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Abuse of process under the RTA Protocol

Cable v Liverpool Victoria Insurance Co Ltd
Court of Appeal
31 July 2020

Edward Cleary reviews the Court of Appeal judgment in Cable v Liverpool Victoria (2020) in which it was held that whilst it should have been obvious to the claimant's solicitors that their client's personal injury claim was worth almost a hundred times more than the RTA Protocol limit of £25,000, striking out the claim was a disproportionate remedy in all the circumstances and alternative sanctions were sufficient to compensate the defendant for the prejudice it had suffered.

Facts

This claim relates to a road traffic accident which occurred on 1 September 2014. The claimant instructed solicitors who submitted a Claim Notification Form ('CNF') on 24 September 2014 under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents ('the RTA Protocol'). The defendant admitted liability for the accident on 2 October 2014 and ordinarily the claim would have been expected to proceed to Stage 2 following the acquisition of expert medical evidence.

The claimant was a high earner with a salary of £130,000 per annum. He suffered what could reasonably be described at the time as "a whiplash injury, but with some uncertain features". When the CNF was submitted, it would not have been apparent that the claim was worth more than £25,000.

In November 2014, the claimant's solicitors obtained evidence from a General Practitioner which did not give a definitive prognosis but instead recommended a further report from a neurologist due to symptoms including headaches, dizziness and disorientation. The claimant was off work but still being paid. At some point, the General Practitioner's report was disclosed and the defendant agreed to make an interim payment of £1,000. Thereafter, progress on the claim was "non-existent" until the first part of 2017 despite the defendant's best efforts, because of the "dilatory conduct" of the claimant's solicitors.

The claimant's employment was terminated in December 2015, however this was not communicated to the defendant for almost three years. A neurology report produced in January 2016 suggested that some aspects of the claimant's condition had deteriorated, and he was unable to work, but the expert did not anticipate any "lasting neurological damage" at that stage. In a second report dated January 2017, the neurologist diagnosed the claimant with a migraine disorder which had become chronic and disabling, and importantly he no longer expected significant improvement. The claimant approved this evidence in November 2017 but neither of the reports were provided to the defendant until August 2018.

By August 2017, the claimant's loss of earnings was already in excess of £200,000 and Lord Justice Coulson concluded that by "no later than the spring or early summer of 2017, it can be said with confidence that [the claimant's solicitors] knew or ought to have known that the claim was worth far in excess of £25,000" and "therefore suitable neither for the RTA Protocol nor Part 8".

Nevertheless, as compliance with the RTA Protocol was not possible prior to expiry of limitation, the claimant's solicitors commenced Part 8 proceedings on 25 July 2017 in accordance with the procedure set out within Practice Direction 8B. Lord Justice Coulson described the Claim Form as "misleading in a number of important respects". On 31 July 2017, the claimant's ex parte application for a stay of proceedings was granted and the claim was stayed until 20 August 2018.

The order also required the claimant's solicitors to serve the Part 8 proceedings and the order granting the stay on the defendant by 20 August 2017, however inexplicably this was not done until six months later. Just four days prior to expiry of the stay, the claimant's solicitors contacted the defendant to inform them that the claim could no longer continue under the RTA Protocol. Two days before expiry of the stay, the claimant's solicitors made an application to lift the stay and transfer the claim to Part 7, and that application was granted ex-parte without the defendant's knowledge. Yet again, in breach of the court's order, the claimant's solicitors failed to serve the amended proceedings in time but when they did, those documents "set out a damages claim in the order of £2.2 million".

The decisions below

The defendant promptly applied to set aside the order lifting the stay and transferring the claim to Part 7, and that application was heard by District Judge Campbell. The claimant subsequently had to apply for relief from sanctions due to his solicitors' failure to serve the amended proceedings in time.

District Judge Campbell found that there had been abuses of the process and the defendant had been prejudiced by the claimant's conduct in several important respects, as a result of which the order lifting the stay was set aside and the claim was struck out. She went on to consider the claimant's application for relief from sanctions and concluded that even if she had not set aside the order, she would have refused the application for relief and struck the claim out in any event.

The claimant unsuccessfully appealed the decision of District Judge Campbell before His Honour Judge Wood QC at a hearing on 15 July 2019. He rejected the claimant's suggestion that District Judge Campbell had "found prejudice where there was none".  His Honour Judge Wood QC concluded that District Judge Campbell had "applied the correct test…but also came to a conclusion which was within the reasonable and generous ambit of her discretion". However, unlike District Judge Campbell, in different circumstances he would have granted the claimant relief on the service issue.

Abuse of process

Lord Justice Coulson accepted, contrary to the claimant's contentions, that principles of abuse of process can apply to the procedure governed by the RTA Protocol. He said it would be counter-intuitive if non-compliance with what is a "detailed set of rules designed to streamline the civil justice process" could be dismissed as being irrelevant to the court's overall control of civil business. The RTA Protocol cannot be divorced from the Civil Procedure Rules as the two are "interwoven" together.

The defendant contended that the allegations of abuse of process were "just one factor to be considered" when making a discretionary decision whether to continue the stay or transfer the claim to Part 7. However, Lord Justice Coulson said that approach risked "avoiding the reality of the situation" as if a permanent stay is maintained, the proceedings will, to all intents and purposes, have come to an end. The issue of whether the claim should be allowed to proceed or should be struck out must be informed by the answer to the question of whether there has been an abuse of process. 

Lord Justice Coulson set out the established two-stage test for abuse of process. The court has to firstly determine whether the claimant's conduct was an abuse of process and, if it was, exercise its discretion as to whether or not to strike out the claim, which involves "the usual balancing exercise, and in particular considerations of proportionality". Lord Justice Coulson concluded that District Judge Campbell did not adopt the correct two-stage test and instead proceeded on the erroneous basis that having assumed an abuse of process this gave rise to a prima facie right to strike out the claim.

Unpicking the extempore judgment of District Judge Campbell, Lord Justice Coulson identified three separate abuses of the process.  Firstly, the claimant's solicitors should have issued a claim under Part 7 rather than Part 8. Secondly, they should have known that the RTA Protocol was inapplicable to the claim. Thirdly, they did not intend to use the stay for the purposes for which it was sought and granted. Lord Justice Coulson agreed that the first and third were definite abuses of the process.  However, he concluded that District Judge Campbell made "unjustified" findings as to the prejudice suffered by the defendant and failed to give any proper weight to the consequences of striking out to the claimant.

Prejudice

Lord Justice Coulson accepted that prejudice to the defendant "undoubtedly did arise here" but categorised the principal consequence of the abuse as a delay of one year between autumn 2017 and autumn 2018. Any earlier abuse by the use of the wrong Protocol was "much more debatable" and could be distinguished as "the process was taking place within the limitation period anyway". Crucially, in the context of the second of the two stage test described above, Lord Justice Coulson found that it was unlikely "anything significant" would have been done differently had the correct Protocol been followed a year earlier.  It was on that basis he concluded although there was potential prejudice to the defendant due to the delay, "there was no evidence of any actual prejudice at all".

Lord Justice Coulson dismissed the defendant's argument that the abuse of process had allowed the claimant to avoid the consequences of the Limitation Act. Whilst there was delay, there was no loss of a defence which would otherwise have been available. Lord Justice Coulson accepted that delay required some form of sanction but concluded there was nothing to suggest that a more conventional form of sanction in costs or in respect of interest would not have met the justice of the case.

The claimant had started his claim in good time under the RTA Protocol, and he was not responsible for the "catalogue of errors and delays since then". If his claim was struck out then he would have to start all over again with a professional negligence claim against his current solicitors, described by Lord Justice Coulson as an "inferior type of satellite claim". For those reasons, he concluded that the decision to strike out the claim was a "disproportionate remedy in all the circumstances".

Lord Justice Coulson concluded that sanctions in indemnity costs and deprivation of interest up to and including the date of the application hearing before District Judge Campbell were sufficient to compensate the defendant for the "minimal prejudice" it had suffered. He rejected the defendant's complaint that an order for indemnity costs was not an appropriate sanction because its costs were not very high.  Accordingly, Lord Justice Coulson lifted the stay and transferred the claim to Part 7.

Relief from sanctions

As for the claimant's application for relief from sanctions in relation to his failure to serve the amended proceedings in time, it was accepted that the default was serious and significant and that there was no good reason for it, however Lord Justice Coulson felt that the effects of the delay were lessened by the fact that the defendant had already been provided with many of the same documents and was therefore persuaded that this was an appropriate case to grant relief.

Comment

It is hard to imagine a catalogue of errors and delays as extensive and serious as those committed by the claimant's solicitors in this case. It is clear that there was more than one abuse of the process, something agreed upon in all three judgments. However, where the Court of Appeal departed from the decisions below was in the exercise of discretion as to whether the prejudice to the defendant arising out of the abuses was sufficient to justify taking the draconian step of striking out the claim.

There appear to have been five main factors which weighed heavily in Lord Justice Coulson's mind when concluding that striking the claim out would have been a disproportionate remedy. Firstly, the responsibility for the numerous failures and delays lay squarely at the feet of the claimant's solicitors rather than the claimant himself. Secondly, the claimant's Article 6 right to a fair trial. Thirdly, the defendant had admitted liability for the accident. Fourthly, the pleaded claim was said to be a very substantial one. Finally, any prejudice suffered by the defendant, which was considerably downplayed in the judgment, paled into insignificance compared to the substantial prejudice that would be suffered by the claimant if all he was left with was an "inferior" loss of chance claim against his current solicitors.

However, the sanctions applied here are unlikely to act as a significant deterrent to others. Insurers will be all too familiar with 'claims incubation' where claims are left within the RTA Protocol long after they are self-evidently unsuitable for the streamlined process. Whilst the court did not find this was a deliberate act by the claimant's solicitors in this case, rather an error arising out of incompetence, the inability of defendants to properly investigate and reserve for these claims remains a major concern.

It is rather difficult to accept the conclusion that, contrary to the judgments of two specialist personal injury judges in District Judge Campbell and His Honour Judge Wood QC, there was only "minimal prejudice" suffered by the defendant. As is the suggestion that the lengthy delay was somehow less significant because it occurred during the limitation period. However, what this judgment does bring is welcome confirmation that abuse of the RTA protocol can amount to an abuse of the court's process and in certain circumstances that may be sufficient to justify striking the claim out, as His Honour Judge Pearce did in the earlier case of Lyle v Allianz Insurance Plc (2017).

What is perhaps most disappointing about this judgment is that it appears to run contrary to the recent hardening of judicial attitudes towards non-compliance with court orders and other defaults following the case of Denton v TH White (2014) and feels overly sympathetic towards mismanaged litigation.

Contact

For further information or to discuss any of the issues arising from this case, please contact Edward Cleary, Senior Associate on +44 (0)7850 947104 or at edward.cleary@dwf.law.

By Edward Cleary

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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