Limitation matters — or does it?

It may seem to defendants that the courts no longer consider the issue to be important and that the chances of succeeding with a limitation defence are at best, remote.

Certainly from a defendant’s perspective, the Court of Appeal’s recent decision in the conjoined cases of Aktas v Adepta and Dixie v British Polythene Industries Plc (2010 EWCA Civ 1170) might be seen as the latest in a series of authoritative limitation decisions tipping the balance of fairness further in favour of claimants.

Prior to Aktas and Dixie, we saw important judgments handed down in the conjoined cases of Cain v Francis and McKay v Hamlani ([2008] EWCA CIV1451) and London Strategic Health Authority  (LSHA) v Whiston ([2010] EWCA CIV 195). These cases considered whether a claimant should be allowed to pursue his claim, even though he had failed to issue proceedings within the relevant time limit.

Under section 11 of the Limitation Act 1980, a claimant is required to issue court proceedings within 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

If he fails to do so a claimant can ask the court to exercise its discretion and disapply the limitation period under Section 33 of the Act so that he may pursue his claim.

The court will do so if it considers it fair, having taken into account the degree of prejudice to the parties. In reaching its decision, the court must consider several factors including the length of and reasons for the claimant’s delay; whether the delay may have adversely affected the validity of the evidence relied upon by the parties and the extent; the defendant’s conduct after the claimant’s cause of action arose; whether the claimant was under a disability when or after his cause of action arose and for how long; the claimant’s conduct i.e. acting promptly and reasonably and the steps taken to obtain appropriate advice and expert evidence.

Loss of the ‘windfall’ limitation defence

In Cain and McKay the Court of Appeal considered whether to allow s33 discretion and in doing so hammered the nail in the coffin of what they termed the ‘windfall’ limitation defence.  Both claimants had issued proceedings outside of the primary limitation period (Cain was a day late, McKay, a year). Liability had been admitted in both cases. Limitation defences were filed but the court rejected the defendant’s argument and disapplied the limitation periods. As a result of this decision (which was rubber-stamped in Aktas and Adepta), where a claimant fails to issue proceedings within the relevant time limit but a defendant has admitted liability, it will not be possible to successfully argue that a claimant should be prevented from pursuing his claim, unless it can be shown that there would be real prejudice to the defendant. To allow otherwise would be simply a windfall to the defendant and the loss of such would not amount to any, or at best, only slight prejudice to the defendant.  

In LHSA v Whiston, a clinical negligence claim, again the defendants were the losers in a limitation argument. The claimant suffered cerebral palsy due to brain damage caused at the time of his birth. Liability was disputed. The claimant did not issue proceedings until 2006; five years after the court considered he had constructive knowledge that he may have a cause of action against the defendant.  However, the Court of Appeal exercised Section 33 discretion and disapplied the limitation period as it considered a fair trial was still possible.  The balance of prejudice was again considered and whilst the Court of Appeal recognised that this was a borderline case, it considered it fair and equitable to disapply the time limit.  It seems the determining factors here were the fact that, in terms of prejudice, in the event that the claimant succeeded, any damages awarded would be substantial whereas if he was not permitted to pursue his claim he would lose all prospect of his future needs being properly provided for and be deprived of any compensation for what was a serious condition. Any prejudice to the defendant was less so. The fact that the passage of time meant that the defendants faced a ‘very stale claim’ where relevant information had been lost/destroyed did not just cause prejudice to the defendant, it also meant that the claimant would not have as much potentially supportive evidence for his claim as he might otherwise have done. 

Ignore the rules at your peril?  Maybe not, if you’re the claimant

In the employers’ liability cases of Aktas and Dixie, defendants have again found themselves on the receiving end of a negative judgment.  Here, the Court of Appeal had to decide whether a claimant’s second action should be struck out as an abuse of process and if no such abuse was found, whether the claimants should be allowed to pursue their claims, having issued them outside of primary limitation.

The claimants had issued claim forms at the very end of the primary limitation period but then failed to serve within the required four months. Liability had been admitted. The claims were struck out and so the claimants issued second claims seeking Section 33 discretion to disapply the limitation period to allow them to pursue their claims against the defendants.  The defendants alleged that the claimants’ failure to serve the proceedings in time in the first action, was so serious a misuse of procedure and so strictly regarded as an act of disrespect to the court, as to amount to an abuse.

Disappointingly, The Court of Appeal concluded that a “mere negligent failure” to serve a claim form is not an abuse of process. Instead, there would need to be an ‘inordinate and inexcusable delay, intentional and contumelious default or at least wholesale disregard of the rules’.  Furthermore, the Court of Appeal noted that there was nothing in the Civil Procedure Rules to suggest the claimants’ failure to serve was an abuse of process.  It also dismissed the defendants’ argument that if time limits were ignored there would be no appropriate sanction applied for failing to serve the claim form in time and took the view as argued by the claimants, that the actual failure of the first claim and the associated costs sanctions was sufficient sanction.

The claimant should sue his own, negligent solicitor

The defendants argued in Aktas that this was an alternative remedy for claimants. This too was rejected by the court, which considered this was irrelevant in deciding whether the claimant’s conduct was an abuse of process. The Court of Appeal also commented that a claimant having to proceed against his negligent solicitor is generally an unsatisfactory way to litigate a claimant’s claim, thus restating earlier decisions that satellite litigation by a claimant against his negligent solicitor will rarely be considered as a relevant factor when considering limitation issues.

The Court of Appeal then, in deciding whether to disapply the limitation period, restated the earlier opinion of McKay and Cain finding that other than losing their limitation defence, which was a windfall there was no real prejudice to the defendant in having to defend the claimant’s claim.  Even though five years had passed since the accident, the court rejected the defendant’s argument that there would be forensic prejudice to the defendant, taking the view that the only real delay that had occurred had been during the period that the parties had been “fighting the abuse of process point”.

Is there any hope for defendants?

On what initially seemed to be a more positive note for defendants, the Court of Appeal in Aktas did suggest that where there is a ‘real situation of abuse’, a second action could be struck out referring to the case of Janov v Morris (1981) 1 WLR 1389. There, the then plaintiff’s first claim had been struck out for failure to comply with an Unless Order made following the defendant’s Application to strike out the claim for failing to take any action to progress the case.  The claimant then issued a second claim (still within primary limitation) but this too was struck out with the Court finding the plaintiff’s conduct as treating the Court with contempt.

They seemed to suggest that where a claimant issues a second claim outside primary limitation if their conduct was so bad it amounted to treating the court with contempt, a claimant would not be allowed to pursue his claim and the limitation period would not be disapplied. Disappointingly, however, they then seemed to backtrack suggesting even if there has been an abuse in the first action, this is not an automatic bar to pursuing a second claim and even if an abuse of process was found, it may be that the issue of whether to strike out the second action cannot be determined by itself but must be considered as part and parcel of all the circumstances of the case. This seems to reinforce the court’s reluctance to penalise claimants except in very limited circumstances.

So will a limitation defence ever succeed?

Whist it seems to be increasingly rare, it is still possible. Although the Courts appear willing to afford much greater latitude to claimants and it seems there are now few situations where discretion will not be exercised in their favour; the clear message from these decisions is that the balance of prejudice to the parties is the key consideration.

However, much of the authoritative case law indicates the courts’ reluctance to find greater prejudice to a defendant than a claimant. Nevertheless, each case will turn on its own facts. However, in cases involving procedural breaches where liability has been admitted, it is very likely that a court will exercise discretion in favour of a claimant unless the defendant can show it has been caused such a distinct disadvantage (as in the case of McDonnell v Walker (2009) EWCA 1257  where the claim, as it is was presented several years post-accident, and outside limitation was quite different from anything notified previously because of an inexcusable delay by the claimant) it would be unfair to do so.

From a practical point of view, Aktas and Dixie acts as yet a further cautionary note to insurers that they cannot assume that if a claimant fails to issue and serve within the usual time limits, he will be prevented from pursuing his claim. Unless it can be shown that in allowing a claimant to proceed, the prejudice caused to a defendant will significantly outweigh that caused to a claimant in preventing him from doing so, then it is likely a claimant will be able to pursue his claim.  Disappointingly, therefore, the significance of observing matters such as appropriate procedural time limits embodied in Statute and the Court Rules no longer seems to have the importance previously believed.