USING RTA PROTOCOL AND PART 8 PROCEDURE INAPPROPRIATELY DID NOT LEAD TO ACTION BEING STRUCK OUT: COURT OF APPEAL DECISION TODAY

The Court of Appeal today gave judgment in Cable v Liverpool Victoria Insurance Co Ltd [2020] EWCA Civ 1015 and overturned the decision to strike out an action because it had been issued inappropriately using the portal and Part 8 procedure.

 

THE CASE AND JUDGMENTS AT FIRST INSTANCE

The decision at first instance was looked at in a previous post.  The claimant was injured in a road traffic accident in September 2014. The claimant’s solicitor notified the defendant of the claim on the MOJ Portal.  Initially the claim was said to be low value. However a medical report indicated that he was absent from work.   The defendant sought further information but received little by way of response, the claimant engaged in what the District Judge called “radio silence”.

ISSUING THE PART 8 CLAIM

In July 2017 the claimant’s solicitors issued a Part 8 claim form.  A stay was granted until August 2018, the court also ordered that a copy of the order be sent to the defendant by August 2017. The order was not, in fact sent, until February 2018.

In August 2018 the claimant’s solicitors informed the defendant that the case was a substantial one, the claimant having lost his £130,000 per year job.   Medical reports that showed substantial injuries were disclosed.

LIFTING THE STAY

The claimant then made an application to lift the stay and for the matter to proceed on a Part 7 basis. This was granted on a without notice.  The defendant then applied to set aside the without notice order.

THE HEARING BEFORE THE CIRCUIT JUDGE

The District Judge set aside the without notice order and refused permission for the matter to proceed by way of Part 7. An appeal against that decision was dismissed by the Circuit Judge.

 

THE JUDGMENT OF THE COURT OF APPEAL

The Court of Appeal today overturned the decision to strike out. It held that the claimant’s conduct meant that there was an abuse of process. However a proper analysis of the authorities did not lead to the conclusion that the action should be struck out. Lesser sanctions would suffice.

 

THE CLAIMANT’S USE OF THE PART 8 PROCEDURE WAS AN ABUSE OF PROCESS

The Court of Appeal held that there was an abuse of process in the claimant’s conduct of the case.

7. WAS THERE AN ABUSE OF PROCESS IN THIS CASE?

    1. In the judgment of DJ Campbell, the ‘Conclusion’ section contains this paragraph:
“65. When I look at the entire history of this case and the way in which this claim has suddenly been presented against the evidence that was available in November 2014, January 2016 and early 2017, all before proceedings were issued and, despite that evidence, the claimant’s solicitors went ahead and sought a stay because they “intended to comply with the portal protocol”, in a case that never, ever at the time they issued the claim form could it be said would have a value of £25,000 or less. That, to me, is an abuse of process and the abuse comes from using the procedure that is available to portal claims in a case that could not be said, on any stretch of the imagination, to be a portal claim. That is why I am so critical of the claimant’s solicitors, because the way in which they have done that meant that a further twelve months went by before they had to do anything substantial and in those twelve months they did not even get any further medical evidence. They just strung it out, continued to fail to properly correspond with the defendant’s solicitors and then at the eleventh hour, two days before the stay due to expire, they make an application to transfer to part 7. That is against a background of a claimant agreeing his medical evidence during that twelve-month period, the file being transferred to the multi-track team, somebody transferring the file up and down the country (although I cannot see why that was going on when the claim form says ‘Liverpool’ for service) and finally getting to grips with the case, a case that should have been got to grips with years earlier. It is more than just ‘do not get a grip’. I find that they have utilised that part 8 stay option in a case where they should never have used it. They should have done the right thing and dropped it out of the portal.”
    1. Unpicking that paragraph a little, it seems to me that it identifies three separate abuses of the process. These were:
a) At the point when the appellant’s solicitors issued the claim under Part 8, they knew (or ought to have known) that this was not a Part 8 claim. They should have issued a claim under Part 7;
b) The appellant’s solicitors sought a stay so as to comply with Stage 2 of the RTA Protocol when they knew (or ought to have known) that the RTA Protocol was inapplicable to this claim;
c) The appellant’s solicitors did not intend to and did not in fact use the stay of proceedings for the purposes for which it was sought and granted.
  1. This evaluative judgment as to the consequences of the appellant’s solicitors’ conduct was clearly open to DJ Campbell. Although she made a number of other criticisms, I consider that these three failures were much the most serious, and are more than sufficient to demonstrate an abuse of process in this case. As foreshadowed in paragraph 54 above, I consider that a) and c) were abuses of the court proceedings themselves, whilst b) is better categorised as an abuse of the RTA Protocol process.
  2. The only real attack by the appellant on this part of DJ Campbell’s judgment is the suggestion that she was wrong to find an abuse of process because she did not find that these failures had caused the respondent “manifest unfairness” (as per Hunter). That criticism was also maintained in respect of the judgment of Judge Wood QC, because it was said that, although he dealt with the issue of unfairness, he did not apply the test of “manifest unfairness”.
  3. In my view, there is nothing in these criticisms. An abuse of process can occur regardless of whether or not there is unfairness, let alone manifest unfairness, to the other party. Nobody suggested in Lewis, Liddle v Atha, or Alpha Rocks that the defendant had been caused manifest unfairness by the deliberate undervaluing of the claims on the claim form or the exaggerated claims for fees, but that did not prevent a finding of abuse of process in each case. In my view, questions of unfairness are relevant to the second part of the test, namely the balancing exercise to be undertaken when considering the proportionate sanction. They are not relevant to whether or not there has been an abuse of process in the first place.

SHOULD THE ACTIONS BE STRUCK OUT AS A RESULT OF THAT ABUSE OF PROCESS

The Court of Appeal, however,  held that the exercise of discretion did not dictate that the actions should be struck out.

8. THE EXERCISE OF DISCRETION
8.1 Introduction
    1. Having established that there was an abuse of process, the second step for the court is the usual balancing exercise, in order to identify the proportionate sanction. Striking out the claim is an option, but as we have seen, it is not the only, or even the primary, solution. As noted in paragraph 15 above, striking out is not one of the options identified in the Practice Direction concerned with compliance with the PAPs, although that does not mean that, in an exceptional case, it will not be the appropriate sanction.
    2. When considering this aspect of the appeal, I remind myself that this court will only interfere if it considers that the first instance judge has erred in principle, or if she has left out of account a feature which should have been considered or taken into account a feature which should not have been considered, or failed to balance the various factors fairly in the scale: see G v G (Minors: Custody Appeal) [1985] 1 WLR 647 and AEI Rediffusion Music Limited v Phonographic Performance Limited [1999] 1 WLR 1507.
    3. I have already said that, in my view, DJ Campbell failed to apply the two-stage test. She dealt with all aspects together, as part of an overall exercise of her discretion, which ran the risk of downplaying the proportionality of bringing the claim to an end. In addition, she wrongly assumed that striking out the claim was the primary solution. Moreover, in reaching her conclusions, I consider that she made findings as to the prejudice suffered by the respondent which were not in the evidence and which were unjustified, and failed to give any proper weight to the consequences of striking out the claim and depriving the appellant of his Article 6 rights. I explain my reasons for these conclusions below.
    4. At the outset, however, it is important to focus on the prejudice to the respondent which undoubtedly did arise here. By July 2017 at the latest, the appellant’s solicitors knew or ought to have known that this was a large claim which was completely unsuitable for the RTA Protocol and Part 8. They should have issued a claim form under CPR Part 7 and sought the respondent’s solicitors’ agreement to a stay whilst the parties complied with the PI Protocol. On that basis, the respondent would have been in receipt of a fully detailed claim by the autumn of 2017 at the latest and been able to utilise the PI Protocol from then on. In the event, the respondent did not have that fully detailed claim until the autumn of 2018. It is that delay of one year which is the principal consequence of the abuse of process.
    5. Usually, such delays are capable of being compensated for in costs or by way of other financial sanctions, although that will always depend on the facts of the individual case. What was the evidence of any wider prejudice to the respondent in this case which could only be met by striking out the claim?
8.2 The Prejudice to the Respondent
    1. The first way in which it is said that the respondent was prejudiced arose from the failure to use the PI Protocol. As both DJ Campbell and Judge Wood QC made plain, the PI Protocol is very different from the RTA Protocol. It requires a completely open approach in respect of medical treatment, experts and rehabilitation, none of which is reflected (for obvious reasons of proportionality) in the RTA Protocol[5]. It is said that the respondent was deprived of these benefits because the PI Protocol was not used.
    2. There are two answers to that. First, for the reasons that I have given, I consider that the focus must be on the lost year between autumn 2017 and autumn 2018. Prior to that, the use of the ‘wrong’ Protocol was much more debateable (because it was not apparent at the outset or for some considerable time thereafter that the claim was obviously unsuitable for the RTA Protocol), and the process was taking place within the limitation period anyway. So the best that the respondent can say is that, if a proper Part 7 claim had been made in the summer/autumn of 2017, as it ought to have been, they might have agreed to a stay so that the matter could have proceeded under the PI Protocol from then on.
    3. Secondly, I do not accept that, if the PI Protocol had been followed a year earlier, the evidence suggests that anything significant would have been done differently. By reason of the size and complexity of the claim, the parties would always have had their own experts. This was a multi-track claim and as such, as paragraph 7.2 of the PI Protocol suggests (paragraph 11 above), it would not have been appropriate for a single joint expert. It has not been suggested that any other aspect of case management (save in respect of experts) might have been done differently if a Part 7 claim had been made in autumn 2017 under the PI Protocol.
    4. The respondent makes a fair general point about medical examinations and rehabilitation. Earlier compliance with the PI Protocol would have led to an earlier examination of the appellant by the respondent’s experts. But there was nothing to suggest that this would have made any difference to the appellant’s medical treatment. Neither was there any evidence that rehabilitation might have been possible if the appellant had been examined by the respondent’s experts a year earlier. On the evidence, DJ Campbell could not conclude, even on the balance of probabilities, that there had been any prejudice to the respondent in this respect.
    5. Further, not only is it not suggested that Dr Kidd’s reports were anything other than clear and comprehensive, but it appears that the appellant himself sought the advice of various specialists, and utilised his own private medical insurance cover to do so. There is nothing to suggest that some critical point was missed in the examinations that did take place, or that sufficiently different treatment was available or should have been recommended.
    6. Accordingly, I conclude that although, potentially, there could have been some prejudice because of the failure to switch to the PI protocol in the autumn of 2017, there was no evidence of any actual prejudice at all.
    7. The second way in which it is said that the respondent suffered prejudice is the suggestion that the abuse of process allowed the appellant’s solicitors to avoid the consequences of the Limitation Act. I confess that I do not follow that argument at all.
    8. The abuse of process identified at paragraph 69 above did not affect the limitation period. The appellant issued his claim form under Part 8 within the 3-year period. If there had been no abuse of process, he would have issued the claim form in time but under Part 7 instead.  The appellant’s use of the wrong Part of the CPR has not bypassed the relevant limitation period or deprived the respondent of a limitation defence. A claim form was issued in time. Furthermore, that claim had been admitted even before the claim form was issued. Thus, there has been no loss of a defence which would otherwise have been available. As my Lord, Lord Justice Lewison, put it during the course of argument, there has been delay, but not deprivation.
    9. Thirdly, DJ Campbell said that the respondent was unable to set a proper reserve in this case because it was misled as to the proper value of the claim for a period of four years. She said that “Insurers work very precisely. In years of claims… they would want to have a reserve set aside for damages and costs. But they have not been able to reserve against this claim in 2014, 2015, 2016, 2017 and most of 2018…” [54].
    10. DJ Campbell is an experienced PI judge and, up to a point, she was entitled to have regard to her own knowledge and experience when considering the prejudice to the respondent. But she was not entitled to find prejudice where it was not alleged. If there had been a failure to set a proper reserve in this case, or if the misrepresentation that this was a low value RTA claim had given rise to particular issues or difficulties for the respondent insurer, then there needed to be specific evidence of that before she could make the finding she did. There was no such evidence. In my view, this was not a matter to which the DJ should have had any regard.
    11. For all these reasons therefore
8.3 Prejudice to the Appellant
    1. As with any balancing exercise, the court also has to consider the position of the appellant and, in particular, the consequences for him if the claim was struck out. In the light of the principles set out at paragraphs 42 – 48 above, and given that this is 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, I do not consider that striking out was an appropriate or proportionate sanction.
    2. The appellant was the victim of an accident for which the defendant had long ago admitted liability. His claim was started in good time under the RTA Protocol, and he was not responsible for the catalogue of errors and delays since then. His claim form was issued within the prescribed three years. If that claim was struck out now, he would have to start all over again, this time with a professional negligence claim against his current solicitors, with all the risk and uncertainty, not to say cost, that such a claim would involve. Moreover, that would be a loss of a chance claim, which is inevitably an inferior type of satellite claim, particularly when compared to the present proceedings, which involves a claim against the primary defendant who has already admitted liability.
    3. None of those matters were considered by DJ Campbell. Lord Millett’s simple statement of the need for a particular justification before a claim was struck out first time round was not cited to her. If it had been, or if the other authorities noted in paragraphs 42 – 48 above had been referred to, I am confident that a different result would have eventuated. As a result, I consider that DJ Campbell erred in law in striking out the claim. That was a disproportionate remedy in all the circumstances.
8.4 The Appropriate Sanction
    1. As I have already indicated, I consider that there are two appropriate sanctions which would reflect the abuse of process in this case. First, I consider that the appellant should pay the respondent’s costs on an indemnity basis up to and including 17 October 2018 (the day of the hearing before DJ Campbell). Secondly, I consider that the claimant should recover no interest on his special damages for the period up until 17 October 2018.
    2. Although, at [69] of her judgment, DJ Campbell identified these two possible sanctions, beyond saying that she did not think that they went far enough, she did not explain why they were inappropriate. In my view, if she was proposing and then rejecting particular sanctions, in order to conclude – as she did – that striking out was the only proper course, then she needed to explain why lesser sanctions were not proportionate. In my view, they were, for the reasons I have given.
    3. Mr Allen QC complained that an order for indemnity costs was not an appropriate sanction because the respondent’s costs were not very high. I reject that submission: as I put to him in argument, the fact that the respondent’s costs were not as extensive as they might have been cannot mean that an order entitling them to all of those costs up to and including 17 October 2018 was inappropriate. Otherwise, taken to its logical conclusion, it would mean that only if the respondent’s costs were unreasonably high would such an order be made. That cannot follow as a matter of logic or as a matter of principle.
    4. Accordingly, on the applications in respect of the stay, the transfer and the strike out, I would lift the stay, transfer the case to Part 7, with the two sanctions as to costs and interest to which I have already referred. I would not strike out the claim. That then leaves the separate debate about the appellant’s application for relief from sanctions, arising out of the failure to comply with the order of DJ Doyle.
9. THE APPLICATION FOR RELIEF FROM SANCTIONS
    1. The application for relief from sanctions involved a consideration of the three stages identified in Denton v TH White [2014] EWCA Civ 906[2014] 1 WLR 3926. The first stage would be to consider whether the failure to comply with DJ Doyle’s order (ie the service of the amended claim form and the accompanying documents on 26 September 2018 rather than 4 September, as ordered) was serious and significant. The second stage would be to consider why the default occurred to see if there is a good reason for it. It is, however, unnecessary to go further into stages 1 and 2 for the purposes of this appeal because, on behalf of the appellant, Mr Browne QC properly accepted that the default was serious and significant and that, although there was an excuse, there was no good reason for it.
    2. The final stage of the Denton v White approach involves a consideration of all the circumstances of the case. The judges below took contrasting attitudes to this: at [78] of her judgment, DJ Campbell concluded that, if she acceded to a request for relief from sanctions in a case with this background, “I might as well just throw the White Book out of the window and say ‘anything goes'”. Judge Wood QC disagreed with that, but approached the application on the basis that, if the claim had not been struck out it would be because there had been no abuse of process, and it would follow that relief from sanctions ought to be granted.
    3. With great respect to both judges, I do not agree with either approach. DJ Campbell was entitled, at the end of a lengthy ex tempore judgment and a long day in court, to home in on the default of the appellant’s solicitors over a lengthy period when considering all the circumstances of the case. But as I have already pointed out, the overall consequence of their default was the one year’s delay in the presentation of a fully particularised claim. Both that default, and the delay in serving the amended particulars of claim for three weeks in September 2018, could have been met by appropriate sanctions from within the White Book, rather than by its defenestration. On the other hand, Judge Wood QC was also wrong to consider that the abuse argument determined everything else: as I have explained, it was quite possible for this to be an abuse of process but for the claim not to be struck out and instead to be allowed to continue under Part 7.
    4. It seems to me that, when looking at the case in the round, the failure to comply with the order of DJ Doyle, was a significant default, which is only exacerbated by the unhappy history. As Lord Sumption stressed in Barton v Wright Hassall LLP [2018] UKSC 12[2018] 1 WLR 1119, the service of proceedings is a critically important step. He said at paragraph 9(2):
“9. (2) Service has a number of purposes, but the most important is to ensure that the contents of the document are brought to the attention of the person to be served (para 37). This is therefore a “critical factor”. However, “the mere fact that the defendant learned of the existence and content of the claim form cannot, without more, constitute a good reason to make an order under rule 6.15(2)” (para 36).”
    1. But in my view, the failure to comply with that ‘critical factor’, together with the claimant’s solicitors’ other failures, must be weighed in the balance against two particular elements of the factual background. The first is that liability for this claim has been admitted by the respondent. That makes this a very different situation to the normal dispute about defective service, where a possible limitation defence to a disputed claim might result if the original service is set aside. The second is that, on 17 August 2018, the heart of the detailed amended claim (and certainly the reason why this was now a large multi-track claim) was provided to the respondent in the form of the medical reports and the claimant’s statement. Although that plainly did not obviate the need for proper service of the amended claim form, which was then accompanied by many of the same documents, it inevitably lessened the effect of the delay in service of those documents from 4 to 26 September 2018.
    2. In those circumstances, I am persuaded that this is an appropriate case to grant relief from sanctions. Like Judge Wood QC, therefore, albeit for different reasons, having lifted the stay and allowed the transfer to Part 7, I would grant the appellant relief from sanctions following his solicitors’ failure to comply with the order of DJ Doyle.
10. CONCLUSIONS
  1. I am conscious that, in arriving at my conclusions, I have come to different views to those of judges with considerable experience of this type of litigation. I am satisfied that that is primarily due to the different arguments and more extensive authorities which were deployed by leading counsel on this appeal. So, for the reasons that I have given, I would allow the appeal; lift the stay; and transfer the case to CPR Part 7. I would order the appellant to pay the respondent’s costs on an indemnity basis up to and including the hearing on 17 October 2018, and order that the appellant is disentitled to any interest on his special damages up to 17 October 2018.