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Judgments - horton v. Sadler and another

HOUSE OF LORDS

SESSION 2005-06

[2006] UKHL 27

on appeal from[2004] EWCA Civ 936

 

OPINIONS

OF THE LORDS OF APPEAL

for judgment IN THE CAUSE

 

horton (Original Appellant and Cross-respondent)

v.

Sadler and another (Original Respondents and Cross-appellants)

 

 

Appellate Committee

 

Lord Bingham of Cornhill

Lord Hoffmann

Lord Rodger of Earlsferry

Lord Carswell

Lord Brown of Eaton-under-Heywood

 

 

Counsel

Original Appellant and Cross-respondent:

Edward Bartley Jones QC

Michelle Mayoh

(Instructed by Sharpe Pritchard agents for Rowe Cohen)

Original Respondents and Cross-appellants:

Dermod O'Brien QC

Clare Brown

(Instructed by Weightmans)

 

Hearing dates:

8 and 9 May 2006

 

on

WEDNESDAY 14 JUNE 2006

 

HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

horton (Original Appellant and Cross-respondent) v. Sadler and another (Original Respondents and Cross-appellants)

[2006] UKHL 27

LORD BINGHAM OF CORNHILL

My Lords,

    1.  In Walkley v Precision Forgings Ltd [1979] 1 WLR 606 the House ruled that the court may not exercise its power to disapply the ordinary time limit in a personal injuries action under what is now section 33 of the Limitation Act 1980 where a claimant had issued proceedings in respect of those injuries before the ordinary time limit expired and has brought a second action (in which the application under section 33 is made) after expiry. In this appeal the House is invited by the appellant to depart from that ruling pursuant to the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. The Motor Insurers' Bureau ("the MIB"), the only effective respondent, submits that the House should adhere to its decision.

The proceedings

    2.  On 12 April 1998 the appellant was injured in a road traffic accident for which the first defendant, Mr Sadler, was wholly responsible. Mr Sadler was not insured, as he should have been, against third party risks. The MIB nominated insurers to act as its agents and the appellant's solicitors corresponded with them. In October 2000 the MIB made an interim payment of £3,675 to the appellant. On 10 April 2001, two days before expiry of the three-year limitation period, the appellant's solicitors issued proceedings against Mr Sadler, but they then failed to comply with a condition precedent of MIB's liability under the agreement made between it and the Secretary of State for Transport by giving notice of the proceedings to MIB. Having been joined as a party to the proceedings on its application, the MIB served a defence, in which it denied liability, relying on the failure to comply with the notice condition, and counterclaimed for return of the interim payment.

    3.  In September 2001 the appellant issued what were in effect duplicate proceedings against Mr Sadler. On this occasion the appellant gave the necessary notice to the MIB, which in October 2001, on its application, was joined as a party to the second action also. Its main defence was that the appellant's claim in the action was statute-barred by section 11 of the 1980 Act. The appellant responded by seeking an order disapplying the ordinary 3-year time limit under section 33 of the 1980 Act. It was ordered that preliminary issues be tried as to the liability of the MIB in the first action and the disapplication of the ordinary time limit under section 33 in the second.

    4.  These issues were resolved in the Salford County Court by His Honour Judge Roger Cooke, who held that the MIB was under no liability in the first action and that the appellant should repay the interim payment he had received with interest. That ruling was not the subject of appeal. In the second action he ruled that he was precluded from exercising the power conferred on the court by section 33 by the decision of the House in Walkley, which was neither distinguishable nor incompatible with the European Convention on Human Rights. But he went on to hold that had it been permissible for him to disapply the time limit under section 33 he would have exercised his discretion in favour of doing so.

    5.  The appellant appealed against the judge's decision in the second action, but authority binding on the Court of Appeal, in particular Walkley, compelled the dismissal of that appeal, which took place without argument on 28 June 2004. Permission to appeal was granted by the House. The MIB cross-appealed.

The MIB

    6.  The growth of motor traffic and the increasing number of accidents to which it gave rise prompted enactment of the Third Parties (Rights Against Insurers) Act 1930 and the Road Traffic Acts of 1930 and 1934, which made third party motor insurance compulsory and facilitated recovery against insurers where judgments were obtained against motorists who were in breach of policy conditions or whose policies were voidable. But this legislation did not address the problem which arose from injuries caused by motorists who could not meet a judgment and were not insured at all. This problem was resolved by what Sir Ralph Gibson in Silverton v Goodall and Motor Insurers' Bureau [1997] PIQR 451, 453-454, called "a novel piece of extra statutory machinery": the formation by insurers writing motor business of the MIB as a company limited by guarantee, of which the insurers were members, to administer a fund provided by them (and ultimately by the general body of insured motorists) to compensate victims of accidents caused by uninsured drivers. The administration of the scheme was governed by a series of agreements between the Bureau and successive Ministers or Secretaries of State for Transport, the first made in June 1946, the most recent (relevant to this case) on 21 December 1988. This last agreement gives effect to the obligations of the United Kingdom under the Second Council Directive on Motor Insurance (84/5/EEC) of 30 December 1983. Clause 2 of the current agreement provides for the satisfaction of claims by the MIB. Clause 5(1) provides that "MIB shall not incur any liability under Clause 2 of this Agreement unless- (a) notice in writing of the bringing of the proceedings is given within seven days after the commencement of the proceedings- (i) to MIB in the case of proceedings in respect of a relevant liability which is … not covered by a contract of insurance …". This is the condition with which the appellant's solicitors did not comply in the first action.

Limitation in personal injuries actions

    7.  As enacted, section 2(1)(a) of the Limitation Act 1939 provided that actions in tort should not be brought after the expiration of six years from the date on which the cause of action accrued. Despite the language used, this has not been taken to mean that the bringing of an action after that time is prohibited but that the defendant has a statutory defence of time-bar in such a case. The period applicable to personal injury actions was shortened to three years by the Law Reform (Limitation of Actions, Etc) Act 1954. There was, however, an obvious source of injustice, highlighted by Cartledge v E Jopling & Sons Ltd [1963] AC 758, where the time limit expired before the victim knew of his injuries. This problem was considered in the Report of the Edmund Davies Committee in 1962 (Cmnd 1829) and led to the Limitation Act 1963, which provided for the accrual of a claimant's cause of action to be deferred in such a case until his date of knowledge. That Act gave rise to acute problems of interpretation and application, and these were the subject of further consideration by the Law Reform Committee under the chairmanship of Lord Justice Orr. In its Twentieth Report (Interim Report on Limitation of Actions: In Personal Injury Claims) (Cmnd 5630), May 1974, the Law Reform Committee proposed a reformulated date of knowledge test. It also, relevantly to this appeal, rejected the proposal that the court should have a general discretion to extend time in meritorious cases (paras 35, 56), but recommended (paras 56, 57, 69(4)) that "in a residual class of cases", regarded as "exceptional", the court should have a discretion to weigh the actual hardships on both sides and to allow an action brought out of time to proceed if the court were satisfied that it would be equitable to do so. In making this recommendation the Committee's object was to promote strict application of the prescribed limitation rules by providing an exceptional means of accommodating very hard cases in which, but for the possibility of resorting to such means, courts might be persuaded to interpret the rules in a way which would strain their meaning or undermine their object.

    8.  The Committee's date of knowledge recommendation was given effect in the Limitation Act 1975 by inserting a new section 2A into the 1939 Act and a discretionary power to extend time was enacted by inserting a new section 2D. These were substantially re-enacted as sections 11 and 33 of the 1980 Act. Section 33 is headed "Discretionary exclusion of time limit for actions in respect of personal injuries or death" and (as amended) provides in subsection (1):

    "(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 11A 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;

    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."

This is supplemented by subsection (3), which provides:

    "(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, by section 11A 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."

    9.  In Finch v Francis (unreported, 21 July 1977), an early case on section 2D, Griffiths J, who had been a member of the Law Reform Committee and a contributor to its report, ruled that "the object of the discretion was to provide for the occasional hard case" and that its application "should be reserved for cases of an unusual nature". Thus he interpreted section 2D as conferring the limited discretion which the Committee had envisaged. But this interpretation was roundly rejected in Firman v Ellis [1978] QB 886, where the Court of Appeal gave judgment in four appeals under section 2D. In his judgment at pp 903-905 Lord Denning MR recounted much of the history summarised above, noting the Law Reform Committee's rejection of the proposal that the court be given an unfettered general discretion to extend time and its recommendation of a discretion in some exceptional, residual classes of case. But, he held (p 905), section 2D had given the court a wide general discretion, not so limited. This was a "revolutionary step" which "alters our whole approach to time bars". Ormrod LJ agreed (p 910) that the section gave the court "the widest discretion". Judicial fetters should not be imposed on this new and valuable discretionary power. Geoffrey Lane LJ (p 915) was similarly of opinion that section 2D could not properly be interpreted as conferring the more limited discretion recommended by the Law Reform Committee.

Walkley

    10.  In all the four actions considered in Firman v Ellis, a writ had been issued within the three year limitation period but had lapsed, and a second action had been brought in which an extension under section 2D was sought. It was not argued that the timely issue of the first writ precluded the exercise of the section 2D power, which the Court of Appeal upheld.

    11.  Mr Walkley was employed as a grinder from 1966 until about 1970-1971. Towards the end of 1969 he became aware of a complaint affecting his fingers. He consulted his trade union, whose legal department considered that he had no grounds for a common law claim for damages. The case was, however, referred to the union's solicitors in South Wales, a firm expert in this field, who negotiated with the employers' insurers. They repudiated liability. A writ was issued in October 1971 and an appearance entered, but no further steps were taken and the solicitors advised Mr Walkley in July 1972 that his claim had no chance of success. Mr Walkley consulted new solicitors who told the employers' solicitors in July 1973 that they were instructed to pursue the action, eliciting the response that if the action were pursued a summons would be issued to dismiss it for want of prosecution. No further steps in the action were taken and these solicitors ceased to act. Mr Walkley then consulted a third firm of solicitors, who obtained an engineer's report and a favourable opinion of counsel. A second writ was issued in December 1976 and served in February 1977. The employers then applied to the master for an order, which he made, striking out the second writ and dismissing the second action. Mr Walkley appealed to Swanwick J, asking that the second action be allowed to continue, in order that he could seek an extension of time under section 2D. The judge set aside the master's order, on Mr Walkley undertaking to discontinue the first action, but did not purport to exercise, nor did he refuse to exercise, the discretion conferred by section 2D.

    12.  On the employers' appeal to the Court of Appeal ([1978] 1 WLR 1228), they did not contend that section 2D could be construed as having no application to a case where a first writ had been issued within the three-year limitation period and that action had been discontinued or dismissed, a fact noted by Megaw LJ at p 1235 of his judgment. Megaw and Shaw LJJ concluded that even if the first action could and would have been struck out for want of prosecution, Mr Walkley was entitled to seek an extension under section 2D in the second action and it was not possible to conclude on the material before the court that his application was bound to fail. On this last point, Waller LJ dissented.

    13.  In their printed case on appeal to the House, the employers expressly advanced the argument which, as noted by Megaw LJ, they had not taken below, and on this ground they succeeded: [1979] 1 WLR 606.

    14.  At p 609, Lord Wilberforce said:

    "My Lords, as a matter of principle I have very great difficulty in understanding how in this case or indeed in any case that I can imagine where an action has been started within the normal limitation period, section 2D can be invoked at all. The section opens with the words:

      '(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 2A or 2B of this Act prejudice the plaintiff …'

    The provisions of section 2A are those which require an action for personal injuries to be brought within three years. So subsection (1)(a) must be contemplating a case in which, because the three years have expired without an action being brought, section 2A applies to the prejudice of the plaintiff. But if the plaintiff has brought his action within the three years, how has he been prejudiced by section 2A? This I fail to understand. If this argument is sound, the respondent's case fails in limine. He brought his first action within the normal limitation period, and if he has suffered any prejudice, it is by his own inaction and not by the operation of the Act. However, since the Court of Appeal did not decide the case on this argument, or, it seems, consider it, and since the provision is a new one, understanding of which may have to come with time, I will consider the appeal on the assumption that these initial words may apply to the case."

He then considered the matters listed in section 2D(3) and concluded, in agreement with Waller LJ, that Mr Walkley's application could not succeed and the second action should therefore be dismissed.

    15.  Viscount Dilhorne expressed his reason for dismissing the second action at p 614:

    "In my opinion this appeal should be allowed for it cannot be said that it was the provisions of section 2A (that is to say, the imposition of the three year period after which an action such as this cannot be proceeded with without the directions of the court) which prejudiced the respondent when within that period he brought an action for damages for the same personal injuries and in respect of the same cause of action as in his second action. He was prejudiced by his delay in proceeding with the first action and by his discontinuance of that action, not by the provisions of section 2A."

    16.  Lord Diplock ruled to similar effect at p 619:

    "My Lords, in my opinion, once a plaintiff has started an action (the first action) within the primary limitation period it is only in the most exceptional circumstances that he would be able to bring himself within section 2D in respect of a second action brought to enforce the same cause of action. If the first action is still in existence, as it was in the instant case when the matter was before the master and the judge, cadit quaestio; he has not been prevented from starting his action by section 2A or section 2B at all, so the provisions of those sections cannot have caused him any prejudice. Does it make any difference that the first action is no longer in existence at the time of the application under section 2D either because it has been struck out for want of prosecution or because it has been discontinued by the plaintiff of his own volition? In my view, it does not. These are self-inflicted wounds. The provisions of section 2A caused him no prejudice at all; he was able to start his action. The only cause of the prejudice to him in the case of dismissal for want of prosecution is dilatoriness which took place after the action was started whether on his own part or on the part of his legal advisers. In the case of discontinuance the only cause of the prejudice is his own act.

    The only exception I have been able to think of where it might be proper to give a direction under section 2D, despite the fact that the plaintiff had previously started an action within the primary limitation period but had subsequently discontinued it, would be a case in which the plaintiff had been induced to discontinue by a misrepresentation or other improper conduct by the defendant; but there is no suggestion of this in the instant case.

    I would allow the appeal upon the ground that Mr Walkley, having previously started an action for the same cause of action within the primary limitation period prescribed by section 2A, cannot bring himself within section 2D at all. Any application by him under that section would fail in limine."

Lord Edmund-Davies and Lord Keith of Kinkel agreed with both Lord Wilberforce and Lord Diplock. So Mr Walkley's second action was dismissed.

Later authority of the House

 
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