THE DANGER OF ISSUING UNDER PART 8 AND THEN DOING VERY LITTLE: COURT UPHOLDS REFUSAL TO LIFT STAY: ACTION STRUCK OUT

I am grateful to barrister Richard Whitehall for sending me a copy of the decision of His Honour Judge Pearce in the case of Lyle -v- Allianz Insurance plc (Liverpool CC 21st December 2017). It is a case that illustrates the dangers of simply issuing and then doing nothing. The claimant issued under Part 8 and obtained a stay. Some 3 years later the court refused to lift the stay – the action could not proceed. It was therefore struck out. A copy of the judgment is available Lyle v Allianz

“… in my judgment the Claimant’s significant and persistent failures and the consequent
delay, increased expense and prejudice to the Defendant, amply justified the District
Judge’s refusal to lift the stay and his consequent order striking out the claim. The
prejudice to the Defendant through this manner of conducting the claim could simply not
be properly compensated with a costs order because of the potential for the delays to have
contributed to persistent symptomatology and/or a lack of rehabilitation, thereby
increasing the value of the claim.”

THE CASE

The claimant was injured in an accident in September 2011, liability was not in dispute.

• The claimant issued proceedings under Part 8 and obtained a stay. The stay was granted on the 10th July 2014 and was a general stay with no limit as to time.
• The stay was effective for several years, during which the claimant obtained further medical evidence.
• In March 2017 the claimant then obtained an order from a District Judge (I assume that this was without a hearing) that the stay be lifted and the action proceed as a Part 7 claim.
• The defendant sought an order from the District Judge setting aside the order lifting the stay.
• The District Judge granted the Defendant’s application and the application by the claimant to lift the stay was refused. Consequently the claim was struck out.
• The claimant appealed that decision to His Honour Judge Pearce.
• The Circuit Judge upheld the District Judge’s order refusing to lift the stay and striking out the action.
• The order upheld the exercise of the District Judge’s discretion. The Circuit Judge found that the court had a power to lift the stay and allow the action to proceed as a Part 7 claim. On the facts of this case it was not appropriate for the court to exercise its discretion to lift the stay.

KEY POINTS

• The judge found that it was open to the claimant to believe that the action was within the Protocol limit (then £10,000) when proceedings were issued and a stay obtained.
• During the period of the stay it must have become obvious to the claimant’s solicitors that the action had a larger value. At that time they were under a duty to notify the court and transfer the matter to a Part 7 claim.
• All the judges involved held that there is a power for the court to order that proceedings issued under Part 8 could be continued as Part 7 proceedings (contrary to the commentary in the white book). (See paragraphs 20 and 21 of the attached judgment).
• The issue in this case was whether the court should exercise its discretion to lift the stay and allow the action to continue when there had been excessive delay and there was no appropriate explanation for the delay, or the conduct during that delay.
• The claimant’s lawyers used the stay period to obtain further medical evidence, without any reference to the defendants. There was an extensive period where actions were being taken without the defendant being informed.
• The court was entitled to find that the way in which this action had been conducted was an abuse of process. The appropriate response was to refuse to lift the stay. The action was, consequently, struck out.

PART 8 PROCEDURE AND THE PROTOCOL

The judgment has a detailed consideration of the rules relating to the Road Traffic Protocol, Part 8 proceedings and transferring.  The judge then considered the position where Part 8 proceedings have been issued and the claimant wants to proceed under Part 7.

“The procedure under Paragraph 16.2 of Practice Direction 8B to the CPR

13. Paragraphs 16.1 to 16.7 of the Protocol deals with the situation where it has not been
possible to comply with the relevant protocol before the expiry of a limitation period. In
those circumstances, the Claimant may start Part 8 proceedings under the Practice
Direction, indicating on the claim form that the claim is for damages and that a stay of
proceedings is sought in order to comply with the relevant protocol. The Claimant is
required to send the claim form together with the order granting a stay to the Defendant,
presumably supposing that the stay will have been granted without a hearing.

14. .’ The Protocol then supposes two possible situations:

(a) The first, pursuant to paragraph 16.5, is that the parties comply with the relevant
protocol and the Claimant “wishes to start the Stage 3 Procedure”. The Claimant is
then required to apply to lift the stay and to request directions. The procedure to be
followed includes the obligation to amend the claim form and file documents so that
the proceedings approximate to what would have happened had they proceeded
under PD8B without the stay.
(b) The second, pursuant to paragraph 16.6, is that the claim no longer continues under
the relevant protocol and the Claimant “wishes to start proceedings under part 7 in
which case the Claimant must make an application to the court to lift the stay and
request directions.
15. This case is concerned with the second of these situations, specifically where the value
of the claim is initially believed to lie within the RTA protocol limit but the claim subsequently appears

to have a greater value”

THE ARGUMENTS OF THE PARTIES

The claimant argued that the action was properly issued under the RTA protocol until they gave written notice that the claim was likely to exceed £25,000. The defendant argued that the claimant could not reasonably have valued the claim at £10,000 at the time the stay was sought.  The claimant should not, therefore, have used the procedure under 16.2 of PD8B.  Alternatively the claimant should have noted, at a much earlier stage, that the claim exceeded the upper limit and it was not appropriate to continue the claim as if the RTA protocol applied.

THE JUDGE’S CONSIDERATION OF THE PRACTICE DIRECTION

28. As noted above, paragraph 4.2 of the RTA protocol provides a mechanism for the
protocol to cease to apply where the Claimant notifies the Defendant that the claim has
been revalued at more than the upper limit. It does not provide any express obligation on
the Claimant to give the relevant notification. However, in my judgment, it is incumbent
on a Claimant and their legal representative to review the potential value of the claim on
a regular basis and to give notice under paragraph 4.2 when it appears that the value
exceeds the upper limit.
29. If this were not the case, the Claimant would be enabled to take all of the advantages of
the RTA protocol, particularly the right to obtain medical evidence without consultation
with the Defendant and the ability to hold such evidence without disclosure to the
Defendant, whilst avoiding the damages and costs limits that would apply if the case
remained in the RTA protocol through to trial or settlement. This would be entirely at
odds with the spirt of the protocols which provide on the one hand a streamlined and
cheap procedure for low value cases and on the other a more case-specific but potentially
more expensive procedure for higher value cases.
30. Where, as in this case, the Claimant has taken advantage of the procedure provided by
paragraph 16.2 of PD8B to obtain a stay of proceedings so as to avoid the operation of a
limitafion defence, the result of the failure to give nofice of the revaluation of the claim
is that the Claimant has the benefit of a limitation defence to which she otherwise would
not be entified. In my judgment, the failure to give such notice is therefore capable of
amounting to an abuse of the process of the court in depriving the Defendant of a potential
Defence to the claim and prevenfing the court from carrying out proper case management,
by ensuring that the case is pursued in an efficient and proportionate manner.
31. There will of course be cases where the valuation of the claim is not clear cut. Further it
may be reasonable for a Claimant who suspects that her claim is worth over the upper
limit to await giving notice unfil it has been possible to investigate the value more fully.
Therefore, not all cases of delay in applying to lift the stay will necessarily be an abuse
of process. It will be a question of judgment on the facts of the particular case.
32. I understand that some courts, when considering an application under paragraph 16.2 of
PD8B, impose a time limit on the stay, typically 6 months, and require the Claimant to
apply to the court for the court for further directions at the end of the stay in default of
which the claim is stmck out. In my judgment, that is a sensible exercise of case
management powers to avoid cases becoming stale. A Claimant who complies with such
a requirement that is imposed by the court is unlikely to find themselves subject to a
criticism that they have abused the process of the court.
33. On the facts of this particular case, it is in my view arguable that the Claimant was entitled
to take the view, at the fime of the issue of proceedings and the application for a stay,
that the value did not exceed the upper limit. Though the mention of fibromyalgia and its
apparent association with the accident would put a reasonable Claimant on notice that
the value might well exceed £10,000, the evidence of valuation of the claim as at the time
of the issue of proceedings was not so clear cut as to lead to the conclusion that the
procedure followed was wrong.

FAILURE TO REVIEW THE VALUE OF THE ACTION WHILST IT WAS STAYED

34. But I agree with District Judge Sanderson at paragraph 22 of his judgment that, by the
time of Mr McMurtry’s report of Febmary 2015 (at which stage the Claimant’s
symptoms had persisted for over 3 years and the diagnosis of fibromyalgia had been
confirmed by a rheumatologist), a reasonable Claimant would have been satisfied that
the value of the claim clearly exceeded £10,000.
35. In fact, the Claimant failed to apply to lift the stay for a further two years, during which
time she obtained reports from two new experts. The Defendant was wholly ignorant of
this. The Claimant herself acknowledged in January 2016 that the claim did not seem
suitable for the RTA protocol. In March 2017, the Claimant finally served her application
to lift the stay. The appfication referred to the Particulars of Qaim^ which value the claim
afah unstated figure in excess of £200,000.
36. In my judgment, this conduct of proceedings lies far outside the expectation of the preaction
protocols. It is not an acceptable way to conduct proceedings under the CPR. The
District Judge was right to be highly critical of the conduct of the claim on behalf of the
Claimant.

THE SUBSTANTIVE ISSUE: SHOULD THE DISTRICT JUDGE HAVE REFUSED TO LIFT THE STAY

The judge upheld the decision that the court had a discretion to allow an action issued under the Protocol to proceed under Part 7. H then considered the appeal against the exercise of the District Judge’s discretion. The District Judge refused to lift the stay.

Should the District Judge have refused to lift the stay?

37. The Claimant draws attention to paragraph 13 of the Practice Direction on Pre-Action
Conduct and Protocols (“the Pre-Action Conduct Protocol’), which provides: “If a
dispute proceeds to litigation, the court will expect the parties to have complied with a
relevant pre-action protocol or this Practice Direction. The court will take into account
non-compliance when giving directions for the management of proceedings (see CPR
3.1(4) and (6)) and when making orders for costs (see CPR 44.3(5)(a)). ” There is no
reference in this paragraph to exercising the power to strike out where there has been
non-compliance with a Practice Direction.
38. The primary problem for the Claimant in continuing these proceedings lies in the stay. It
has not been suggested that the court has no discretion as to whether lift the stay. But if
the court was right in declining to lift the stay in this case, the inevitable consequence
was that the proceedings could not proceed, rendering strike out an appropriate order to
bring finality.
39. This does not prevent the general tenor of paragraph 13 of the Pre-Action Conduct
Protocol being applicable to this case. The court should hesitate before reaching a
decision the result of which is to bring a claim prematurely to an end without judicial
determination on its merits – see for example the judgment of Lord Woolf in Biguzzi v
Rank Leisure plc [1999] 1 WLR 1926). As Laddie J put it in Reckitt Benkiser UK v Home
Pairfum Limited [2004J EWHC 302 (Pat), “the striking out of a valid claim should be
the last option. If the abuse can be addressed by a less draconian course, it should be. ”
I accept that the same principle applies to the consideration of an application to lift a stay
where the result of not lifting the stay will be to cause a claim to fail.
40. The Defendant contends that the conduct of these proceedings by the Claimant and her
legal advisers has caused it prejudice.
(a) Until March 2017, the Defendant had simply no idea about the potential value of the
claim that was being brought. Whilst there was a hint that it might exceed £10,000
(or £25,000) in value, the Claimant had done nothing to communicate its tme worth;
(b) When the Defendant was served with the application, it was faced with medical
reports from experts to whose instruction it had had no opportunity to contribute.
The process of instruction of experts under the PI protocol (which is not adopted by
the RTA protocol so as to create a more streamlined system suitable for lower valued
cases) was bypassed. So, for example, the Defendant was now faced with reports to
the authors of whom it might have taken legitimate objection. Had it been consulted
in accordance with the PI protocol, it may have been possible to agree experts.
(c) The Claimant’s medical evidence in March 2016 suggested that the Claimant might
be suitable for a rehabilitation programme. This suggestion was maintained in the
Provisional Schedule of Losses and Expenses at 12/150. It is not clear why such
rehabilitation has not yet taken place! Whether the reason is the Claimant’s
impecuniosity or otherwise, the Defendant has been denied the opportunity to
promote rehabilitation and/or to make an appropriate interim payment to fund it.
(d) Had this case proceeded by Part 7 proceedings from Febmary 2015 when application
should have been made to lift the slay, the claim would have been resolved well
within the following 2 1/2  years, that is to say by the hearing of this application by the
District Judge. The Claimant’s own medical evidence supports the conclusion that
continuing litigation is not in the interests of her health (see for example Dr Vincenti
at paragraph 11.8, 9/129 when he says, “Mrs Lyle will be best served by as rapid a
resolution of her compensation claim as can be practically organised’). Thus, the
delay in this case during the period when the stay should have been lifted may
arguably have aggravated the Claimant’s injuries and thereby increased the damages
that the Defendant is liable to meet.
(e) Even now the Defendant does not know the value of the case it must meet. The
Defendant has had no opportunity since the stay was imposed to make a realistic
offer to settle this case and avoid any further liability for costs. The delay will
certainly have increased costs.
41. As the Defendant rightly identifies in its skeleton argument at 2.1/19.14, it made several
attempts to obtain an update on the claim. The response on behalf of the Claimant was
perfunctory.
42. To compound the criticism made above, the Defendant points out that even now, more
than 6 years after the accident, the Claimant relies on a Schedule of Loss which is
described as “provisional’ and states most heads of loss as to be confirmed. Such a
Schedule simply does not comply with the obligafion in paragraph 4.2 of PD16 to give
particulars of the value of the claim.
43. It is often the case that those preparing a case on behalf of a Claimant do not have the
necessary informafion to plead future losses at the fime of first service of the Schedule.
Sometimes even past losses may not be capable of quantification for want of relevant
documentation. But in this case the Schedule is seriously deficient:
(a) The Claimant had had almost six years from the date of the accident to the date of
its service in order to obtain the necessary documentation;
(b) In so far as relevant documentation had not been obtained in this time scale, this
suggests either that the documents did not exist or that the Claimant’s representatives
had made no real attempts to obtain them;
(c) The Claimant must have had access to the necessary information to state at the very
least what her actual earnings were before and after the accident;
(d) It is very likely that those figures, forfified if necessary by reference to average
earnings figures, could be used as a basis to estimate what she contends her earnings
would have been but for the accident;
(e) The amount of care and assistance, including gardening, DIY and decorating,
received by the Claimant was a matter of past fact not expert opinion and did not
require a report from a care expert;
(f) There is simply no explanation for the lack of particularity about past medical
treatment, travel costs and miscellaneous expenses incurred by the Claimant, even
though these matters are peculiarly within the Claimant’s knowledge.
44. The Claimant contends that there is no true prejudice. Indeed, the Claimant contends that the Defendant has acquiesced in the
Claimant’s conduct of the litigation by inviting an application for transfer to the Part 7
procedure (see 15.1/235).
45. I agree with the findings of the District Judge that the prejudice to a Defendant through
delay such as this is obvious. Even if it were not obvious, he (at paragraph 16(vi) of his
judgment at 5/35) and I (above) have set out various aspects of that prejudice. His
concluding statement that “this state of affairs offends against every aspect ofthe CPR
and the overriding objective ” is amply justified.
46. The Claimant makes various points in mitigation of its position, these are fully set out at
paragraph 18 of the judgment below and I do not need to repeat them here.
47. I bear in mind the draconian consequences of striking out a case which may be worth
more than £200,000 to the Claimant. I accept, following paragraph 67 of the judgment
of Barling J in Wearn v HNH International EWHC 3542 (Ch), that delay alone is not an
abuse of the process of the court.
48: But in my judgment the Claimant’s significant and persistent failures and the consequent
delay, increased expense and prejudice to the Defendant, amply justified the District
Judge’s refusal to lift the stay and his consequent order striking out the claim. The
prejudice to the Defendant through this manner of conducting the claim could simply not
be properly compensated with a costs order because of the potential for the delays to have
contributed to persistent symptomatology and/or a lack of rehabilitation, thereby
increasing the value of the claim.
49. It is a particularly distressing feature of cases such as this to have to conclude that
avoidable delays in litigation have not only increased costs but are likely to have
exacerbated the Claimant’s health problems. Those who profess any expertise in this kind
of litigation should be aware of that risk. The Claimant’s advisors here appear not to have
been.

Conclusion
50. For the reasons set out above, I dismiss this appeal. The parties have agreed a
consequential order.”