Horton v Sadler and another

JurisdictionUK Non-devolved
JudgeLORD BINGHAM OF CORNHILL,LORD HOFFMANN,LORD RODGER OF EARLSFERRY,LORD CARSWELL,LORD BROWN OF EATON-UNDER-HEYWOOD
Judgment Date14 June 2006
Neutral Citation[2006] UKHL 27
CourtHouse of Lords
Date14 June 2006
Horton
(Original Appellant and Cross-respondent)
and
Sadler

and another

(Original Respondents and Cross-appellants)

[2006] UKHL 27

Appellate Committee

Lord Bingham of Cornhill

Lord Hoffmann

Lord Rodger of Earlsferry

Lord Carswell

Lord Brown of Eaton-under-Heywood

HOUSE OF LORDS

Original Appellant and Cross-respondent:

Edward Bartley Jones QC

Michelle Mayoh

(Instructed by Sharpe Pritchard agents for Rowe Cohen)

Original Respondents and Cross-appellants:

Dermod O'Brien QC

Clare Brown

(Instructed by Weightmans)

LORD BINGHAM OF CORNHILL

My Lords,

1

In Walkley v Precision Forgings Ltd [1979] 1 WLR 606 the House ruled that the court may not exercise its power to disapply the ordinary time limit in a personal injuries action under what is now section 33 of the Limitation Act 1980 where a claimant had issued proceedings in respect of those injuries before the ordinary time limit expired and has brought a second action (in which the application under section 33 is made) after expiry. In this appeal the House is invited by the appellant to depart from that ruling pursuant to the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. The Motor Insurers' Bureau ("the MIB"), the only effective respondent, submits that the House should adhere to its decision.

The proceedings

2

On 12 April 1998 the appellant was injured in a road traffic accident for which the first defendant, Mr Sadler, was wholly responsible. Mr Sadler was not insured, as he should have been, against third party risks. The MIB nominated insurers to act as its agents and the appellant's solicitors corresponded with them. In October 2000 the MIB made an interim payment of £3,675 to the appellant. On 10 April 2001, two days before expiry of the three-year limitation period, the appellant's solicitors issued proceedings against Mr Sadler, but they then failed to comply with a condition precedent of MIB's liability under the agreement made between it and the Secretary of State for Transport by giving notice of the proceedings to MIB. Having been joined as a party to the proceedings on its application, the MIB served a defence, in which it denied liability, relying on the failure to comply with the notice condition, and counterclaimed for return of the interim payment.

3

In September 2001 the appellant issued what were in effect duplicate proceedings against Mr Sadler. On this occasion the appellant gave the necessary notice to the MIB, which in October 2001, on its application, was joined as a party to the second action also. Its main defence was that the appellant's claim in the action was statute-barred by section 11 of the 1980 Act. The appellant responded by seeking an order disapplying the ordinary 3-year time limit under section 33 of the 1980 Act. It was ordered that preliminary issues be tried as to the liability of the MIB in the first action and the disapplication of the ordinary time limit under section 33 in the second.

4

These issues were resolved in the Salford County Court by His Honour Judge Roger Cooke, who held that the MIB was under no liability in the first action and that the appellant should repay the interim payment he had received with interest. That ruling was not the subject of appeal. In the second action he ruled that he was precluded from exercising the power conferred on the court by section 33 by the decision of the House in Walkley, which was neither distinguishable nor incompatible with the European Convention on Human Rights. But he went on to hold that had it been permissible for him to disapply the time limit under section 33 he would have exercised his discretion in favour of doing so.

5

The appellant appealed against the judge's decision in the second action, but authority binding on the Court of Appeal, in particular Walkley, compelled the dismissal of that appeal, which took place without argument on 28 June 2004. Permission to appeal was granted by the House. The MIB cross-appealed.

The MIB

6

The growth of motor traffic and the increasing number of accidents to which it gave rise prompted enactment of the Third Parties (Rights Against Insurers) Act 1930 and the Road Traffic Acts of 1930 and 1934, which made third party motor insurance compulsory and facilitated recovery against insurers where judgments were obtained against motorists who were in breach of policy conditions or whose policies were voidable. But this legislation did not address the problem which arose from injuries caused by motorists who could not meet a judgment and were not insured at all. This problem was resolved by what Sir Ralph Gibson in Silverton v Goodall and Motor Insurers' Bureau [1997] PIQR 451, 453-454, called "a novel piece of extra statutory machinery": the formation by insurers writing motor business of the MIB as a company limited by guarantee, of which the insurers were members, to administer a fund provided by them (and ultimately by the general body of insured motorists) to compensate victims of accidents caused by uninsured drivers. The administration of the scheme was governed by a series of agreements between the Bureau and successive Ministers or Secretaries of State for Transport, the first made in June 1946, the most recent (relevant to this case) on 21 December 1988. This last agreement gives effect to the obligations of the United Kingdom under the Second Council Directive on Motor Insurance (84/5/EEC) of 30 December 1983. Clause 2 of the current agreement provides for the satisfaction of claims by the MIB. Clause 5(1) provides that "MIB shall not incur any liability under Clause 2 of this Agreement unless- (a) notice in writing of the bringing of the proceedings is given within seven days after the commencement of the proceedings- (i) to MIB in the case of proceedings in respect of a relevant liability which is … not covered by a contract of insurance …". This is the condition with which the appellant's solicitors did not comply in the first action.

Limitation in personal injuries actions

7

As enacted, section 2(1)(a) of the Limitation Act 1939 provided that actions in tort should not be brought after the expiration of six years from the date on which the cause of action accrued. Despite the language used, this has not been taken to mean that the bringing of an action after that time is prohibited but that the defendant has a statutory defence of time-bar in such a case. The period applicable to personal injury actions was shortened to three years by the Law Reform (Limitation of Actions, Etc) Act 1954. There was, however, an obvious source of injustice, highlighted by Cartledge v E Jopling & Sons Ltd [1963] AC 758, where the time limit expired before the victim knew of his injuries. This problem was considered in the Report of the Edmund Davies Committee in 1962 (Cmnd 1829) and led to the Limitation Act 1963, which provided for the accrual of a claimant's cause of action to be deferred in such a case until his date of knowledge. That Act gave rise to acute problems of interpretation and application, and these were the subject of further consideration by the Law Reform Committee under the chairmanship of Lord Justice Orr. In its Twentieth Report (Interim Report on Limitation of Actions: In Personal Injury Claims) (Cmnd 5630), May 1974, the Law Reform Committee proposed a reformulated date of knowledge test. It also, relevantly to this appeal, rejected the proposal that the court should have a general discretion to extend time in meritorious cases (paras 35, 56), but recommended (paras 56, 57, 69(4)) that "in a residual class of cases", regarded as "exceptional", the court should have a discretion to weigh the actual hardships on both sides and to allow an action brought out of time to proceed if the court were satisfied that it would be equitable to do so. In making this recommendation the Committee's object was to promote strict application of the prescribed limitation rules by providing an exceptional means of accommodating very hard cases in which, but for the possibility of resorting to such means, courts might be persuaded to interpret the rules in a way which would strain their meaning or undermine their object.

8

The Committee's date of knowledge recommendation was given effect in the Limitation Act 1975 by inserting a new section 2A into the 1939 Act and a discretionary power to extend time was enacted by inserting a new section 2D. These were substantially re-enacted as sections 11 and 33 of the 1980 Act. Section 33 is headed "Discretionary exclusion of time limit for actions in respect of personal injuries or death" and (as amended) provides in subsection (1):

"(1) If it appears to the court that it would be equitable to allow an action to proceed having regard to the degree to which-

  • (a) the provisions of section 11 or 11A or 12 of this Act prejudice the plaintiff or any person whom he represents; and

  • (b) any decision of the court under this subsection would prejudice the defendant or any person whom he represents;

the court may direct that those provisions shall not apply to the action, or shall not apply to any specified cause of action to which the action relates."

This is supplemented by subsection (3), which provides:

"(3) In acting under this section the court shall have regard to all the circumstances of the case and in particular to-

  • (a) the length of, and the reasons for, the delay on the part of the plaintiff;

  • (b) the extent to which, having regard to the delay, the evidence adduced or likely to be adduced by the plaintiff or the defendant is or is likely to be less cogent than if the action had been brought within the time allowed by section 11, by section 11A or (as the case may be) by section 12;

  • (c) the conduct of the defendant after the cause of action arose, including the extent (if any) to which...

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