On 7 June 1996, our client C, who was then
nine years old, suffered severe injuries in a road accident. She
was standing at the side of the road with two friends and her
mother waiting to cross when she was struck by the Defendant's
vehicle, which was travelling very close to parked cars and at high
speed. The Defendant was later convicted of failing to stop after
the accident.
The Defendant's insurers were informed of a
claim by C. In November 1997, the insurers were advised by the
Claimant's solicitors to make a reserve for the claim of at least
£1 million.
After much correspondence, on 4 May 1999, the
Defendant's insurers wrote to confirm that they did not intend to
dispute liability. As this was now a damages assessment case, we
decided to obtain more evidence before issuing proceedings in order
to avoid a strict timetable being imposed by the Court under the
CPR.
C survived the accident but developed epilepsy
and her intellectual progress was a cause for concern. She was
eventually sent to a weekly boarding school with a caring and
non-competitive environment.
Proceedings were issued on 22nd November 2001
following the Defendant's insurers' refusal to pay any interim
payment towards the Claimant's expenses and school fees. In the
defence served on 11th January 2002, the Defendant contested
liability, alleged contributory negligence by C by running into the
road and withdrew the admission in the insurer's letter of 4.5.99.
In April 2002, the Defendant served Part 20 proceedings on C's
mother, alleging that she was the cause of the accident and
claiming a contribution.
We issued an application for the defence to be
struck out and for judgment against the Defendant. The hearing took
place before Deputy Master Hoffman of the Queen's Bench Division of
the High Court on 29 April 2002.
The Master was referred to two Court of Appeal
cases, Christopher Malcolm Standerwick v Royal Ordinance PLC Court
of Appeal 6 March 1995 (unreported) and Gale v Superdrug Court of
Appeal 23 April 1996.
The Defendants contended that they were
entitled to change their mind and that the pre-action protocol
presumption that the admissions were binding only applied to cases
under £15,000. This was a substantial case, possibly worth over £1
million.
The Claimant's counsel argued that a clear and
unambiguous admission of liability had been made by an experienced
and substantial insurance company after their enquiries were
complete with full knowledge of the scale of the claim. The
Claimant had relied on the admission and would now be severely
prejudiced as all work on liability had ceased in 1999 and the
factual witnesses were told at that stage that their evidence would
not be needed. A care and schooling plan had been set up on the
basis that the Defendants would be paying for it.
Furthermore, as the Defendant was no longer
alleging any negligence by C, the Defendant would have to show that
he was not even 1% to blame to escape having to pay the whole
judgment. There was substantial evidence of negligence against the
Defendant including his speeding, swerving and failure to stop. No
witness supported the Defendant's account that he had been going
slowly, sounded his horn and braked.
In his judgment, Deputy Master Hoffman
referred to the two Court of Appeal cases. On the face of it, the
Defendants were entitled to change their mind and not giving a
reason was only one factor to be taken into account. However, the
facts in Gale v Superdrug were different to the facts here. In
Gale, the admission was made by insurers and as soon as they
instructed solicitors, their solicitors advised that the admission
should never have been made because there was evidence of a strong
defence. This included the involvement of a van belonging to a
third party and contributory negligence by Mrs Gale. The insurer's
solicitors acted promptly and sought to avoid any further prejudice
by their actions.
In this case, the accident was either caused
by the Defendant or the Claimant's mother who had been joined in
part 20 proceedings. The Defendants and the insurers had not acted
promptly. The insurers had instructed three firms of solicitors
over two and a half years and only decided to withdraw the
admission of liability following the recent issue of proceedings.
They had not acted to avoid prejudice, only withdrawing the
allegations of contributory negligence against the child two days
before the hearing and promising at the hearing not to seek to
recover any interim payment from the child if the Defendant was
successful in escaping liability.
The Master found that there was clear and
cogent evidence of prejudice to the Claimant in that the factual
witnesses had been stood down and that a care and schooling plan
had been set up on the basis that the Defendants would pay. That
might have to be reversed if the admission was withdrawn.
Accordingly, he ordered that judgment be
entered for the Claimant together with costs. He ordered the
Defendant to pay an interim payment of damages which will enable
the present expenses and school fees to be paid. The insurers
indicated after the hearing that they would drop the Part 20 claim
against the mother if it was found that she had no insurance to
cover her for the claim (as is the case). The case will now proceed
as an assessment of damages.
Why is this case
important?
An insurer will not be able to withdraw an
admission even in a serious case where the Claimant will suffer
severe prejudice as a result. If it is possible for insurers to
make an admission in open correspondence and withdraw it 2 years
later, then sensible negotiations between the parties would be all
but impossible. We have to be able to rely on what an insurer or
solicitor says when an offer is made in negotiations.
Patrick Allen
Hodge Jones & Allen
May 2002