FAILURE TO SERVE FORM N251: ADDITIONAL LIABILITIES & PREMIUM DISALLOWED; RELIEF FROM SANCTIONS REFUSED
We are seeing reports come through of cases that were decided some time ago. However they provide illustrations of the problems that can arise and the court’s likely approach. Ibbertson -v- Black Horse Ltd [Maidstone County Court] is available on BAILLI where the Deputy District Judge deals with the issue of whether a Form N251 was served. This decision was made before the Mitchell decision, however the judge expressly considered the new CPR 3.9.
THE ISSUES: HAD A FORM N251 EVER BEEN SERVED? IF NOT, SHOULD THE CLAIMANTS BE GRANTED RELIEF FROM SANCTIONS?
The initial claim had been settled with the defendant agreeing to pay the claimants’ costs. When the points of dispute was filed an issue arose as to whether the N251 had been served. The defendant asserted it had not.
WAS NOTICE SENT?
The judge found that the N251 was not received, finding that the evidence before him was not satisfactory.
“11. All I have really is a written statement from Ms Negar Yazdani saying that in her view a letter was sent; her statement is written in very general terms and as Mr Saoul rightly says that does not go into any great detail about the process by which the letter was sent.
- Equally I have to say that Black Horse’s evidence does not tell me anything about the processes in its solicitor’s office about receipt of letters.
- Nevertheless, I have been been pursuaded by the fact that the two recipients, allegedly to whom the letter was sent, did not receive the letter. I find that the solicitors representing Black Horse Limited did not receive it. I also have to find, simply because I have the file in front of me, that the Court did not receive that letter either. I have to say I am very concerned to note in the replies to points of dispute that in response to the allegation about recovery of additional liabilities, it simply says:
“The Claimants do not agree with the Defendant that a success fee or ATE premium is not recoverable. The Defendant was made aware in the Claimant’s letter before action dated 15th February 2011 that the Claimants entered into a Conditional Fee Agreement. The Claimants are of the view that the Defendant has dealt with the Claimants’ instructing solicitors on various claims before and they are aware of their practice to enter into a Conditional Fee Agreement which provides for a success fee. The Claimants also note that at the time when the Defendant received the letter before action or at the time of issue, this point was never raised”.
- Why is the letter of 12th May 2011 not mentioned there? It seems to me an obvious point to make because the letter of 12th May 2011 encloses the N251, which is precisely the alleged notice which brings the matter back within the rules. I find it very odd I have to say, that the reply did not mention it. I cannot and do not say that Ms Yazdani is telling lies. She is a partner and I would not suggest that she was telling me lies or untruths. It may be that the letter was certainly dictated, it may be the letter was certainly taken down to the post room but it does seem to me very odd that there is a lack of evidence from the claimants’ solicitors as to how that letter got out of the solicitor’s office and the general processes under which their postal system operated.
- I also note (if I may say so) that on the alleged copy of the crucial letter I have seen at page 58 in the bundle, the font size of the name and address of the recipient and the letter itself seem to me to be different, which is again an odd point which I have noted from looking at these documents.
- If, as I do, I find that on the balance of probabilities the letter of 12th May 2011 and form N251 did not get to their recipients. I also find that they were not posted and it seems to me that the breach of the rules is therefore much more fundamental than the claimants’ solicitors suggest.”
SHOULD RELIEF FROM SANCTIONS BE GRANTED?
The judge refused an application for relief from sanctions.
- There was a finding that N251 had never been posted.
- The claim was a relatively modest one and the additional liability and premium were large.
“even if I were looking at the old version of CPR rule 3.9 I would be looking in more detail at the issue of prejudice. I would have decided, in this particular case, that the prejudice was actually substantial, bearing in mind the amount of the claim itself. An “after the event” insurance premium of this size is extremely large and is something that the recipient of a notice would be bound to ask questions about and would be bound to consider very carefully in terms of negotiating with the claimant”
- The judge rejected arguments that relief should be granted because the existence of an additional liability was mentioned in the letter before action.
- The judge also did not accept an argument that relief should be granted because the defendant’s solicitors had dealt with the claimants’ solicitors on many occasions in the past and were aware that additional liabilities were claimed.
LESSONS THAT FLOW
I stress that this was a pre-Mitchell decision. However it very much anticipates the Mitchell judgment. There are a number of clear lessons.
- Make sure the Form N251 is sent.
- Make sure you can prove the Form N251 was sent.
DECISIONS THAT DIFFER
Jon Williams has asked me to remind everyone of the decision of Master Saker in Harrison -v- Black Horse where Master Saker took a similar view on this issue.