Judgments - horton v. Sadler and another

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    17.  The House has had occasion to consider section 2D and its successor, section 33, in two later cases. The first was Thompson v Brown [1981] 1 WLR 744. In that case the appellant's solicitors had negligently failed to issue a writ within the three year limitation period. A writ was issued a month out of time and the appellant's application for an extension of time under section 2D was tried as a preliminary issue by Phillips J. He ruled against the appellant, holding that he was bound by Court of Appeal authority to find that the appellant had not been prejudiced by the time limit in section 2A since he had an unanswerable claim against his solicitors. There was a leapfrog appeal to the House, where Lord Elwyn-Jones, Lord Fraser of Tullybelton, Lord Scarman and Lord Bridge of Harwich agreed with the opinion of Lord Diplock. In this opinion Lord Diplock analysed the decision of the House in Walkley, observing (pp 749, 750) that because of the issue of the first writ in that case section 2A had not affected Mr Walkley at all, let alone prejudiced him. The only reason why section 2D did not apply to his case was because the primary limitation period had not expired when Mr Walkley had started his first action (p 751). Lord Diplock observed that exercise of the section 2D power must always be highly prejudicial to a defendant by depriving him of what would otherwise be a complete defence, although what the defendant lost where the application was made shortly after expiry of the primary limitation period might be regarded as being in the nature of a windfall (p 750). On the other hand, Lord Diplock thought it self-evident that expiry of the limitation period without issue of proceedings must always prejudice the plaintiff to some degree (p 750). This unanimous decision of the House is authority for three further propositions. First, while the outcome of the Firman v Ellis [1978] QB 886 appeals was wrong in the light of Walkley, the Court of Appeal had been right about the unfettered nature of the discretion conferred by section 2D: pp 752, 753. Secondly, while a plaintiff's right of full recovery against his negligent solicitor was always a highly relevant consideration in striking the balance required by section 2D, a view earlier expressed by the Court of Appeal in Firman v Ellis at p 909, it did not preclude exercise of the section 2D power in the plaintiff's favour, and the judge had been wrong to rule otherwise: pp 752-753. Thirdly while it was anomalous that a defendant should be better off where a writ had been issued but not served (as in Firman v Ellis) than he would be if the writ had not been issued at all (as in Thompson), this was a consequence of the rule that an action is brought for limitation purposes when a writ is issued and not when it is served: pp 752-753. The case was remitted to the judge for him to consider whether the provisions of section 2A should be disapplied.

    18.  The second case was Deerness v John R Keeble & Son (Brantham) Ltd [1983] 2 Lloyd's Rep 260. The plaintiff suffered very serious injuries as a passenger in a car, and a writ was issued within the three-year period against the driver and the owner of the car whose insurers made a substantial interim payment. But the writ was not served, nor renewed at the end of 12 months, and the limitation period expired without its renewal. A second writ was issued, the insurers relied on the section 11 time bar and the plaintiff sought an extension of time under section 33. Comyn J found exceptional grounds for granting an extension, despite Walkley, but the Court of Appeal held that the plaintiff's claim was statute-barred and the House endorsed this conclusion. Lord Edmund-Davies, Lord Keith of Kinkel, Lord Brandon of Oakbrook and Lord Brightman expressed unqualified agreement with the leading opinion of Lord Diplock. In this opinion Lord Diplock rejected the judge's reliance on his reference in Walkley to "most exceptional circumstances", concluding that only an estoppel would suffice: p 262. In Walkley the House had ruled "that a plaintiff who has actually started an action before the expiry of the primary limitation period has not been prejudiced by what are now the provisions of s 11 of the Limitation Act 1980 and therefore cannot bring himself within the provisions of s 33(1)": p 262. "The rationale of the rule laid down by this House in Walkley's case did not logically admit of any exceptions": p 262. Further reference was made to the anomaly which Lord Diplock had acknowledged in Thompson: p 263.

Court of Appeal authority

    19.  The decision of the House in Walkley has been considered by the Court of Appeal in a number of cases, which may be divided into three broad classes. In the first class of case, the decision has been applied with no expression of disapproval. Examples are Whitfield v North Durham Health Authority [1995] PIQR 361, Forward v Hendricks [1997] 2 All ER 395 and Young, decd v Western Power Distribution (South West) plc [2003] EWCA Civ 1034, [2003] 1 WLR 2868. Into the same class falls the unreported first instance decision of Judge McKenna in the Birmingham County Court (17 February 2003) in Morris v Lokass and the Motor Insurers' Bureau. In the second class of case Walkley has been applied but with express reluctance. An example is Chappell v Cooper [1980] 1 WLR 958, 967-8, per Ormrod LJ. In the third class of case Walkley has been distinguished, as in Rose v Express Welding Ltd (21 January 1986, unreported, Court of Appeal (Civil Division) Transcript No 31 of 1986); White v Glass, The Times, 18 February 1989, Court of Appeal (Civil Division) Transcript No 140 of 1989; Re Workvale Ltd [1992] 1 WLR 416; McEvoy v AA Welding and Fabrication Ltd [1998] PIQR 266; Shapland v Palmer [1999] 1 WLR 2068; Piggott v Aulton, decd [2003] EWCA Civ 24, [2003] RTR 540; and Adams v Ali [2006] EWCA Civ 91, [2006] 1 WLR 1330. The detailed grounds relied on to distinguish Walkley in these cases are not in my opinion important: the significance of the decisions lies in the Court of Appeal's unwillingness to regard the ratio of Walkley as applicable to any case not on all fours with it and in the disfavour with which the reasoning and decision in Walkley has in some of these cases been regarded. A number of Lords Justices plainly share the opinion of the Law Commission in its Report on Limitation of Actions (Law Com No 270), 10 July 2001, para 3.166, which the Government accepted in principle in July 2002, subject to further consideration of certain aspects, and proposed to enact when a suitable opportunity should arise:

    "However, we consider that some amendments should be made to the current form of the discretion [in section 33]. An artificial distinction exists under the current law between the claimant who has not issued any proceedings within the limitation period (in which case the discretion applies) and the claimant who has issued proceedings, but failed to serve them within the limitation period (in which case the discretion does not apply)."

The authority cited by the Law Commission is Walkley.

The appellant's criticism of Walkley

    20.  Counsel for the appellant strongly criticised the decision of the House in Walkley, contending (1) that the reasoning of the decision itself cannot be supported, (2) that the decision has given rise to indefensible distinctions, and (3) that the decision deprives the court of the wide and unfettered discretion which the legislation was intended to give it. None of these contentions was accepted by counsel for the MIB, and it is necessary to consider each in turn. I shall for convenience refer only to the current sections, sections 11 and 33, even where their predecessor sections were in force at the time of a decision.

    21.  (1)  Counsel for the appellant submitted that the effect of section 11 is to provide the defendant with a time limit defence in any proceedings brought after the expiry of the three-year period. When section 33(1) refers to consideration whether it would be equitable to allow "an action" to proceed it is referring to such an action. It is prejudice to the plaintiff by application of section 11 to that action to which section 33(1)(a) refers, and that action to which the court may direct that the provisions of section 11 shall not apply. Thus the question for the court under section 33 is always whether it is equitable or inequitable as between the parties to override the time bar which, if relied on by the defendant, will, unless disapplied by order of the court, defeat the action which the plaintiff has ex hypothesi brought out of time.

    22.  This analysis is, as I think, plainly correct. But the appellant contended that it could not readily be reconciled with the reasoning in Walkley. It was held there that the plaintiff, having issued a writ within the three-year period could not be prejudiced by section 11. But the action timeously brought by the plaintiff in Walkley, as in the Firman v Ellis cases, could not be effectively pursued. The plaintiff could succeed only in his second action. To that section 11 provided a bar which prejudiced him by defeating his action. Section 11 did not prejudice the plaintiff in his first action, brought in time, but that was not the relevant action. When in Thompson it was said, more than once, that section 11 did not affect Mr Walkley at all, this overlooked the fact that section 11 affected him, unless disapplied, by defeating his second action. The negligence of his solicitors gave rise to the need for a second action, but it was the time bar which meant that that action was bound to fail.

    23.  Despite the great eminence of those who gave judgment in Walkley, explained and distinguished that decision in Thompson and applied it in Deerness, I do not think there is any answer which can be given to the appellant's criticisms and counsel for the MIB provided none.

    24.  (2)  The appellant relied on the fine distinctions drawn by the Court of Appeal in some of the cases cited above as evidence of the court's reluctance to apply Walkley in any case where it was not strictly constrained by that authority to do so, and in particular on the distinction, acknowledged by Lord Diplock to be anomalous, between cases where the plaintiff had issued proceedings within the primary limitation period, which had thereafter foundered for some procedural reason, and cases where no proceedings had been issued at all. There was no rational ground for concluding that a defendant should be vulnerable in the latter case, where the plaintiff's solicitor's negligence would probably be greater but not in the former case where it would probably be less. This was an anomaly caused not by the rule that proceedings are brought when the writ is issued, and not by the language of the statute, but by the decision in Walkley. In the result, the distinction lacked any principled justification.

    25.  I can, again, see no answer to this criticism, and I do not think counsel for the MIB was able to advance one.

    26.  (3)  In reliance on Firman v Ellis, strongly affirmed on this point by the House in Thompson, the appellant contended that the legislation conferred a wide and unfettered discretion and that it was accordingly inconsistent with that interpretation to constrain the exercise of the section 33 discretion by technical rules such as that laid down in Walkley. This was to subvert the intention of Parliament to be derived from the terms of the legislation.

    27.  For the MIB it was pointed out that the Law Reform Committee in its Twentieth Report appears to have contemplated a more limited discretion. This is, I think, so. But the Committee did not annex a draft bill to its report, so it cannot be said that the changes made in the 1975 Act were approved by it as giving faithful effect to its recommendation. While resort to materials such as the Twentieth Report is permissible to explain the purpose of a statute, identify the mischief at which it is directed and clarify an ambiguity in its language, such a report cannot ordinarily be relied on to qualify or override the terms of a statute which are themselves clear. Such, in my opinion, is the case here. Lord Denning's exposition of the statutory language in Firman v Ellis is to my mind persuasive. It was endorsed by the House in Thompson. It has never to my knowledge been questioned.

    28.  On this point also I would accept the thrust of the appellant's criticism. Mr Walkley's case for seeking an exercise of the section 33 discretion in his favour was, as Waller LJ rightly held, of the weakest. Thus the outcome of the case was clearly right. But I feel bound to conclude that the reasoning of the decision was unsound, that it has given rise to distinctions which disfigure the law in this area and that the effect has been to restrict unduly the broad discretion which Parliament conferred.

Departure

    29.  Over the past 40 years the House has exercised its power to depart from its own precedent rarely and sparingly. It has never been thought enough to justify doing so that a later generation of Law Lords would have resolved an issue or formulated a principle differently from their predecessors. The House was referred to statements of principle found in such cases as R v National Insurance Commissioner, Ex p Hudson [1972] AC 944, 966, 971-972, 973, 993, 995, 996, 1023-1025 and, more recently, R v G [2003] UKHL 50, [2004] 1 AC 1034, paras 30-35. As made clear in the 1966 Practice Statement ([1966] 1 WLR 1234) former decisions of the House are normally binding. But too rigid adherence to precedent may lead to injustice in a particular case and unduly restrict the development of the law. The House will depart from a previous decision where it appears right to do.

    30.  The MIB submitted that the conditions for departure were not satisfied in this case, even if the criticisms of Walkley were held to be justified. The decision affected a relatively small number of litigants whose second actions fell foul of the rule and who could therefore be expected, if they had ever had an arguable claim, to have a right of redress against their solicitors. Thus the risk of irreparable prejudice to any individual would be small. Commonly the "squabble" (as Lord Diplock called it in Deerness, p 261) would be between the solicitor's indemnity insurers and the defendant driver's motor insurers to decide which should pay to the victim the damages to which he was entitled. It was pointed out that Walkley had now stood for 25 years; Parliament had not reversed its effect when consolidating the law in 1980; if Parliament wishes to give effect to the Law Commission's recommendation it can do so; the case for judicial intervention is not made out.

    31.  There is force in these arguments. But this is not a case in which contracts, settlements of property or fiscal arrangements have been entered into on the faith of a settled legal rule. The criminal law, where certainty is particularly important, will be unaffected if the House departs from Walkley. There will be no detriment to public administration. While injustice may bear more hardly on individuals, I do not regard the concept as inapplicable to judgments affecting corporations with competing interests. I would in the result depart from Walkley for three reasons, taken together: that it unfairly deprives claimants of a right Parliament intended them to have; that it has driven the Court of Appeal to draw distinctions which are in my opinion correct but which are so fine as to reflect no credit on this area of the law; and that it subverts the clear intention of Parliament.

The section 33 discretion

    32.  In resolving an application under section 33 the court must make a decision of which the inevitable effect is either to deprive the defendant of an accrued statute-bar defence or to stifle the claimant's action against the tortfeasor who caused his personal injuries. In choosing between these outcomes the court must be guided by what appears to it to be equitable, which I take to mean no more (but also no less) than fair, and it must have regard to all the circumstances of the case and in particular the six matters listed in subsection (3). These are, as Lord Diplock observed in Thompson at p 751, "a curious hotchpotch", for reasons which he examined. But there is, as it seems to me, a problem underlying the whole of section 33: that it appears to treat the plaintiff and the defendant as individuals liable to suffer prejudice, and with no recognition that it is frequently the competing interests of insurers which will be liable to suffer prejudice. I cannot accept the suggestion by the MIB that the references to "or any person whom he represents" in subsections (1)(a) and (1)(b) are capable of referring to insurers, since a plaintiff and a defendant do not in any legal sense "represent" their insurers. Faced by this problem, but recognising the reality of insurance, the courts have routinely and rightly taken account of the parties' insurance rights. Thus a plaintiff's rights against his insured solicitor are very relevant (Thompson, p 752) but this does not mean that refusal of an order under section 33 will not prejudice him to some degree (Thompson, pp 750-751).

    33.  Given the rarity of its exposure to problems arising under section 33, the House cannot match the experience and insight which first instance judges and Lords Justices bring to bear on these problems. I do not therefore think it would be well-advised to seek to give guidance on the exercise of this discretion. If Walkley represents a very clear case for refusal to exercise the discretion, Hartley v Birmingham City District Council [1992] 1 WLR 968, 978-979, might be thought a clear case for its exercise: the writ was issued one day late; there had been early notification of the claim; and the defendant's ability to defend the case was unaffected. Thus even if the plaintiff had a cast-iron claim against her solicitors the limitation defence could fairly be regarded as a windfall or gratuitous bonus. Between these extremes lie a variety of cases turning on different facts.

    34.  In the present case Judge Cooke gave reasons for holding that, but for Walkley, he would have exercised his discretion in the appellant's favour. He alluded to an argument strongly relied on by the MIB and successfully advanced on its behalf in Morris v Lokass and Motor Insurers' Bureau, above, that as between the claimant's solicitors' professional indemnity insurers and the MIB the loss should fall on the former, who had received a premium, and not on the MIB, who had not. But he reminded himself of the court's duty to look at all the circumstances of the case, and noted that in the present case the delay after expiry of the three-year period was short and was caused by failure to meet the "technical but vital requirements" of clause 5(1)(a). Viewing the matter without reference to the appellant's claim against his solicitor's insurers, he found the balance to favour the appellant since the delay was small, the effect on the trial minimal and the MIB would lose a fortuitous limitation defence. He then considered whether the appellant's claim against his solicitor's indemnity insurers tilted the balance the other way. He noted in the MIB's favour that the appellant had an undisputed claim, whether against his solicitor or the MIB, and described the balance he had to strike as a fine one. But he concluded that the balance remained in the appellant's favour, since the MIB had been on notice of the claim, and had no evidential problem and were simply losing the windfall of a limitation defence, whereas the appellant would have to bring a further action against a new defendant.

    35.  On its cross-appeal, raised in case the appellant succeeded in his challenge to Walkley, the MIB criticised the judge's self-direction, contending that in the present case (unlike some other cases referred to) the appellant would suffer no prejudice at all if an order under section 33 were refused. (The MIB relied on the fact that, as the House was told, the appellant had, after the judgment against him in the county court, received payment from his solicitor's insurers. But since this occurred after the judgment it can have no bearing on the judge's exercise of discretion. In any event, the judge assumed that the appellant had a good claim.) It was urged by the MIB that the loss should fall on the insurer who had received a premium to provide cover against the very risk which eventuated. Had these points persuaded the judge his conclusion might well have been supportable. But he was guilty of no misdirection. He was entitled to see some prejudice to the appellant in having to make a new claim in which, even if liability was undisputed, the quantum of damages was not. 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. I would give effect to his exercise of judgment.

Article 6 of the European Convention

    36.  It was argued for the appellant that the decision in Walkley, if upheld, violated article 6 of the European Convention by denying the appellant access to a court. In the event, this issue does not arise. Had it done so, I should have needed much persuasion to accept it. The appellant had untrammelled access to the court for three years after his injuries, of which he was fully aware. Had Parliament conferred no discretion on the court to extend time he could not, as he accepted, have complained. To the extent that Walkley unfairly gave better rights to some litigants than others, that is a defect calling for correction by Parliament or the domestic courts but involving, as I think, no violation of the appellant's Convention rights.

Abuse

    37.  It was argued below and in the House that it was an abuse for the appellant to bring a second action while his first action was still extant. The judge accepted that in the ordinary way it is an abuse to pursue two actions against the same defendants in respect of the same subject matter and indicated that if he were giving permission for the second action to continue he would require the first action to be discontinued. This was, I think, the correct response. As it was, he dismissed both actions.

Disposal

    38.  I would allow the appeal and dismiss the cross-appeal. The case must be remitted to the Salford County Court. The parties are invited to make written submissions on costs within 14 days.

LORD HOFFMANN

My Lords,

    39.  This appeal raises two interesting questions on the principle of stare decisis. The first is whether the House should depart from its decision in Walkley v Precision Forgings Ltd [1979] 1 WLR 606. My Lords, it is with a reluctance verging on disbelief that one is driven to conclude that the deliberate opinions of Lord Wilberforce and Lord Diplock were quite wrong. Of each of them it may be said, as Viscount Simonds said of Lord Macnaghten when faced with a rather similar situation in Public Trustee v Inland Revenue Commissioners [1960] AC 398, 409, that "to generations who have passed their lives in the law his is truly clarum et venerabile nomen." But, for the reasons given by my noble and learned friend Lord Bingham of Cornhill, I think that they misconstrued what is now section 33 of the Limitation Act 1980.

    40.  But the fact that the House as now constituted would have decided Walkley differently is not a sufficient reason for departing from a decision which has stood for nearly 30 years and which the House has followed on two subsequent occasions. If the House in its judicial capacity has erred, it is usually better to leave it to Parliament to change the law prospectively than for the House to undo its mistake with retrospective effect. But the situation which has been created by Walkley falls squarely within Lord Reid's description in R v National Insurance Commissioner, Ex p Hudson [1972] AC 944, 966 of a case in which it would be right for the House to depart from a previous decision:

    "It is notorious that where an existing decision is disapproved but cannot be overruled courts tend to distinguish it on inadequate grounds. I do not think that they act wrongly in so doing: they are adopting the less bad of the only alternatives open to them. But this is bound to lead to uncertainty for no one can say in advance whether in a particular case the court will or will not feel bound to follow the old unsatisfactory decision. On balance it seems to me that overruling such a decision will promote and not impair the certainty of the law."

    41.  That describes exactly what has happened to Walkley in the Court of Appeal. The grounds upon which it was distinguished in Re Workvale Ltd [1992] 1 WLR 416, Shapland v Palmer [1999] 1 WLR 2068 and Adams v Ali [2006] EWCA Civ 91, [2006] 1 WLR 1330 while no doubt technically correct, mean that the distinction between cases in which the discretion is or is not available is completely irrational. So much so, that Mr Bartley Jones QC, on behalf of the claimant, suggested that on the facts of this case Walkley could be distinguished on the ground that the first action, in which the MIB denied liability because they had not been given proper notice, was different from the second action, in which they accepted they would be liable. When asked how it could be rational to distinguish the actions on the basis of whether a third party would be willing to accept liability for the damages, he said that it was no more irrational than some of the distinctions which had been made in earlier cases. That, I fear, is true. The only answer is to depart from Walkley and restore some consistency to this part of the law.

    42.  The second question is rather different. The 20th Report of the Law Reform Committee (Cmnd 5630) on which the Limitation Act 1975 was based, intended the discretion conferred by what is now section 33 of the 1980 Act to be used only in a "residual class of cases": see paragraph 56. But the statute as enacted was in very general terms. The court had to consider whether it would be "equitable" to allow the action to proceed, having regard to the "prejudice" which would be caused to the parties by taking one course or the other and having regard to all the circumstances of the case, including in particular a list of factors including the extent to which the plaintiff (but not his advisers) acted "promptly and reasonably" once he knew that the injury might be capable of giving rise to an action for damages.

    43.  In Firman v Ellis [1978] QB 886 the Court of Appeal refused to confine the application of the discretion as the Law Reform Committee had intended. Ormrod LJ said (at p 898):

    "To bring in the report as an aid to construction is to introduce a problem which cannot be solved, namely, how far Parliament meant to recognise or ignore the report."

 
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