McDonnell & Anor v Walker & Anor [2009] EWCA Civ 1257

[2009] EWCA Civ 1257Case No B3/2009/0082IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
Venue ON APPEAL FROM THE MANCHESTER COUNTY COURT
Deputy Circuit Judge Morgan
8MA06683
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 24/11/2009
Before
LORD JUSTICE WALLERVice-President of the Court of Appeal, Civil DivisionLORD JUSTICE RIMERSIR PAUL KENNEDY
Between
McDonnell & AnrRespondentsDavid Walker (Executor of the Estate of Richard Walker, deceased)Appellant
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7404 1424Official Shorthand Writers to the Court)
Simon Hilton (instructed by Messrs Pannone LLP) for RespondentsFrank Burton QC and Paul Russell (instructed by Messrs Cogent) for AppellantHearing Hearing dates : 19 th October 2009
JudgmentLord Justice Waller :
[1]This is an appeal from a decision of Deputy Circuit Judge Morgan who, by a judgment handed down on 1st December 2008, granted the respondent claimants’ (the claimants) application to disapply the provisions of Section 11 of the Limitation Act 1980 under Section 33 of that Act. The appellant defendant (the defendant) has put in lengthy grounds of appeal which broadly assert that the deputy judge misunderstood important aspects of the evidence, misdirected himself in various ways including the test to be applied, failed to identify the correct period of delay, and reached a decision in the exercise of his discretion which was not open to him.

The history

[2]The facts and relevant chronology are as follows:- i) On 24th April 2001 the first claimant was the driver of a car, with the second claimant as a passenger, which was in collision with a car being driven by Richard Walker. Richard Walker was killed in the accident. ii) The claimants instructed Anthony Hodari & Co (Hodari), solicitors, and on 31st July 2001 that firm wrote a letter of claim to Richard Walker’s family which was forwarded to Richard Walker’s insurers, Direct Line. iii) On 7th September 2001 Direct Line wrote two letters to Hodari, the first relating to the first claimant and the second the second claimant. In both they stated they could not confirm their stance on liability pending the inquest; in both they requested a list of 3 consultants in the hope of agreeing a joint instruction. In the letter relating to the first claimant they noted “the severity of your client’s injuries”. iv) The inquest was held on 11th October 2001 and on 29th October 2001 Hodari asked Direct Line to confirm liability was not in issue. On 23rd November Hodari sent details of an orthopaedic surgeon, Mr Swain, to Direct Line and again asked for confirmation that liability was accepted. v) On 24th November 2001 Direct Line accepted liability and offered £900 for the claim in respect of the first claimant’s car. The offer for the car was accepted on 6th December 2001. vi) In early 2002 the claimants returned from Northern Ireland to University in England and Hodari sought to find medical experts in England. By April 2002 experts had been agreed between Direct Line and Hodari but both claimants failed to attend appointments in that month “in the light of the fact that both claimants were at University and were on working placements”. vii) In her statement Emma Swainbank of Hodari says she received details of an orthopaedic surgeon in Belfast on 14th May 2002. Ultimately a letter of instruction to Mr Christopher Andrews in Belfast was sent but only on 14th October 200 3. From logs produced by Direct Line it seems they were being informed by Hodari in December 2003 of difficulties getting touch with the claimants. They were also being informed that “it would seem” that there would be no loss of earnings claim, that Hodari were looking at “generals”, and “specials” were minimal. viii) In February 2004 the Direct Line log records again that Hodari were saying they had difficulties getting instructions from the claimants but that loss of earnings would not be applicable since the first claimant was a student; and that they had no particulars of injuries “but would suggest he has recovered well as he is not pushing them at all”. The log records that Hodari had instructed a medical expert and that they were saying they will return with news as soon as possible. ix) Eventually appointments were made for both claimants to see Mr Andrews on 29th March 2004 – now nearly three years after the accident. x) On 8th April 2004 Hodari wrote to confirm they were issuing proceedings to protect the limitation position and asked for the correct name and address for the defendant. xi) On 20th April 2004 the claim form was issued limiting damages to £15,000. The claim handler within Hodari diarised the date for service as 26th August 2004 which was an error. xii) Hodari received medical reports on 24th April 2004. They were served on Direct Line on 5th July 2004. Particulars of claim were filed on 23rd August 2004 with particulars of injury as follows: - “the first claimant sustained a broken knee cap, broken pelvis and several cuts and bruises. As a result of the accident the claimant will be at a handicap on the open labour market. Full details are set out in the medical reports of Mr Andrews dated 13th April and 16th April 2004. Further medical evidence to be adduced.” [Mr Andrews’ medical reports made clear that the first claimant’s injuries were serious indeed] . . .” “As a result of the collision the second claimant sustained facial cuts, bruising and psychological injuries. Full details are set out in the medical reports of Mr Andrews dated 13th April and 16th April 2004.” [Mr Andrews’ reports showed the second claimant’s physical injuries were not insignificant but there was no medical report to support the allegation of psychological injury] xiii) Ultimately the proceedings were served on 23rd August 2004, one day late. Schedules relating to special damages were served on 27th August 2004, in each case claiming £50 but indicating other matters were to be advised. xiv) On 6th September 2004 the defence took the point as to late service and on 21st October 2004 Hodari applied retrospectively for an extension of time for service. That application was refused on 12th January 2005.[3]It is right just to take stock at this juncture. First the application to extend time retrospectively was doomed to failure because of the language of CPR 7.6 (3) which provides as follows: - (3) If the claimant applies for an order to extend the time for compliance after the end of the period specified by rule 7.5 or by an order made under this rule, the court may make such an order only if –(a) the court has failed to serve the claim form; or(b) the claimant has taken all reasonable steps to comply with rule 7.5 but has been unable to do so; and(c) in either case, the claimant has acted promptly in making the application.[4]Second, at this time Walkley v Precision Forgings Ltd [1979] 1 WLR 606 HL(E) was still good law. That decision held that the court may not exercise its power to disapply the ordinary time limit in a personal injury action under s.33 of the Limitation Act where the claimant had brought an action before the expiry of that limit and was bringing a second action in which the application under s.33 was being made. Thus, at this time the claimants would be advised that they could not commence a second action against the estate of Richard Walker. Direct Line would presumably put their files away.[5]The claimants went to different solicitors, Pannone, obviously with the intention of suing Hodari in relation to their mistake leading to late service. Pannone were contacted swiftly by the first claimant in January 2005. Papers were obtained from Hodari in July 2005 and ultimately both claimants attended a meeting at Pannone at the end of October 2005. What Debra Woolfson of Pannone says in her statement is that “Unfortunately there was then a gap in my instructions in that the client care documentation was not returned”. It was not returned until December 200 6.[6]In the meanwhile on 14th June 2006 the House of Lords decision in Horton v Sadler [2007] 1 AC 307 departed from Walkley and from that date it was possible for a court to exercise its discretion under s.33, even though a claimant had brought an action prior to the expiry of the limitation period and that action had been halted for any reason. The facts in Horton were that the defendant had suffered no forensic prejudice and it would have been a windfall if he could rely on an understandable error on the part of the claimant’s advisers, and thus the judge’s inclination to be allowed to disapply the limitation period was given effect by the House of Lords.[7]Pannone did not at this stage commence a second action against the Estate of Richard Walker. They pursued the claimants’ claim against Hodari writing a formal protocol letter to Hodari on 3rd April 2007. On 26th July 2007 solicitors acting for Hodari, Reynolds Coleman Bradley, responded suggesting that a claim should now be pursued against the original defendant.[8]Between August 2007 and April 2008 discussions took place between Pannone and Reynolds Coleman Bradley about the funding of the second action. In September 2007 Mr Andrews prepared fresh reports on the claimants and in October 2007 both claimants were examined by a psychiatrist Dr Mangan. Dr Mangan produced a report on the first claimant dated 1st October 2007 (that would seem to be an error since it refers to visits after that date).[9]On 17th April 2008 the second action against the Estate of Richard Walker was commenced and it is in that action that the application to disapply the limitation period under s.33 was made and it is that application which succeeded before the deputy judge.[10]In the second action the claim form states that the first claimant expects to recover damages of more than £300,000 and the second claimant more than £100,000 but less than £300,000. The first claimant also claims loss of earnings and future loss of earnings of over £315,000 and the second claimant’s schedule of special damages includes £62,777 for loss of earnings since the accident. Those claims are quite different from anything intimated to Direct Line prior to the service of the first proceedings and indeed quite different from the claim in the first proceedings. So far as psychological injury is concerned April 2008 was the first time any report had been supplied.[11]I should say at the outset that there is, as it seems to me, a slight tension between CPR 7.6 and its stringent terms not entitling a court to extend time in the first action even if no forensic prejudice has been suffered by a defendant, and having the power nevertheless to allow a second action to be commenced by using its discretion under s.33. But since the decision in Horton there is no doubt that there have been cases including McKay v Hamlani (considered by the Court of Appeal with Cain v Francis [2009] 3 WLR 551) in which time has been extended under s.33 in second actions where CPR 7.6 prevented an extension of time for service of a first action. Thus it cannot be said that in a CPR 7.6 case an extension of time for bringing a second action should never be granted, but it seems to me to be a relevant context and to at least show that it should not be easy for a claimant to commence a second action and obtain a disapplication of the limitation period under s.33.[12]Before turning to the judge’s judgment in this case, it is convenient to set out the well known statutory provisions. “11. Special time limit for actions in respect of personal injuries(1) This section applies to any action for damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision) where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to the plaintiff or any other person.(2) None of the time limits given in the preceding provisions of this Act shall apply to an action to which this section applies.(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) or (5) below.(4) Except where subsection (5) below applies, the period applicable is three years from— (a) the date on which the cause of action accrued; or (b) the date of knowledge (if later) of the person injured . . . “33. Discretionary exclusion of time limit for actions in respect of personal injuries or death (1) If it appears to the court that it would be equitable to allow an action to proceed having regard to the degree to which— (a) the provisions of section 11 or 12 of this Act prejudice the plaintiff or any person whom he represents; and (b) any decision of the court under this subsection would prejudice the defendant or any person whom he represents; (c) the court may direct that those provisions shall not apply to the action, or shall not apply to any specified cause of action to which the action relates. (2) The court shall not under this section disapply section 12(1) except where the reason why the person injured could no longer maintain an action was because of the time limit in section 11. If, for example, the person injured could at his death no longer maintain an action under the Fatal Accidents Act 1976 because of the time limit in Article 29 in Schedule 1 to the Carriage by Air Act 1961, the court has no power to direct that section 12(1) shall not apply. (3) In acting under this section the court shall have regard to all the circumstances of the case and in particular to— (a) the length of, and the reasons for, the delay on the part of the plaintiff; (b) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought within the time allowed by section 11 or (as the case may be) by section 12; (c) the conduct of the defendant after the cause of action arose, including the extent (if any) to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiff’s cause of action against the defendant; (d) the duration of any disability of the plaintiff arising after the date of the accrual of the cause of action; (e) the extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages; (f) the steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received. (4) In a case where the person injured died when, because of section 11, he could no longer maintain an action and recover damages in respect of the injury, the court shall have regard in particular to the length of, and the reasons for, the delay on the part of the deceased.(5) In a case under subsection (4) above, or any other case where the time limit, or one of the time limits, depends on the date of knowledge of a person other than the plaintiff, subsection (3) above shall have effect with appropriate modifications, and shall have effect in particular as if references to the plaintiff included references to any person whose date of knowledge is or was relevant in determining a time limit.(6) A direction by the court disapplying the provisions of section 12(1) shall operate to disapply the provisions to the same effect in section 1(1) of the Fatal Accidents Act 1976.(7) In this section “the court” means the court in which the action has been brought.(8) References in this section to section 11 include references to that section as extended by any of the preceding provisions of this Part of this Act or by any provision of Part III of this Act.”[13]The history of this case, which I have spelt out, would indicate that the particular features identified in Section 33 (3)(c), (d), (e) and (f) are not present in this case. The deputy judge thought that (c) conduct of the defendant might be relevant; as will appear hereafter, I disagree. Thus what the court was required to have regard to are “all the circumstances” and “in particular(a) the length of and reasons for delay on the part of the [claimants], and(b) the extent to which having regard to the delay, the evidence adduced or likely to be adduced is or is likely to be less cogent than if the action had been brought within the time allowed by section 11…”[14]The first question is to what delay are (a) and (b) referring – is it delay since the expiry of the limitation period and if so does that make delay prior to the expiration of the limitation period irrelevant?[15]The answer to the above question has been provided by decisions of the House of Lords. A passage in the speech of Lord Griffiths in Donovan v Gwentoys [1990] 1 WLR 472 at 478 referring to an earlier decision of the House of Lords reads as follows:- “In the course of his speech, Lord Diplock considered the meaning of delay in what was then, section 2D(3)(a)(b) of the Limitation Act 1939, as inserted by the Act of 1975 and which is now s.33(3)(a)(b) of the Limitation Act 1980. He said [1981] 1 WLR 744, 751:
“Subsection (3) requires the court to have regard to ‘all the circumstances of the case’ but singles out six matters for particular mention. These six present a curious hotchpotch. ‘The delay’ referred to in paragraph (a) must be the same delay as in paragraph (b); so it means the delay after the primary limitation period expired.

(a) ”

There was some debate before your Lordships, for which I was primarily responsible, as to whether delay in subsection (3)(a) was referring to delay from the accrual of the cause of action rather than delay after the expiry of the primary limitation period. There can, however, be no doubt that the delay referred to in subsection (3)(b) is delay subsequent to the expiry of the primary limitation period and I am persuaded that Lord Diplock’s construction is correct and it is to this same period of delay that the court is to have regard under paragraph (a) and also in subsection (4). It does not, however, follow that, in weighing the prejudice to the defendant, the court is not entitled to take into account the date upon which the claim is first made against the defendant. Compare the facts in Thompson v Brown with the facts of this case. In Thompson v Brown the claim had been made within a few weeks of the accident and liability and damage had been fully considered by the defendants’ insurers at an early stage. At the time the limitation period expired, the defendants’ insurers were in a position to settle the claim on its true merits. The fact that the plaintiff’s solicitors slipped up so that the writ was issued 37 days late was a totally unexpected windfall benefit for the defendant’s insurers. The primary purpose of the limitation period is not so to protect a defendant from the injustice of having to face a stale claim, that is, a claim with which he never expected to have to deal. The defendants’ insurers never suffered from that disadvantage in Thompson v Brown and thus the degree of prejudice they suffered was slight. By contrast in the present case, the defendants are faced with a truly stale claim first made upon them five years after the event. The degree of prejudice they suffer is manifestly incomparably greater than the degree of prejudice suffered by the defendants in Thompson v Brown and it would be absurd if this could not be taken into account by a judge in the exercise of his discretion. I agree entirely with the following passage form the judgment of Stuart-Smith LJ:- “The time of the notification of the claim is not one of the particular matters to which the court is required to have regard under s.33(3); although it may come in under paragraph (e). But to my mind it is an extremely important consideration, and is always so regarded by the judges who have to consider these questions. I cannot accept Mr Tillyard’s contention that it is irrelevant, presumably because it is not specifically referred to in s.33(3)” “Subsection (3) requires the court to have regard to ‘all the circumstances of the case’ but singles out six matters for particular mention. These six present a curious hotchpotch. ‘The delay’ referred to in paragraph (a) must be the same delay as in paragraph (b); so it means the delay after the primary limitation period expired. It is the length of this delay (in the instant case 37 days) and the reasons for it that matter under paragraph (a).” “The time of the notification of the claim is not one of the particular matters to which the court is required to have regard under s.33(3); although it may come in under paragraph (e). But to my mind it is an extremely important consideration, and is always so regarded by the judges who have to consider these questions. I cannot accept Mr Tillyard’s contention that it is irrelevant, presumably because it is not specifically referred to in s.33(3)”[16]In the same case Lord Oliver at 479 puts the same point in this way:- “My Lords, I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Griffiths. I entirely agree with it and add a few words of my own only because a contrary view was taken by the majority of the Court of Appeal The argument in favour of the proposition that dilatoriness on the part of the plaintiff in issuing his writ is irrelevant until the period of limitation has expired rests upon the proposition that, since a defendant has no legal ground for complaint if the plaintiff issues his writ one day before the expiry of the period, it follows that he suffers no prejudice if the writ is not issued until two days later, save to the extent that, if the section is disapplied, he is deprived of his vested right to defeat the plaintiff’s claim on that point alone. In my opinion, this is a false point. A defendant is always likely to be prejudiced by the dilatoriness of a plaintiff in pursuing his claim. Witnesses’ memories may fade, records may be lost or destroyed, opportunities for inspection and report may be lost. The fact that the law permits a plaintiff within prescribed limits to disadvantage a defendant in this way does not mean that the defendant is not prejudiced. It merely means that he is not in a position to complain of whatever prejudice he suffers. Once a plaintiff allows the permitted time to elapse, the defendant is no longer subject to that disability, and in a situation in which the court is directed to consider all the circumstances of the case and to balance the prejudice to the parties, the fact that the claim has, as a result of the plaintiff’s failure to use the time allowed to him, become a thoroughly stale claim, cannot, in my judgment, be irrelevant. It is clear from the judge’s judgment that, because sub-paragraphs (a) and (b) of s.33(3) of the Act of 1980 focus particular attention on the time elapsing after the expiry of the limitation period, he felt constrained to regard the time which had been allowed to pass prior to that date as something which had to be left wholly out of account. In my judgment, he was wrong to do so and that necessarily vitiated the exercise of his discretion. I, too, would allow the appeal.”[17]Lord Bridge, Lord Templeman and Lord Lowry agreed with both speeches. Thus delay in subsections (a) and (b) refers to delay since expiry of the limitation period but the overall delay is relevant as part of all the circumstances of the case.[18]What then is the proper approach to s.33? The section has been considered and reconsidered a number of times both by the House of Lords and by the Court of Appeal. In particular it has had to be considered recently as the landscape has changed, e.g. following the decision in Horton departing from Walkley and A v Hoare [2008] 1 AC 844 departing from Stubbings v Webb [1993] AC 498. Most recently (and after the decision of the deputy judge in this case) this court in AB v Nugent Care Society [2009] EWCA Civ 827 at paragraph 12 repeated what had been said in KR v Bryn Alyn Community Holdings Ltd [2003] QB 1441 as the relevant starting points and at paragraph 20 confirmed them as still valid post-Hoare subject to putting a slight gloss on the description in Bryn Alyn of the exercise being an exceptional indulgence to the claimant. I am not going to repeat here what is set out in Bryn Alyn and again in Nugent Care but would emphasisetwo obvious points; (i)depending on the issues and the nature of the evidence going to them the longer the delay the more likely and the greater, the prejudice to the defendant; and (ii) a judge should not reach a decision by reference to one circumstance or without regard to all the issues – he should conduct a balancing exercise at the end of his analysis of all the relevant circumstances and with regard to all the issues, taking them all into account.[19]Section 33 has also received extensive analysis in the recent decision of the Court of Appeal in Cain v Francis [2009] 3 WLR 551 (again a decision handed down after the judgment of the deputy judge in this case). Following an extensive review of the authorities Smith LJ summarised her view as follows:- “73. It seems to me that, in the exercise of the discretion, the basic question to be asked is whether it is fair and just in all the circumstances to expect the defendant to meet this claim on the merits, notwithstanding the delay in commencement. The length of the delay will be important, not so much for itself as to the effect it has had. To what extent has the defendant been disadvantaged in his investigation of the claim and/or the assembly of evidence, in respect of the issues of both liability and quantum? But it will also be important to consider the reasons for the delay. Thus, there may be some unfairness to the defendant due to the delay in issue but the delay may have arisen for so excusable a reason, that, looking at the matter in the round, on balance, it is fair and just that the action should proceed. On the other hand, the balance may go in the opposite direction, partly because the delay has caused procedural disadvantage and unfairness to the defendant and partly because the reasons for the delay (or its length) are not good ones. 74. Although the delay referred to in s.33(3) is the delay after the expiry of the primary limitation period, it will always be relevant to consider when the defendant knew that a claim was to be made against him and also the opportunities he has had to investigate the claim and collect evidence: see Donovan v Gwentoys Ltd [1990] 1 WLR 472. If, as here, a defendant has had early notification of a claim and every possible opportunity to investigate and to collect evidence, some delay after the expiry of three years will have had no prejudicial effect.”[20]Sir Andrew Morritt put the matter this way:- “79. In cases to which s.11 Limitation Act 1980 applies an action may not be brought after the expiration of the periods prescribed by subsections (3) and (4). In any such case there will be no trial on the merits. The purpose of s.33 is to enable the court to review the position in the light of the facts of individual cases. The object of the exercise is to consider the circumstances of individual cases in order to determine whether the action should proceed to trial. That this is the purpose is confirmed by the material words in subsection (1) which pose the indirect question whether “...it would be equitable to allow the action to proceed...”.80. The action can only proceed in cases to which s.11 applies if the provisions of that section are disapplied by a direction to that effect made by the court under s.33. By subsection (1)(b) the court is required to have “regard to the degree to which – [such a decision]...would prejudice the defendant...”. Thus the prejudice is to be ascertained on the assumption that the provisions of s.11 have been disapplied by an order made under s.33. The subsection does not direct the court to have regard to the prejudice the defendant would suffer from the very act of disapplication.81. The consequence of the disapplication of s.11 will be that there may be a trial of the claimant’s claim on its merits notwithstanding the delay in commencing the proceedings. Has that delay caused prejudice to the defendant in its defence? If so, does it outweigh the prejudice to the claimant of being denied a trial at all? In addition the court will need to consider all the circumstances of the case and in particular the other aspects of the case enumerated in subsection (3).82. In that context it does not appear to me that the loss of a limitation defence is regarded as a head of prejudice to the defendant at all; it is merely the obverse of the disapplication of s.11 which is assumed. It is this consideration which, in my view, accounts for and justifies the marked reluctance of the courts, as demonstrated by the judgments to which Smith LJ has referred in detail, to have regard to the loss of a limitation defence.83. I am grateful to Smith LJ for setting out the facts of the two appeals and the relevant details of the previous decisions on this matter. I have nothing to add in either respect. I agree with her conclusion in paragraph 73 and the application of the rationale to which she refers to the facts of the two appeals. I have added these few words of my own by way of exegesis from the wording of s.33 in its wider context.”[21]In Cain v Francis and indeed the other appeal being considered with Cain v Francis, McKay v Hamlani, the court was of the view that fairness required the actions to be allowed to continue. In Cain v Francis the Court of Appeal allowed the appeal and disapplied the limitation period under s.33 but it is important to stress that the court was not simply applying some rather broad test as to whether a fair trial was still possible. The fact that the defendant could not show any forensic prejudice and that the limitation defence would have been a complete windfall was the key feature. Cain was injured in a traffic accident and within a short time liability was admitted. Medical reports were disclosed to insurers and substantial interim payments were made - this is important. The solicitor sought to reach an agreement with insurers to allow for the postponement of the issue of proceedings because it looked as though settlement could not be achieved before expiry of the limitation period. The insurers declined. Proceedings were issued one day late. In Cain (as in Horton overruling Walkley) the loss of the limitation defence was the only prejudice the defendant would suffer – no forensic prejudice was relied on at all. As recorded by Smith LJ when she came to deal with the actual decision in Cain [paragraph 76]“The defendant below did not even attempt to argue that she had suffered any other prejudice besides the loss of the limitation defence . . . The claim was promptly notified . . . the defendant had every chance to investigate the remaining quantum matters . . . the delay was one day . . . it did not cause any prejudice. . . . it did not even cause any inconvenience . . .”. As for prejudice suffered by the claimant, Mr Cain, Smith LJ observed although he would not be financially worse off, he would have to sue his solicitor, whom he still used, and would have to repay the interim payments – “So the fact that the claimant will not suffer financially is relevant but not determinative.” Thus not to have disapplied the limitation period would have been a complete windfall to the defendant and his insurers.[22]That type of case must be contrasted with the case where forensic prejudice is suffered by a defendant who has not for many years been notified of a claim in any detail so as to enable him to investigate it.[23]Let me now turn to the circumstances of this case and the judgment of the Deputy Judge. First I would identify what seem to me to be key features of his reasoning as to why it was appropriate to exercise his discretion in favour of the claimants. In paragraph 4 he seems to suggest that as at 23rd August 2004 there had been considerable correspondence between solicitors such as presumably to enable the defendant insurers to assess the claim [see third sentence of paragraph 4]. He identified a period between the strike out of the first action and the decision in Horton as 17 months and then the period of 22 months post-Horton until the second action was brought [paragraph 5]. He suggested that for the purposes of s.33(3)(a) it was the period of 22 months following Horton which was the relevant period and that for the purposes of considering the effect of delay on the cogency of evidence under s.33(3)(b) it was that period of 22 months which he must consider.[24]He dealt with the point being made by Mr Russell for the defendants that the defendants were now having to “undertake a standing start” with the second action by saying that that was only relevant to s.33(3)(c), i.e. the conduct of the defendant and that in essence their failure to investigate the claim was their fault (see paragraph 10).[25]He referred to the fact that service was only one day out of time. He referred to a decision of Cox J where she extended time following the issue of the second set of proceedings after a delay of six months after the decision in Horton and where she applied a test as to whether a fair trial was possible. He said that he had heard no cogent argument which persuaded him that notwithstanding the length of the delay, it was not possible for there to be a fair trial of the action on the available evidence. (See paragraph 11, last sentence.)[26]I should finally quote paragraphs 13 and 14 of the judge’s judgment:- “13. Finally in the other 2008 case cited to me, also tried by Cox J, Khairule v North West Strategic Health Authority (4th July 2008) she again reviewed the authorities and said at paragraph 113:- “In my view the crucial question in cases such as these, when considering the effects of the passage of time generally and the Section 33 discretion, is whether it is still possible to have a fair trial of the issues on the available evidence. Of relevance to this question will be when the Defendants first had knowledge of the claim and the opportunity they have had to investigate it and secure relevant evidence, and can prepare to meet it at trial. 14. In this case the Defendants had knowledge of the claim and admitted liability within 7 months of the accident and they had ample opportunity, which they chose not to take, to investigate it and to secure any relevant evidence on the issue of quantum of damage. In my judgment the Defendant has signally failed to demonstrate forensic prejudice stemming from the delay. Whilst the period of delay is much longer than the period in the cited cases, the test remains the same in relation to any prejudice suffered by the Defendant as a result of that delay. Notwithstanding the Defendant’s solicitor Simon Frith’s mammoth 87 paragraph statement of 24th October 2008, I am not persuaded that he has demonstrated significant prejudice to the Defendant resulting from the delay. I am satisfied that the evidence pertaining to the quantum of damages of these two Claimants is still available and has not been detrimentally affected by the passage of time. So I am satisfied that the significant delay in this case, perhaps unusually, has not caused prejudice to the Defendant sufficient to persuade me that the Claim should be struck out.” “In my view the crucial question in cases such as these, when considering the effects of the passage of time generally and the Section 33 discretion, is whether it is still possible to have a fair trial of the issues on the available evidence. Of relevance to this question will be when the Defendants first had knowledge of the claim and the opportunity they have had to investigate it and secure relevant evidence, and can prepare to meet it at trial.[27]Mr Burton QC in his skeleton made many criticisms of the judge’s judgment. I will attempt to summarise the most pertinent. i) The judge has regarded the period of 22 months following the decision in Horton as the relevant period of delay. That was not technically the correct approach, even in relation to subsections (a) and (b) which refer to delay since the expiry of the limitation period, but more importantly the whole period of delay was relevant in considering whether the defendant was prejudiced. Indeed, submitted Mr Burton, it is the period of delay prior to the defendant having details of a claim so that he can investigate the same which is the most significant period. Although the deputy judge quotes passages from Cox J’s judgment where she looks at the whole period of delay, and the deputy judge says that he is accepting Cox J’s judgment as indicating the correct approach, Mr Burton submitted that the sentence in his final paragraph quoted above (paragraph 14), referring to the period of delay being much longer than the period in the cited cases was once again a reference to 22 months as opposed to the six months of Cox J’s decision. ii) The judge’s reference to there being correspondence between the solicitors prior to the issue of the first proceedings was simply inaccurate, and certainly inaccurate insofar as it might give the impression that full information as to the claims being made by the claimants was being provided. iii) Insofar as the deputy judge was suggesting that the defendant could at any time have investigated the quantum claim prior to the service of the first proceedings and that it was their fault if it did not do so that was inaccurate and unfair. No investigation of general damages was possible until the receipt of medical reports and those, so far as physical injuries were concerned, were not provided until shortly before service of the proceedings. No psychological report was served at this time and no details of any claim for loss or earnings past or future was provided. The defendant’s insurers were co-operating in trying to persuade the claimants’ solicitors to instruct experts from an early stage but, possibly through the claimants’ own attitude to the litigation or a failure on the part of their solicitors, no reports were forthcoming until just before the proceedings were served. iv) Ultimately what the Defendant’s insurers have received in the second action are claims of a different magnitude from those notified during the first action. The claims as now notified raise questions not only in relation to the seriousness of the injuries which the defendant’s insurers have never had an opportunity to investigate, but points on loss of earnings which, in the first proceedings, had not been notified at all. The deputy judge said that any lack of knowledge of the claim and the fact that the claim now had to be met from “a standing start” was relevant to the defendant’s conduct under s.33(3)(c). This, submits Mr Burton, is to misunderstand what s.33(3)(c) covers. There is obvious forensic prejudice in a defendant being placed in a situation in which he is notified of claims years after the event and has to deal with them from what is called “a standing start”.[28]Mr Hilton, in his skeleton and orally, struggled manfully to deal with the criticisms and submitted rightly that this court must be slow in reversing a judge who has exercised a discretion under s.33. He submitted in particular that what the judge had found was that there was no forensic prejudice, and he submitted that the judge had ultimately applied the correct test when stating that “….the basic question to be asked is whether it is fair and just in all the circumstances to expect the defendant to meet this claim on the merits, notwithstanding the delay in commencement”. He submitted that Direct Line had chosen to do next to nothing in its investigation of the claim and to then take advantage of the technical error in service. It was Direct Line’s decision to take advantage of the one day failure when they knew that the claim was a very substantial one.[29]He submitted that despite the judge’s reference to the 22 months post-Horton he in fact applied the test of forensic prejudice to the whole period. He submitted the judge was entitled to find that the evidence available had not been “detrimentally affected by the passage of time”. There was no concrete evidence before the judge to demonstrate that the defendant’s fair opportunity to defend himself had been compromised. What the judge had found was that a fair trial was still possible and that was not a decision with which we should interfere.[30]It seems to me that many of the criticisms of the judgment were made out. In particular it seems to me that the judge did think he was to concentrate on the 22 month period post-Horton. The impression given by identifying that period as the most material is that it seems to suggest that provided there is no delay post-Horton, a claimant should be able to succeed in a disapplication of the limitation period in any second action. That totally misunderstands the effect of Horton where the disapplication was granted in circumstances where a defendant could show no forensic prejudice whatever. Cain v Francis similarly supports the disapplication in a second action where there is no forensic prejudice, but if there is forensic prejudice, then where that prejudice is caused by inexcusable delay and where there is little if any prejudice to a claimant with an action against his solicitors the position will almost certainly be different.[31]Furthermore it seems to me that the deputy judge’s approach to forensic prejudice was flawed. He suggested that there was correspondence during the period of three years from the accident and he suggested that it was for the defendant’s insurers to investigate, but until the insurers had details of the claim being made they were in no position to investigate. Reports relevant to general damages were only received three years after the accident, no psychological report was received at that time and no claim for loss of earnings present or future was received at all. The claim ultimately received 7 years after the accident was of a different magnitude. Clearly forensic prejudice had been suffered by the defendant or more accurately his insurers.[32]Thus this is a case in which the judge having misdirected himself in various respects we should revisit the question whether it is appropriate to disapply the limitation period under s.33.[33]As I have already stressed both Horton and Cain v Francis, were cases where the defendant was only relying on the loss of a limitation defence as prejudice but could point to no forensic prejudice. They were cases in which the defendant or his insurers had full information as to a claimant’s claim prior to the ending of the first action, and where it can truly be said that a mistake by those acting for the claimants had produced a windfall for the defendant. Lord Bingham in Horton at page 325 in dealing with the merits of that case said “in a straightforward case in which the appellant’s delay was short and understandable and caused the effective defendant no forensic prejudice at all, the judge was in my opinion entitled to view a motor insurer (or in default the MIB) as the primary source of compensation for the victim of a road traffic accident.” The position was the same in Cain v Francis: no forensic prejudice was relied on.[34]There clearly was forensic prejudice to the defendant in this case. The defendant or more accurately Direct Line were on any view not in a position to examine the claim as now made by the claimants prior to the service of the first proceedings. Even if they had sight of medical reports just before proceedings were served which might have assisted in assessing general damages, they had no claim for loss of earnings past or future. In the second action they were faced with a claim of a different dimension to that notified prior to service of those proceedings. It seems to me that they would clearly suffer a forensic disadvantage in having to examine the claims now made from a “standing start”. It furthermore seems to me that until they had details of the claim it cannot be said that it is their fault that they did not carry out investigations.[35]If delay has caused forensic prejudice to the defendant, then one must consider the cause of the delay. If the delay was excusable and on balance it is still possible to have a fair trial then it may be just and fair to allow the action to proceed. On the other hand if the delay has caused unfairness to the defendant in his ability to investigate it and there is no excuse for the delay, the action should not be allowed to proceed. I would add, where there has been inexcusable and lengthy delay in a claimant notifying a defendant as to his case on liability or as in this case quantum and there has been negligence in issuing the proceedings or in serving them on time, that is a situation in which it almost speaks for itself that a defendant has suffered forensic disadvantage and a claimant is unlikely to suffer prejudice.[36]The delay which is relevant is the whole period since the accident occurred. Each period of delay needs separate consideration as to whether it was excusable. First there is the delay of three years or so up to service of the first proceedings; this was the fault either of the claimants themselves or their solicitors. No excuse has been provided for that delay. The failure to serve on time was negligent and the claimants will have a claim for that negligence. There is then a period of 17 months until Horton was decided in June 2006; it may have been excusable from the claimants’ point of view but this was certainly not a period where the defendant was at fault. There is finally the period of 22 months until the issue of the second set of proceedings; there is no excuse for that period. The solicitors discussing how that claim should be funded provides no excuse for the non-issue of the second proceedings vis a vis the defendant.[37]Thus, to summarise, the defendant received claims quite different in magnitude from anything notified to them before, almost seven years to the day after the accident, and where there is only a period of 17 months for which there is any kind of excuse. They were clearly forensically disadvantaged by a substantial period of delay by the claimants for which there is no excuse.[38]What about prejudice to the claimants if the disapplication under s.33 is refused? Prejudice on which they should be entitled to rely would seem slight. They have a claim against Hodari for serving the proceedings late. That is a loss of a chance claim. But since liability was admitted the court in the negligence claim would be seeking to assess what the claimant would have recovered at a trial if the proceedings had been properly served. If the evidence were the same in the negligence action as it would have been at the trial, as Smith LJ pointed out in Dudarec v Andrews [2006] 2 All ER 856 at 870 paragraph 61, there is no reason to apply a discount. That is a passage relied on by Mr Burton for saying the claimants would recover 100%. I do not myself think it would be as straightforward as that because part of Mr Burton’s case on forensic prejudice is that his client, if faced with the claimants’ current claims, has been prejudiced in being unable to challenge aspects of those claims. He cannot as it seems to me have it both ways, and some discount would have to be applied for the risk that the defendant in the original action would have been able to challenge some aspects of the claim, but it would not be high. Furthermore in so far as it is delay which has made the task difficult, some of that delay is the fault of the claimants themselves, and if a deduction is made for that factor that deduction can hardly be prejudice which the claimants are entitled to rely on as against the original defendant.[39]I should finally mention one other factor which might be raised in the action against Hodari, and which the claimants might say gave rise to prejudice to them. Hodari might suggest that the claimants had failed to mitigate by not commencing the second action as soon as the Horton decision was announced. If that were a good point, the claimants could argue they will be prejudiced because there is a risk they will not recover from Hodari at all.[40]The answer to that point seems to me to be as follows. If the second action had been commenced shortly after June 2006, a court would in my view still have taken the view that an extension should not be granted under s.33. The real point in this case is that by the time the first action was brought to an end, Direct Line had not been properly notified of the claim the claimants were making and had therefore suffered forensic prejudice having to commence their investigations from a standing start. This adds force to the criticism of the deputy judge’s approach because it demonstrates that the 22 months delay in commencing the second action after the decision in Horton is less material than other delay in notifying the claim.[41]Performing the balancing exercise the position appears to me to be clear. The defendant, or more accurately his insurers Direct Line, have suffered forensic prejudice as a result of not being notified of the claimants’ current claim until seven years after the accident. The major part of that delay was the fault of the claimants themselves or their advisors and was inexcusable. The claimants will suffer only minor prejudice if they have to proceed against the solicitors who made the error over service of the first proceedings and some of that prejudice is their own fault. This was not a case in which it was right to disapply the limitation period.[42]I would allow the appeal and refuse an extension under s.33 in this case. Lord Justice Rimer[43]I agree.

Sir Paul Kennedy

[44]I also agree. In the present case there is evidence which indicated that part of the delay was due to lack of co-operation by the claimants with arrangements made by their solicitors. If that was the case, then it may be something to be investigated and reflected in any ultimate award, and that can only happen in the context of an action by the claimants against their former solicitor.

Cited in 7 later judgments