Staying power curtailed – the Court of Appeal calls for action!

In a recent decision that will be welcome news to insurers and those who represent them, the Court of Appeal have delivered a landmark ruling that brings clarity on the powers available to the court in directing claimants to ensure that claims started in the Pre-Action Protocol (PAP) are progressed with expediency.

Like the other cases in the suite, the case of MH Site Maintenance Services Limited and Anor v James Watson [20025] EWCA Civ 775 concerned a road traffic accident for which liability was not in dispute.  

Mr Watson had a car accident in September 2019 and, having instructed solicitors, submitted a claims notification form (CNF) in July 2020 and received the admission of liability in the insurers’ response later that month. Despite several requests from the defendants in the subsequent years, no Stage 2 pack was ever submitted and, with the timescale for Limitation now rapidly approaching, the claimant issued Part 8 proceedings, in accordance with Civil Procedure Rules Practice Direction (PD) 49F in September 2022 (just 10 days prior to the three year cut-off date). In filing the proceedings, the claimant sought an indefinite stay in order to allow further time in which to comply with the PAP. In September 2022, District Judge Openshaw permitted the claimant a further 12 months in which to apply to lift the stay and proceed to Stage 3 or transfer the claim to Part 7. If neither option was taken the claim would be automatically struck out.

In reaching the view that the claim was not proceeding with any sense of urgency, the defendants applied to the court for an order to compel the claimant to submit the Stage 2 pack within 21 days. The application came before District Judge Baldwin who held that the court had no power to intervene in the operation of the PAP, which was a pre-litigation regime. The defendants appealed, but this early view was endorsed by His Honour Judge Wood KC who, whilst sympathising with the defendants’ invidious position, proffered that the court did not have the jurisdiction to compel submission of the Stage 2 pack.

The matter then came before the Court of Appeal; Lord Justice Coulson, Lady Justice Andrews and Lord Justice Holgate, presiding, who took a very different view. Delivering the leading judgment, Lord Justice Coulson said that DJ Baldwin and Judge Wood were wrong:

‘…once Part 8 proceedings are up and running, the court has… express power under the Practice Direction…to order compliance with the PAP.’ 

Further,

‘There is no automatic entitlement to a stay of a particular length; nor is the grant of a stay a purely administrative function.’

Adding further illustration in acquiescence, Lady Justice Andrews went on to say:

“In the course of the hearing we were told that in practice stays granted under paragraph 16.2 of PD 49F are often renewed as a matter of course, sometimes more than once, and that some district judges even grant indefinite stays. They should not be doing this” (emphasis added).

And, in conclusion, ‘…lengthy periods of inactivity by claimants are contrary to the rationale of the PAP and should de discouraged. The renewal of the stay should never be treated as a rubber-stamping exercise and indefinite stay would rarely, if ever, be justified.”

So, claimants beware. It is now very clear that submitting the CNF and issuing a Part 8 claim, whilst providing protection from the risk of having a claim disallowed due to the passage of time in accordance The Limitation Act 1980, such a step is not a panacea to inaction. Periods of procrastination will not be tolerated and insurers and their legal representatives can approach the courts to intervene.