential and important aspect”.
However, there would be “material and significant prejudice to the claimant by the inevitable delays that would be incurred if he had to rely on bringing a claim against his solicitors”. She concluded that the claimant had established that he “would suffer real and material prejudice if his claim was not permitted to proceed such that it is equitable to allow him to bring the action notwithstanding the limitation period set by Parliament”. On the other hand, the defendants were unable to show they would suffer any significant prejudice beyond having to defend the claim; the claim was all but settled until the claimant’s heart attack. The short extension was therefore granted to validate the late-served claim.
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