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Cite as: [2002] EWCA Civ 67

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Ace Insurance Sa-Nv v Seechurn [2002] EWCA Civ 67 (6th February, 2002)

		Neutral Citation Number: [2002] EWCA Civ 67
		Case No: B1/2001/0372

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
His Hon. Judge Previte

Royal Courts of Justice
Strand,
London, WC2A 2LL

6th February 2002.

B e f o r e :

LORD JUSTICE WARD
LORD JUSTICE THORPE
and
LORD JUSTICE KEENE
____________________

ACE INSURANCE SA-NV
Appellant

- and -

SURENDRANATH SEECHURN
Respondent

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Jeremy Stuart-Smith Q.C. (instructed by Messrs Davies Lavery for the Appellant)
Stephen Shaw (instructed by Messrs Ashley & Co. for the Respondent)
____________________

HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

Lord Justice Ward:

At the trial of two preliminary issues, His Hon. Judge Previte Q.C. sitting in the Central London County Court found on 30^th January 2001 that:

i) the date of accrual of the cause of action for payment under two policies of disability insurance was 12 months after the disabling accident which befell the claimant on 16^th September 1988; and

ii) although proceedings were only brought over 10 years later on 7^th October 1998, the action had not become statute barred on 16^th September 1995 because the defendant insurers were estopped from relying on Section 5 of the Limitation Act 1980.

The first finding is now accepted, but the insurers appeal with the permission of Robert Walker L.J. against the second ruling.

Mr Seechurn came to this country from Mauritius in 1975 when he was about 30 years old and found work at the Post Office where he remained. On 16^th September 1988 he was a passenger on the upper desk of a London Transport bus and, having rung the bell, started to descend down the stairs. The bus stopped sharply causing him to lose his balance and roll downstairs hitting his head on the steps as he fell. A passenger saved him from falling into the roadway but he suffered severe injuries to his neck, to his upper and lower back and was admitted to hospital for treatment. He alleges that his condition had grown progressively worse over the years so that he was left in constant pain, severely handicapped in his mobility, totally incapacitated from work and now dependent on Social Security and Disability Benefit.

Fortunately Mr Seechurn had accepted invitations extended to holders of an American Express Card to take out policies of insurance with the defendant company, then known as Cigna Insurance Company of Europe s.a.-n.v. The first policy was taken out on 16^th March 1988 under the American Express Card Member Disability Compensation Plan. The benefit of that policy was a total sum of Ł250,000 in the event of his suffering permanent total disablement but the policy also required the insurer to pay a partial benefit as a proportion of the sum insured relative to the degree of permanent disability. These benefits were paid in the event of the insured suffering “bodily injury” meaning “injury which is caused by accidental means and which within 12 calendar months from the date of the accident results in the insured person’s permanent disablement”. “Permanent total disablement” was defined to mean “disablement which, having lasted for at least 12 months, will in all probability entirely prevent the insured person from engaging in his/her usual occupation or any other occupation for which he/she is fitted by reason of education, training or experience for the remainder of his/her life”.

The second policy was taken out on 7^th June 1988 under the American Express Card Member Triple Security Plan. This insured the card member in the sum of Ł150,000 in the event of his suffering permanent total disablement but provided for a payment of Ł1,500 per month for temporary total disablement payable for 12 months. There were slightly different definitions of “bodily injury” and “permanent total disablement” but nothing turns upon those differences.

In his witness statement, dealing with the history of his claim from the date of the accident to 1989 the claimant states that he did not at first know how serious his injuries were and certainly did not then believe that there was a risk that he would be permanently disabled. He says that he submitted the report form for a claim for temporary total disablement under the Triple Security Plan on 17^th October 1998, but this must be a typographical error for 1989. It is common ground that the insurers paid him the insured sums of Ł1,500 per month for 12 months and he has by common consent received Ł18,000 benefit under that plan.

On 3^rd May 1990 Mr Seechurn submitted a claim under the Disablement Compensation Plan, supported by his consultant orthopaedic surgeon Mr Thakkar who certified that:-

“In his present state he cannot work and I do not expect him to resume work in the future.”

In August 1990 the claimant was seen by the defendant’s consultant orthopaedic surgeon, Mr Cobb, and his opinion was that:-

“There are several inconsistencies between his symptoms and physical signs suggesting that he is not a reliable witness. ... In my opinion, therefore, although undoubtedly this man suffered a significant injury to his back and neck which is very likely to be causing continued symptoms, he may be reluctant to admit improvement and recovery. The diagnosis is of soft tissue injuries only and there is no evidence of significant neurological dysfunction. The natural history of this condition is resolution of symptoms within 1-2 years and recovery of function. ... I believe that if he makes the psychological adjustment necessary to want to obtain work and to want to sort his life out, then he will achieve significant recovery of his symptoms and will be suitable for some sort of employment, probably sedentary and clerical.”

On 30^th January 1991 the claimant saw Mr Thakkar again. His conclusion was:-

“Electromyographic studies (tests on the muscles to detect abnormalities) were performed in June ’89 and a myelogram (assessment of the spinal cord by inserting a dye in the spinal canal) in Nov. ’89 failed to reveal significant abnormalities.

When assessed today (30/1/91) it would appear that he is still in a great deal of pain and is unable to move unaided and unsupported. He has numbness and weakness in both upper and lower limbs and is on painkilling medication. These symptoms and signs are extremely difficult to explain and I would certainly recommend a second opinion from a neurologist. In my opinion the accident has probably partially contributed to his present state. Physiotherapy and rehabilitation may improve his clinical state but it is very unlikely that he will ever be normal again. In his present state he cannot be gainfully employed and I do not foresee him returning to a full-time job in the future.”

The claimant sought a second orthopaedic opinion and Mr Tiwari reported on 5^th March 1991 that:-

“PROGNOSIS.

1. I feel that this man requires further specialised investigation on the lines of MRI and CT scans to definitely exclude any spinal pathology.

2. He also requires further assessment by a neurosurgeon to exclude any neurological abnormality in view of his bizarre symptoms and signs.

3. In my opinion he is unable to resume his previous or any alternative occupation because of extreme pain ...

5. I found him psychologically stable and mentally orientated to time and place ...

IN CONCLUSION.

I feel that this man has sustained severe injury to his neck and back resulting in severe pain. He also presents with rather bizarre symptoms and positive neurological deficits which require further investigation. I think that this man’s problems will continue in the long term.”

Although the insurers had written on 24^th January 1991 that they were unable to make any payment under the Disability Compensation Plan as no evidence had been provided to suggest that the claimant had continuing and permanent injuries, they were prepared to reconsider the matter and on 28^th May 1991 they wrote:-

“Taking into account that all your current symptoms that are not of a permanent nature, we have assessed the degree of permanent disability that can be regarded as due to your accident as being Ł10,000 and on the assumption this is acceptable to you we attach our form of discharge for your signature and return.”

The claimant instructed solicitors, Anthony J. Newton & Co., who, in response to the insurer’s letter of 28^th May, sent the insurers copies of the reports from Mr Thakkar and Mr Tiwari, asserted that Mr Seechurn was permanently disabled, unable to engage in any form of employment and consequently entitled to the full amount due and payable under the policy. That elicited this response on 26^th June 1991:-

“From the evidence that has been read by a Chief Medical Officer, we could at this stage increase our offer to 10% which amounts to Ł20,000.

If this is acceptable to the client, can you please let us know or alternatively can you please let us have full reports from the suggested neurosurgeon and also reports of any MRI and CT scans.”

That offer was rejected as unacceptable on 30^th July 1991 when the claimant’s solicitors contended that he need not provide any further medical reports and seemed to draw the battle lines with the assertion that:-

“Unless you agree that our client is entitled to payment in full, it appears there is no alternative but for him to institute proceedings for what is rightly due and owing to him.”

As I have already set out, those proceedings were not in fact instituted until 7^th October 1998. In the intervening years there were periods both of silence and of correspondence which I will need to analyse in more detail in order to decide whether the judge erred in his conclusion that the course of correspondence and the insurer’s conduct gave rise to what Chitty on Contracts describes as a “forbearance in equity” (see paragraph 3-080 et seq).

The Judge’s Conclusions.

The judge decided as follows:-

“Having regard to the correspondence, principally to the letters to which I have referred in this judgment, and to the evidence of the claimant, Mr Capuano [the defendants’ solicitor] and Mr Keen [the defendants’ insurance manager], I find that both before and after the expiration of the six-year period the defendants, and the defendants acting through Davies Lavery [their solicitors], led Mr Seechurn to believe that the defendants were willing to continue considering his claim under the Disability Compensation Plan and would apply for a stay of proceedings if proceedings were issued before they had reached a final conclusion in the light of all the medical evidence they desired.

Mr Seechurn had made it clear that it was his intention to issue proceedings. In addition to saying that they would apply to stay the proceedings, the defendants made it clear that there would be costs consequences, or possible costs consequences, if proceedings were issued before they had reached finality with regard to the extent of disablement.

I find that Mr Seechurn relied on what he was told with regard to the defendants being willing to give further consideration to his claim up to the time when the limitation point was taken. I also find that although the claimant expressed reluctance from time to time to co-operate with the defendants with regard to further medical examination, that reluctance was primarily in relation to the tests with the Dynatron machine. He had reservations about the independence of the defendants’ doctors but he had in fact seen Mr Cobb and Doctor Nieman and did agree to submit himself for further examinations when he wrote on 30^th July 1998. And I find, as I have already mentioned, that on being informed of the limitation point which was being taken, he did immediately complain that he had been misled.

The claimant’s primary case with regard to the limitation is that in equity the defendants are estopped from relying on Section 5 of the Act. I have been referred to the relevant passages in Chitty, in particular to the speech of Lord Cairns in Hughes v. Metropolitan Railway cited in paragraph 3-080, where Lord Cairns said that if one party leads the other “to suppose that the strict rights arising out of the contract will not be in force, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have taken place between the parties”. The requirements for the equitable doctrine to operate are that there must be a legal relationship giving rise to rights and duties between the parties. I am satisfied that requirement is fulfilled here in respect of the insurance contract. “... a promise or a representation by one party that he will not enforce against the other his strict legal rights arising out of that relationship:” I find that there was at least a representation arising out of the correspondence (to which I have referred) that the defendants would continue to look at and consider Mr Seechurn’s claims over and above the sum of Ł20,000 that had already been paid.

“An intention on the part of the former party that the latter will rely on the representation”: I find that that is proved. It is clear, in my view, from the terms of the correspondence, in particular the reference to “staying proceedings", or “penalties” with regard to “costs”, that it was the intention of the defendants, through their solicitors, that the door should be kept open.

And the further requirement that there should be “reliance by the other party”, I find that there was reliance by the claimant who, despite the intimation that proceedings would be started, stayed his hand. Although the matter became unduly protracted, and lay in abeyance for considerable periods of time, I find that the claimant never abandoned his intention to bring proceedings, albeit at one stage he took the alternative course of referring the matter to the Ombudsman, but that he did not proceed.

The claimant, who is now publicly funded, could have obtained legal aid at an earlier stage. The fact that he did not do so, indicates to me that he was relying on the statements made by or on behalf of the defendants that they would look further at the merits of his claim. I bear in mind that even where those requirements are satisfied, the operation of the doctrine may be excluded if it is nevertheless not inequitable for the first party to go back on his promise. My view is that it would be inequitable, in the circumstances of this case, to allow the defendants to rely on the limitation defence.

I find that Mr Seechurn was induced to believe, by the correspondence and statements therein, that the door would be kept open. In so finding, I bear in mind that the representation must be clear or unequivocal. I so find. I think, viewed objectively, a reasonable person reading the correspondence, especially with regard to the letters to which I have drawn attention, would conclude that the door was held open. The defendants appeared to be speaking with two voices, and where a defendant does that, then, in my view, it is entirely reasonable for a person to conclude – and indeed it is consistent with the policy of the defendants – that they prefer to avoid proceedings and to settle the matter amicably if they could do so. That, in my view, would discourage any reasonable person from issuing proceedings because they would rely on that course of conduct being pursued by the defendant.

It was, in my view, an entirely reasonable course for them to take, and one consistent with the policy expressed by Mr Keen, of willingness to assist their customer. I do not think that they can now turn round and say, as was said in evidence: “Oh, but we are not a charity, we are entitled to insist on our strict legal rights”. My view is that they had forborne to do that and led Mr Seechurn into thinking that they would, as I have said, continue to negotiate with him; and, in those circumstances, I think they are not entitled to rely on Section 5 of the Limitation Act.”

The submissions to us.

Mr Jeremy Stuart-Smith Q.C. who appears before us although he did not appear below, submits that the judge erred in failing to appreciate that the correspondence was conducted staccato, each instalment being interspersed by unaccounted delay. In particular the judge had need to analyse the events before and contrast them with the events after the period of limitation expired. To establish the estoppel, the claimant would have to satisfy the following requirements:-

i) A clear and unequivocal promise or representation. (As both counsel used “promise” and “representation” almost interchangeably, I shall limit myself to “promise”.)

ii) The promise had to be not simply that the defendant was willing to continue to negotiate but essentially that the defendant would not rely on a limitation defence.

iii) Although the promise could be implied from the correspondence, or from conduct or even from silence, no implication would arise in this case because there was no duty on the defendant to advert to the onset of limitation or the fact that any action had become time-barred.

iv) The claimant had to rely upon the promise.

v) Relying on the promise the claimant would have to have altered his position to his detriment.

Mr Stuart-Smith submits that there was no promise by the defendant not to rely upon its rights and that no reliance or detriment can be shown, especially after the period of limitation had expired.

Mr Shaw, for the respondent, submits that the judge cannot be shown to have made such an egregious error in his assessment of the facts that he can be upset on appeal. He submits that the promise has to be construed through the eyes of the promisee, that it is not an objective test but at best a test of whether a lay person would be surprised by the promisor’s stance. He submits that the promises have to be construed as the defendant discouraging the claimant from issuing his proceedings by threats that if proceedings were issued they would apply for a stay and would seek their costs. It was a promise to keep the door to further consideration of the claim open. If that is the gist, then the claimant contends that it is inequitable for the defendant to shut the door by standing upon its legal rights and taking the limitation point. Whilst he accepts that there is no duty to advise that time was running out, or had expired, Mr Shaw submits that, against the background of its discouraging proceedings every time they are threatened, the defendant has to make it clear that it is not abandoning its defence and that it is keeping all its arguments open, otherwise the wrong impression is given making it unconscionable to go back to the assertion of its rights.

The Law.

It is probably unnecessary for the purposes of this judgment to explore what differences, if any, there may be between estoppel by representation, promisory estoppel, estoppel by convention, waiver or what Chitty on Contract paragraph 3-080 calls “forbearance in equity”. It may still be controversial whether or not “all these can now be seen to merge into one general principle shorn of limitations”, as Lord Denning M.R. suggested in Amalgamated Investments and Property Co. Ltd. v Texas Commerce International Bank [1982] Q.B. 84, 122 but counsel have not invited us to enter into that debate and I do not propose to do so. Since the essence of the claimant’s case is that the course of correspondence contained some assurance by the defendant not to raise a limitation defence, it seems to me that it is most likely to be a case of promisory estoppel for there is no representation of existing fact and no shared assumption supporting an estoppel by representation or by convention respectively. Both counsel agree that the judge was correct to apply, as the locus classicus, the decision in Hughes v Metropolitan Railway Co. (1877) 2 App. Cas. 439, and it is worth quoting fully from the speech of Lord Cairns at p.488:-

“... it is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results – certain penalties or legal forfeiture – afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which are thus taking place between the parties.”

Subsequent authorities serve to highlight some of the important elements. First, the promise (or representation) must be clear and unequivocal. In Woodhouse Ltd. v Nigerian Produce Ltd. [1972] A.C. 741, 755, Lord Hailsham of St. Marylebone L.C. said:-

“But, on the assumption that there was [an ambiguity in the crucial exchange of letters] I agree with the Court of Appeal that such cases as Low v Bouverie [1891] 3 Ch 82 and Canadian & Dominion Sugar Co. Ltd. v Canadian National (West Indies) Steamships Ltd. [1947] AC 46 are authority for the proposition that, to give rise to an estoppel, representation should be clear and unequivocal, and that, if a representation is not made in such a form as to comply with this requirement, it normally matters not that the representee should have misconstrued it and relied upon it.”

In Low v Bouverie [1891] 3 Ch 82, 106, Bowen L.J. had said that:-

“... an estoppel, that is to say, the language upon which the estoppel is founded, must be precise and unambiguous. That does not necessarily mean that the language must be such that it cannot possibly be open to different interpretations, but it must be such that it will be reasonably understood in a particular sense by the person to whom it is addressed.”

Addressing that passage, Lord Hailsham said in Woodhouse Ltd. v Nigerian Produce Ltd. at p.770:-

“I am satisfied that, in the second sentence of the above quotation, the meaning is to exclude far-fetched or strained, but still possible, interpretations, whilst still insisting on a sufficient precision and freedom from ambiguity to ensure that the representation will (not may) be reasonably understood in the particular sense required.”

Later at p.757 he said:-

“Counsel for the appellants was asked whether he knew of any case in which an ambiguous statement had ever formed the basis of a purely promisory estoppel, as contended for here, as distinct from estoppel of a more familiar type based on factual representation. He candidly replied that he did not. I do not find this surprisingly, since it would really be an astonishing thing if, in the case of a genuine misunderstanding as to the meaning of an offer, the offeree could obtain by means of the doctrine of promisory estoppel something that he must fail to obtain under the conventional law of contract.”

The speech of Lord Cross of Chelsea is interesting for the contrast he drew between estoppel by representation and a promisory estoppel. He said at p. 767:-

“Even if one assumes that a man who makes a representation of fact which he reasonably interprets in one way but which the representee reasonably interprets in another may in some circumstances be bound by the interpretation placed on it by the representee, it surely cannot be that a man who in response to a request for an indulgence which he reasonably interprets in one way makes an unenforceable promise as to his future conduct which the other party reasonably interprets in a sense different from that intended can be in a worse position than if the request for an indulgence had been an offer to contract and the granting of the indulgence an acceptance of the offer.”

The promise may be made by conduct or may be implied, but mere inactivity is not normally sufficient. In Allied Marine Transport Ltd. v Vale Do Rio Doce Navegacao S.A.[1985] 1 W.L.R. 925, 937 and 941 Robert Goff L.J. said:-

“It is well settled that that principle [of equitable estoppel] requires that one person should have made an unequivocal representation that he does not intend to enforce his strict legal rights against the other; yet it is difficult to imagine how silence and inaction can be anything but equivocal.

...

But silence and inaction are of their nature equivocal, for the simple reason that there can be more than one reason why the person concerned has been silent or inactive.”

It is, in my judgment, important to emphasise that the unequivocal unambiguous promise or representation has to be that the party did not intend to enforce his strict legal rights. That point is demonstrated by Republic of India v India Steamship Co. (No. 2) [1998] AC 878. There the question was whether there was a waiver or estoppel which would defeat the defendant’s contention that the proceedings in the English Court should be struck out pursuant to section 34 of the Civil Jurisdiction and Judgments Act 1982 by reason of the plaintiff’s already having obtained judgment in an overseas court, Cochin. Dealing with the defence of estoppel by convention, Lord Steyn said at p. 914:-

“But in order to establish an estoppel by convention the plaintiffs had to prove that the defendants evinced by their conduct that they were content that the taking of a judgment in Cochin would not prejudice the resolution of other proceedings on their merits, that is, that in future proceedings no plea or defence on the basis of a judgment in Cochin would be raised whatever the outcome of the proceedings in Cochin.”

Dealing with the plea of estoppel by acquiescence, Lord Steyn said at p. 915:-

“It is overwhelmingly probable, as both sides accepted, that until after the judgment in Cochin was handed down neither side gave any thought to the implications of that judgment on any further proceedings. Both sides were in ignorance of the potential consequences of a judgment in Cochin. There were no special circumstances which could even arguably have required the defendants to put the plaintiff on their guard as to the risk flowing from the taking of a judgment in Cochin. The defendants also did nothing by conduct or silence which could have led the plaintiffs to think that the plaintiffs could safely take a judgment in Cochin without any risk of a plea or defence in any further proceeding.”

The same principle will apply here.

The point arose directly in Hillingdon Borough Council v A.R.C. Ltd. (No. 2) [2000] 3 E.G.L.R. 97, a case drawn to our attention by Mr Stuart-Smith but to which unfortunately the judge was not referred. In that case, like this, the parties continued to negotiate the settlement of the claimant’s right to compensation before and after the claim became statute barred. Dealing with the plea of estoppel by convention, Arden J., giving the judgment of the Court of Appeal, said:-

“A shared assumption is not, on the authorities, sufficient to establish an estoppel unless it is communicated. It follows that if, in this case, there was no shared assumption to the effect that A.R.C. had a valid claim that was not time-barred, there could be no communication by H.L.B. that they were making any such assumption. It also follows from what we have said above that the communication required would, in any event, be not simply that A.R.C. had a valid claim, but also that H.L.B. would not take any defence that might be open to them on the basis of a statutory limitation period.”

Dealing with the question of promisory estoppel she said:-

“... A.R.C. would have to satisfy the court that there was some clear and equivocal representation by H.L.B. to A.R.C. that its claim was a valid claim, and, in addition, that H.L.B. would not rely upon any statutory limitation defence.”

It is common ground that the promise or representation must be made intending to affect the legal relations between the parties and the promisee or representee must rely upon it and alter his position.

It is usually said that this must be an alteration to the detriment of the promisee or representee. Although the law in Australia and in this country may not have moved in exactly the same direction at all times, the decision of seven judges of the High Court of Australia in Commonwealth of Australia v Verwayen (1990) 170 C.L.R. 394 is interesting. Both before and after proceedings had been commenced by the plaintiff, the Commonwealth repeatedly represented that it would not rely on a limitation defence. Then it changed its mind and was granted leave to amend to plead that bar. Mason C.J. drew a distinction between two types of detriment: detriment which would flow from the denial of the assumption upon which a party had relied and detriment which the party had already suffered by relying on that assumption. In that case the first or the broader type of detriment would have been the plaintiff’s failure in his action for damages and the second would have been his costs incurred in mounting it up until the date when the defence was amended. There is debate as to whether detriment is always required. In Hughes v Metropolitan Railway itself the promisee had forborne from taking steps that he would otherwise have taken to safeguard his legal position and it may be for the equitable doctrine to operate, all that is required is that it should be inequitable for the promisor to go back on the promise. That is the essence of Mr Shaw’s submission,that, as Oliver J. expressed it in Taylors Fashions Ltd. v Liverpool Trustees Co. [1982] 1 Q.B. 133, 155, all that need be established is that it was unconscionable for the defendant to seek to take advantage of the claimant’s mistake. I am content to approach the case appeal on that basis.

The questions which arise in this appeal.

From that review of the law, I conclude that the relevant questions are these:-

i) Is there a clear, unequivocal, unambiguous and unconditional promise by the insurers that they will not raise the defence that the action is statute barred. The focus has to be on whether or not they were giving up that right.

ii) The promise must be construed objectively, not subjectively. The question is whether the correspondence can reasonably be understood to contain that particular promise. It does not matter what Mr Seechurn thought it meant nor does it matter what a layman might have thought, as Mr Shaw contends, unless, of course, that layman is a passenger on the Clapham omnibus.

iii) The third question is whether Mr Seechurn relying on the promise, altered his position to his detriment or whether it would be inequitable or unconscionable not to hold the insurers to their promise.

An analysis of the correspondence.

As different considerations may apply before and after the claim became statute-barred, I will look separately at the correspondence in those two periods.

The correspondence up to the expiry of the period of limitation on 16^th September 1995.

As already set out, the position had been reached by the end of July 1991 that the claimant, through his solicitors, was claiming payment of the full amount due under the policies, asserting that he need not provide further medical evidence and threatening to institute proceedings. The defendant’s solicitors took the view that under the terms of the policy the claimant was obliged to provide reasonable assistance to the underwriters and thus they sought a further medical examination. On 22^nd August they wrote:-

“In the meantime we would state that any action commenced by your client will be vigorously defended and we reserve the right to exhibit our client’s letter to you of 26^th June 1991 to the court when the question of costs is discussed.”

The author of that letter, Mr Capuano agreed in evidence that he was not intending to shut the door, that he was anxious to avoid court proceedings if only the claimant would undergo further medical examinations.

On 21^st October 1991, the Ł20,000 was sent to the claimant’s solicitors expressed to be “in full and final settlement of your client’s claim based on a level of 10% disability”. The letter continued:-

“As we have discussed with you on the telephone our client is prepared to reconsider the level of your client’s disability on the basis that he consents to undergo further medical examination and be referred to a pain control and rehabilitation clinic.”

Mr Capuano accepted that he was conveying a mixed message and that if he had simply said the Ł20,000 was the final offer, that would have resulted in litigation which was what he as seeking to avoid.

The claimant eventually in November 1991 elected to be seen by the insurer’s doctor, Dr. Nieman. He reported very unfavourably. He said:-

“I cannot state that he does not have pain, but I do consider that the degree of pain is exaggerated, particularly as his behaviour when excited contrasts markedly with his apparent freedom from pain when he is dressing and undressing and even when he is walking. As far as his apparent weakness and sensory loss of the arm and leg are concerned I believe this is spurious.

With regard to his incontinence of urine ... I suspect that the wetness of his underpants came from the tap and not from his bladder. I would agree therefore that the estimation of a level of permanent disability for Mr Seechurn at 10% is reasonable and that a level of compensation of Ł20,000 is in the circumstances generous.”

He did, however, later review that opinion in the light of medical records which had not been available to him at the time of his first report. He stated:-

“I consider that these opinions quoted from above, reinforce the conclusions which I stated in my report of 27^th November and I do not wish to alter or amend those conclusions.”

Both those reports were in the hands of the claimant’s solicitors by February 1992.

Time passed and on 10^th November the insurer’s solicitors asked for confirmation that Mr Seechurn had agreed to accept the moneys paid in settlement. On 13^th November 1992 Newton & Co., Solicitors, wrote on Mr Seechurn’s behalf rejecting that offer and stating:-

“We are having up-to-date medical reports prepared for the purposes of preparation of our papers to issue proceedings against your client.”

Nothing happened for nearly a year. Mr Seechurn wrote directly to the insurers on 26^th October 1993 informing them that his doctor was of the view that he would never be gainfully employed again and that he was submitting his claim. The insurer’s response was that the evidence provided from the medical reports showed that he was not entitled to any further payment.

Once again matters apparently went to sleep but one has some sympathy for Mr Seechurn because it appears that at sometime in the interval his solicitor died but he instructed new solicitors, Ashley & Co. He wrote on 21^st February 1995:-

“As you know, I am prepared to fight my case tooth and nail. I gather from your solicitor that you too is [sic] prepared to defend it vigorously. You may be aware that litigation in the High Court is a very costly business. However I am covered by legal insurance. The question of cost is not going to hinder me from seeking redress.”

He added a postscript that he was also referring the matter to the Ombudsman.

The insurers replied that they had assumed from the lapse of time that he had accepted the money but indicated they were prepared to look at the matter again although it was likely that they would require a further medical examination. That was repeated by their solicitors to Mr Seechurn’s new solicitors. Davies-Lavery, for the insurers, wrote on 13^th April 1995:-

“In order to give your client the benefit of the doubt our client is prepared to go to the expense of carrying out further medical examination. To this effect therefore we would request that your client be examined by an orthopaedic consultant and also undergo examination with a Dynatron 2000 machine which will be able to confirm the level of his disability.”

Mr Seechurn gave evidence to the judge that having received advice from an apparently responsible source, he was suspicious of the Dynatron test which he believed was of doubtful validity. He decided to refer the matter to the Insurance Ombudsman.

On 9^th May 1995 Davies-Lavery sent Ashley & Co. Dr Nieman’s two reports and stated in their letter, which the judge regarded as a significant letter bearing in mind that it was written three months (actually it was four months) before the limitation period would expire. Davies-Lavery said:-

“On the basis of those reports your client was paid Ł20,000 which we considered to be a satisfactory settlement under the terms of his policy with our client. However, if it is your case that Mr Seechurn’s physical disabilities will continue then before our clients are prepared to make any further payment they wish him to undergo the medical examination referred to in our letter of 13^th April. Our client is not attempting to avoid their obligations under the policy but merely wish to determine that the amount they are required to pay is in accordance with the policy and is reasonable. As you will appreciate should Mr Seechurn decide to litigate then he will have to undergo further medical examinations in any event and if he does commence legal proceedings prematurely then we reserve the right to bring the contents of this letter to the attention of the court.”

The referral to the Ombudsman did not please the insurers. Davies-Lavery wrote on 24^th June 1995:-

“If your client wishes to progress this matter then we would suggest he adheres to our request as contained within the third paragraph of our letter of 13^th April to you. We believe that the outcome of those tests will decide, once and for all, whether your client has a valid claim under the policy and if he has, then it will be dealt with promptly. If your client then disagrees with those results he can either proceed with his application to the Insurance Ombudsman Bureau or alternatively commence legal proceedings. We trust you will be good enough to speak to your client to resolve the position and let us know which way he wishes to proceed.”

On 9^th July 1995 Mr Seechurn wrote personally to Mr Keen of the insurers. He expressed the view that:-

“In view of ... (your) obdurate attitude and unfair comment (re: my condition) I would rather refer the whole issue to a real independent and unbiased authority namely the Insurance Ombudsman ...”

He protested that the request to undergo further examination and tests were “ploys that you are using to undermine my claim and to pay me as less [sic] as possible”. He was convinced that all the insurers were trying to do was “to get a report to your liking. Obviously a doctor paid by you will dance to your tune”. So he wrote:-

“I therefore refuse to be seen by any doctor recommended by you and undergo further medical tests etc., unless the reasons are given why my doctor’s reports are being ignored. ... In these circumstances I feel more happy to leave it to the Insurance Ombudsman to decide ... I can always take legal action if ever I am not satisfied with the Ombudsman’s decision.”

Davies-Lavery responded on 16^th August 1995. The judge said, wrongly, that the letter was written on “the very day upon which the six year limitation period expired”, whereas in fact time had another month to run. The solicitors wrote:-

“Because of the contradictions in the various reports we do not believe that, without being subject to a further medical examination, that either the Insurance Ombudsman or any other party will be able to rule in respect of your claim. Finally, if proceedings should be issued we would advise you that there is a wealth of case law which would entitle our clients to apply for a stay (of) proceedings if you refused to undergo a further medical examination. ...

We would reiterate that neither we nor our clients wish to be difficult nor do we intend to cast any dispersions [sic] upon your own medical evidence save that we will say that the evidence is inconsistent and in part contradictory. If you submit to the further medical examinations that we have requested then we believe that it may well be possible for this matter to be concluded amicably once the results are known.”

The judge viewed that last paragraph as holding out encouragement to the claimant.

The period of limitation expired without response to that letter and, of course, without the issue of proceedings.

The correspondence after the expiry of the period of limitation.

On 2^nd November 1995 Mr Seechurn wrote to the insurers informing them that he had referred the matter to the Ombudsman. He stated:-

“I make it categorically clear to you that I am not prepared to undergo any further medical examination or be tested by the Dynatron 2000 machine.”

It appears, however, that the Ombudsman is unable to investigate a complaint until in receipt of “a chief executor final decision letter”. Mr Seechurn called for it.

The insurers replied:-

“In accordance with the Insurance Ombudsman’s request and on behalf of the Chief Executive ... we are therefore formally notifying you that we do not feel that we can consider your claim further without the benefit of a further medical examination. We would, however, like to make it quite clear that we are not refusing to investigate your claim further to see whether additional benefit might become payable to you as a consequence of that examination. What we cannot do is, however, consider your claim further without the benefit of that examination and since you are refusing point blank to have this examination this has to be a matter for you.”

Mr Seechurn considered that that was a further demonstration that all the insurers were wanting to do was to evade payment. He wrote on 11^th December 1995 saying that:-

“I am sure if I start litigation the court will take a different view from you. The court will permit me to seek to enforce the contract ...”

The response of 20^th December 1995 was:-

“We have already made it perfectly clear that we are not prepared to proceed further with your claim unless our solicitors can arrange for you to be medically examined again.”

There the correspondence rested until 19^th March 1997 when Mr Seechurn submitted a recent report from a neuro-spinal consultant and stated that he wished the matter to go to court. Davies-Lavery informed him that until he consented to undergo examinations by an orthopaedic consultant and submit to the Dynatron 2000 test the insurers were not in a position to reconsider the claim. They stated:-

“(i) Whilst we note that you have stated that you wish the matter to go to court we must advise you, and we would suggest you obtain your own legal advice on this point, that if legal proceedings are issued that you would in any event have to undergo further medical examinations by our client’s own consultant. Any refusal by you to do so could result in our clients applying for a stay of the proceedings until such time as those examinations have been concluded. In the circumstances, we would ask that you reconsider your stance on undergoing further medical examinations as any failure by you to do so by you will result in our clients having no alternative but to refuse to consider your claim any further.”

The judge deals with what then happened as follows:-

“There then appears to have been a letter, dated either 1^st June or 18^th June, typed on Mr Seechurn’s behalf by his nephew, with reference to the letter of 21^st April. Unfortunately, that letter was not received by Davies-Lavery until a copy of it was sent considerably later.”

In it he states that:-

“I have never refused to be medically examined but what concerns me this time is the introduction of what seems to be a mechanical examination. I have made enquiries on the Dynatron 2000 machine ... I will not take any risk in subjecting myself to a test of which I have not been provided the necessary details and safeguards. ... I must emphasise here that I am determined to have this matter referred to court and I shall be seeking the appropriate advice in this connection.”

A year passed. On 30^th July 1998 Mr Seechurn wrote to the insurer’s solicitors referring to the letter of 1^st June 1997 and informing them that he had recently been examined by his own orthopaedic consultant and that his condition was worsening. He said that he was prepared to submit himself to a further medical examination at the insurer’s expense.

The reply of 13^th August 1998 brought matters to a head. When they had retrieved their papers from storage they wrote:-

“However, having reviewed the file of papers, it would appear that the incident giving rise to your injury occurred on 16^th September 1988, approximately 10 years ago. Your claim against Cigna would be under the contract of insurance. There is a 6 year limitation period in which to bring actions for breach of contract and it would appear to me that this period has expired and Cigna have no further liability to you.”

Not surprisingly Mr Seechurn was outraged. He wrote on 24^th August 1998 protesting that:-

“I have been led to believe that we are still in negotiations. I wrote to you on 18^th June 1997 in response to your letter of 1^st April 1997. (Copy enclosed). You deliberately did not reply to my letter. You had a sinister motive. You were playing for time.”

Mr Capuano replied on 11^th September 1998:-

“I cannot see how you have been led to believe we are still in negotiations. I have noted the copy of my letter of 21^st April 1997 ... However, at the time of writing that letter I had not considered the limitation period.”

There the relevant correspondence ends.

I turn, therefore, to answering the three questions I posed with reference to the periods before and after the action had become statute barred.

The period leading to the claim becoming statute-barred on 16^th September 1995.

The first and second requirements for a clear unequivocal unconditional promise, objectively construed, not to rely on its right to plead limitation.

The correspondence shows:

i) The claimant’s solicitors were preparing to issue proceedings on 13^th November 1992, well within the limitation period.

ii) The defendant’s solicitors were requesting the claimant to undergo examination by their nominated orthopaedic surgeon and to submit to the Dynatron test to determine whether they were required to make any further payment.

iii) The defendant’s solicitors were asserting that:-

a) If the claimant submitted to the further medical examinations requested, it might “well be possible for this matter to be concluded amicably once the results [were] known”.

b) If proceedings were brought without further medical examination, the defendants would refer the correspondence to the court and seek a stay of the proceedings pending such a further examination.

iv) The claimant was, however, steadfastly refusing to be seen by the defendant’s doctors or to submit to the Dynatron test.

I do not disagree with the judge’s conclusions that the defendant was intending to keep the door open and was promising that it would continue to look at and consider Mr Seechurn’s claims over and above Ł20,000 that had already been paid. That, in my judgment, is not enough to enable the claimant to establish a promise of the kind which satisfies the first and second requirements I have outlined.

The judge seems to me to have fallen into two errors. First, any promise to keep the door open was conditional upon the claimant submitting to the further medical examination. He refused to accept that condition. That position was made even clearer by the exchange of correspondence after September. There was a categorical refusal by the claimant on 2^nd November 1995 and a firm reiteration of the defendant’s position in its letter of 20^th December 1995 making it perfectly clear that they were not prepared to proceed without the further medical examination. Even if the door was still open after 16^th September 1995, the claimant failed to accept the terms which would have helped him across the threshold.

Secondly, what the judge failed to consider, no doubt because his attention was not drawn to the need to do so, was whether or not there was a clear unequivocal promise or representation or common assumption, call it what you will, that the defendants would forgo their right to plead the Limitation Act 1980. I find nothing in the correspondence which justifies finding that there was any promise to that effect or anything at all like that effect. To say that the door was open to further negotiations or even to point out that the proceedings could be stayed pending medical examination, did not in my judgment, carry any implication that a limitation defence would not be taken. As Lord Steyn observed in Republic of India, there was no duty on the defendant’s solicitor to warn of this impending fall of the guillotine. Furthermore, as the authorities make clear, silence or inaction are of their nature equivocal. Although the test is whether the letters objectively construed contained the necessary promise, expressed or implied, there seems to be no reason to doubt the evidence Mr Capuano gave (transcript of 26^th January, p.41D) that when he reviewed the file again in August 1998:-

“I realised the limitation period had already come into force. I advised Mr Seechurn immediately I became aware of it.”

The judge made no finding about this. The letter of 11^th September 1998 is consistent with his evidence. The inference is almost irresistible that, sadly, not one of the three firms of solicitors applied their minds to limitation until it was too late.

In my judgment the claimant fails to establish this first requirement and that is fatal to any estoppel operating against the defendants. The correspondence is typical of the attempts to negotiate a settlement of a claim with all the usual thrust and counter-thrust (or bluff or counter-bluff) of potential litigants striving to come to terms without losing too much face. That is not enough to found an estoppel.

Detriment.

If the necessary promise had been established, I would have had no difficulty in accepting that it was intended to be acted upon, and was relied upon with the result that Mr Seechurn suffered the detriment of losing his right to approach the judgment seat. It would then have been inequitable and unconscionable for the defendant to plead the time bar.

The period after the claim had become statute-barred.

The requisite promise.

The nature of the promise did not change. There was again an expression of willingness to consider the claim provided the requested medical examinations were undertaken and the same warning that the defendant would apply to stay the proceedings pending such examinations. The defendants were urging the claimant to seek advice: he was maintaining his determination to go to court. There were two substantial periods of delay, first from 20^th December 1995 to 19^th March 1997 and secondly from 1^st June 1997 to 30^th July 1998. The limitation point was said to have been taken immediately the defendant’s solicitors became aware of it.

For the same reasons I have already given, no clear promise to surrender the defendant’s legal rights can be established. To assert that the door to compromising the claim was still open was not impliedly to promise that a limitation point would not be taken if the negotiations failed and the proceedings started out of time.

Detriment.

After the limitation period had expired it is difficult to see how the claimant could have altered his position to his detriment. His claim was doomed. He could not be worse off. The claimant had steadfastly refused to undertake the required examinations. The defendants were receptive to reconsidering his claim if fresh medical evidence justified it. Who knows what would have happened had he consented? The defendant had been extraordinarily patient and amenable. Alas the claimant changed his mind too late. I can see nothing inequitable or unconscionable in the defendant refusing in those circumstances to engage in further negotiations or in their denying liability for a claim which had become very stale.

Conclusions.

In my judgment no estoppel of any kind can be established. This is most unfortunate for the claimant. I have no doubt that he laboured under a misapprehension that his claim was never at risk of being defeated as it has been. His solicitors would not appear to have put him on guard and I feel sympathic towards him. Sadly, however, I am in no doubt that the appeal has to be allowed with the result that his claim is to be dismissed.

Lord Justice Thorpe:

I agree that this appeal should be allowed. I have some sympathy for Mr Seechurn, as, I suspect, did Judge Previte. I also accept Mr Shaw’s submission that Mr Seechurn’s ability to save himself by reliance on the equitable doctrine of forbearance depends upon the impression gained from the relevant correspondence. Having read the judgment and Judge Previte’s summary of that correspondence I shared his view that Mr Seechurn was entitled to equitable relief. However Mr Stuart-Smith’s guided tour of the totality of the correspondence led me to the opposite conclusion. Judge Previte’s judgment compresses the chronology in a number of significant respects. Nor does his judgment sufficiently convey the extent to which Mr Seechurn communicated; sometimes directly, sometimes through solicitors, sometimes to insurers, sometimes to their solicitors and sometimes to the Insurance Ombudsman. There is both a lack of consistency and a neglect in pursuit which tell strongly against Mr Seechurn. It is only surprising to me that the appellant’s solicitors did not take the limitation point sooner.

Lord Justice Keene:

I also agree.

Order: appeal allowed with costs here and below, those costs to be assessed by the costs judge; section 11(1) costs order made, upon appellant's undertaking not to seek to enforce any order for costs personally against the respondent after set-off has been taken into account; permission to appeal to the House of Lords refused.