England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR N WILKINSON QC (Sitting as a High Court Judge)

		Royal Courts of Justice Strand, London, WC2A 2LL
		11th December 2013

Lord Justice Longmore:

Introduction

1. The second defendant ("Aegis") was a company which, until July 2011, provided security services to western organisations operating in Iraq. It sub-contracted the recruitment and engagement of personnel to the first defendant, a wholly owned subsidiary of the second defendant. I shall refer to the defendants as "Aegis". A particular contract undertaken by Aegis was known as the Matrix contract in respect of which the client was the United States Government.
2. The claimant, Mr Davidson, was originally a member of the Parachute Regiment and had served in Iraq before he left the army in 2002. Thereafter he worked as a protection operative and in November 2007 was engaged as a Security Escort Team ("SET") member by Aegis on the Matrix project. On 22^nd November 2007 while in Basra, he participated in a medical training course run by a regional liaison team leader also employed by Aegis, Mr Craig Dickson. There were about six or eight participants and Mr Davidson was paired with a Mr Charles-Francis Love (Mr Love) for the purpose of the exercises which formed part of the training. Both were required to wear full military body armour, weapons and equipment. The first exercise was for Mr Davidson to drag Mr Love along the ground which he found very difficult; the second exercise was to lift Mr Love from the ground without assistance and carry him in a fireman's lift for 20 metres in high desert temperatures. The combined weight of Mr Love with his equipment and Mr Davidson's equipment was 155kg (24.4 stone). While doing this Mr Davidson sustained a back injury allegedly caused by rotation of his back under the heavy load. It did not appear to be too bad at first and Mr Davidson carried on the day's activities but it was hurting badly the next day and he reported the fact to Mr Dickson who referred him for medical assessment.
3. Mr Davidson's back did not improve and Aegis terminated his contract of employment with effect from 18^th December 2007 by which time Mr Davidson was back in England. Mr Craig Dickson made a short statement about the matter on 11^th December 2007 in which he said that he had demonstrated the correct method of lifting and carrying. Aegis reported the accident to the United States Department of Labor on 20^th December 2007. Negotiations took place with insurers which have resulted in payments of US$1 million under the U.S. Defense Base Act, US$ 156,000 under a personal accident policy taken out for him by Aegis and US$134,000 by way of medical expenses. Mr Davidson maintains, however, that the true value of his claim is about £1.71 million.
4. In about March 2009 he instructed Irwin Mitchell to pursue this claim against Aegis but they did not send a letter of claim pursuant to the pre-action protocol for personal injuries until 10^th December 2009 perhaps because they were awaiting a medical report which Mr Davidson sent to Aegis on 30^th October 2009. Matters proceeded in a leisurely fashion but on 23^rd July 2010 Aegis' insurers said that Aegis intended to deny liability. A letter requiring Aegis to make the disclosure required by the pre-action protocol letter elicited a response on 12^th October 2010 from Aegis' insurers that their inquiries were incomplete. The three year time bar for personal injury was due to expire on 22^nd November 2010 and Irwin Mitchell issued a claim form on 15^th November 2010. That had to be served within 4 months; a photocopy of the claim form was served on Aegis on 18^th February 2011 but that did not comply with CPR 6.3(1) which requires an original sealed claim form to be served. Aegis did not assert that the claim form had not been served until 15.30 hours on 15^th March when they consented to a request from Irwin Mitchell for an extension of time for service of the particulars of claim until 10^th May 2011. Mr Davidson applied for a further extension of time which was not agreed. An application was listed for 20^th June 2011, when Aegis said in the face of the court that the claim form had not been served.
5. This was, of course, a point which was legally correct although one of the great technicality; an application was made for an extension of time for service pursuant to CPR 7.6 until 26^th August 2011 or an order dispensing with service altogether. That application was refused by District Judge Birkby on 5^th September 2011 and an appeal from that order was dismissed by His Honour Judge Robinson on 13^th January 2012. Inevitably Mr Davidson was advised to instruct new solicitors; they issued a new claim form on 5^th April 2012 which was duly served on 10^th May 2012 together with an application to disallow the three year time bar pursuant to section 33 of the Limitation Act 1980. That application was dismissed by Mr Nigel Wilkinson QC sitting as a Deputy Judge of the High Court. He cited a dictum of Waller LJ in McDonnell v Walker [2009] EWCA Civ 1257; [2010] PIQR P 102 to the effect that it should not be easy for a claimant, who had failed to serve proceedings in time, to commence a second action and obtain a disapplication of the limitation period under s.33. He set out the guidance of Smith LJ given in Cain v Francis [2009] QB 754 at para 73 and then said:-

"23. Bearing those broad principles in mind, in my judgment the balance tips heavily towards the defendant, who has been caused a degree of unfairness by the initial delay in the notification of the claim, which has been aggravated by the continuing delay caused by the failure of the claimant to commence proceedings within the limitation period. Those difficulties have been exacerbated by the loss of documents in August 2011, which I have no good reason to doubt did occur. That loss took place nine months after the expiry of the limitation period and is not reflective, as I find, of any fault on the part of the defendants.

24. I am reinforced in my decision by the observations of Waller LJ in McDonnell, to which I have previously referred. The prejudice to the claimant in having to pursue an unanswerable claim against his former solicitor is slight by comparison to that confronting the defendants in the light of the history of his claim against them. This application therefore fails and is dismissed."

6. It is at this stage convenient to set out the relevant terms of section 33 of the Limitation Act 1980:-

"Discretionary exclusion of time limit for actions in respect of personal injuries or death.

(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 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….

(2) 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….

(c) The conduct of the defendant after the cause of action arose, including the extent (if any) to which he responded to requests reasonably made by the plaintiff for information or inspection for the purpose of ascertaining facts which were or might be relevant to the plaintiff's cause of action against the defendant…

(e) The extent to which the plaintiff acted promptly and reasonably once he knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to an action for damages; and

(f) The steps, if any, taken by the plaintiff to obtain medical, legal or other expert advice and the nature of any such advice he may have received."

The claimant's submissions

7. Ms Mulcahy QC for Mr Davidson made four attacks on the judge's exercise of discretion. She submitted:-

i) McDonnell v Walker was inconsistent with the later authority of Aktas v Adepta [2011] QB 894 [2010] EWCA Civ 1170 which was to be preferred. The resolution of this conflict was said to be of great importance to those practising in the personal injuries field;

ii) it was wrong to take into account, as a matter of any weight, the fact that a claimant might have a good claim against his former solicitors;

iii) the judge was wrong to find as a fact that there had been any prejudice to the defendants arising after the expiry of the three year limitation period in November 2010; and

iv) if there was no such prejudice, it was then wrong to take into account any prejudice which occurred before the limitation expired.

The supposed conflict between McDonnell and Aktas

8. Both these cases were concerned to resolve the tension between, on the one hand, the new CPR with their considerably more stringent requirements for extensions of time for service (in all civil cases) than had existed under the old RSC and, on the other hand, the continuance of the statutory discretion vested in the court by section 33 of the Limitation Act to disapply the 3 year time limit in cases of personal injury. At paragraph 11 of his judgment in McDonnell Waller LJ (with whom Rimer LJ and Sir Paul Kennedy agreed) said:-

"I should say at the outset that there is, as it seems to me, a slight tension between CPR 7.6 and its stringent terms not entitling a court to extend time in the first action even if no forensic prejudice has been suffered by a defendant, and having the power nevertheless to allow a second action to be commenced by using its discretion under s. 33 [that is to say section 33 of the Limitation Act 1980]. But since the decision in Horton there is no doubt that there have been cases including McKay v Hamlani (considered by the Court of Appeal with Cain v Francis [2009] 3 WLR 551) in which time has been extended under s. 33 in second actions where CPR 7.6 prevented an extension of time for service of a first action. Thus it cannot be said that in a CPR 7.6 case an extension of time for bringing a second action should never be granted, but it seems to me to be a relevant context and to at least show that it should not be easy for a claimant to commence a second action and obtain a disapplication of the limitation period under s. 33."

9. The passage in Aktas v Adepta which it is suggested is in conflict with these words is at paragraph 84 of the judgment of Rix LJ (with whom Aikens LJ and I agreed):-

"84. Both sides rely on these remarks. The defendants rely on Waller LJ's cautionary words cited above. The claimants submit that McDonnell v Walker, on its facts, just as Cain v Francis and McKay v Hamlani on their facts, show how the section 33 discretion is well able to take account of all relevant circumstances, such as prejudice, delay and inexcusable delay, in arriving at the justice of the matter. I agree that these cases show section 33 working well, in both kinds of case. As for Waller LJ's more general remarks about CPR 7.6 and section 33, I would be somewhat circumspect. CPR 7.6 is a general provision, whereas section 33 is specific to personal injury claims with their shorter time limit. If there is a tension, Horton v Sadler, rather that the post Horton v Sadler cases like McKay v Hamlani, rules, on the highest authority, that the statute must be preferred. How, of course, the discretion will be exercised, will depend on the individual facts of each case. There is no reason to think that the defendant will be more prejudiced where the second action is out of time than where the first action is out of time, rather the contrary. And the claimant's or his solicitor's fault, generally speaking, is liable to be greater where the first action is out of time than where the second action is, at any rate where the second action is lost only be reason of an error over service."

10. I can only say that I am surprised that anyone could think that there was any conflict between these two passages. This is rather confirmed by the fact that it turned out, on inquiry from the bench, that the judge was not referred to this passage in Aktas during the argument. The fact that one judge says of another judge's "general remarks" that he would be "somewhat circumspect" does not constitute a conflict; it is merely the second judge saying that the remarks of the earlier judge cannot be treated as an easy or universal mantra which will apply in all cases, if indeed that was what the first judge is saying. Waller LJ was saying that it should not be easy to obtain a disapplication of the time-limit (which, of course, it should not be). Rix LJ was reminding practitioners that it should not be too difficult either (which, of course, it should not be). Neither judge remotely questioned the guidance of Smith LJ in Cain v Francis at paragraph 73 which the judge himself applied in this case:-

"It seems to me that in the exercise of the discretion the basic question to be asked is whether it is fair and just in all the circumstances to expect the defendant to meet this claim on the merits, notwithstanding the delay in commencement. The length of the delay will be important not so much for itself as to the effect it has had. To what extent has the defendant been disadvantaged in his investigation of the claim and/or the assembly of evidence in respect of the issues of both liability and quantum? But it will also be important to consider the reasons for the delay. Thus there may be some unfairness to the defendant due to the delay in issue, but the delay may have arisen for so excusable a reason that, looking at the matter in the round, on balance it is fair and just that the action should proceed. On the other hand, the balance may go in the opposite direction, partly because the delay has caused procedural disadvantage and unfairness to the defendant and partly because of the reasons for the delay or its length are not good ones.

Although the delay referred to in 33(3) is the delay after the expiry of the primary limitation period, it will always be relevant to consider when the defendant knew that a claim was to be made against him and also the opportunities he has had to investigate the claim and to collect evidence (see Donovan v Gwentoys). If, as here, a defendant has had early notification of a claim and every possible opportunity to investigate and to collect evidence, some delay after the expiry of three years will have had no prejudicial effect."

This is the guidance which will almost always be of most use to first instance judges who are asked to disapply the three year time limit in personal injury cases.

11. Ms Mulcahy also relied on the last two sentences of paragraph 84 of Aktas to submit that the failure of the first action for want of service should somehow be an advantage to the claimant rather than an advantage to the defendant. But that is not what Rix LJ is saying at all. He is merely saying that there may (sometimes, not invariably) be less fault in a claimant who has begun within time but failed to serve than in one who only begins out of time. But neither situation is a situation in respect of which a claimant can claim any advantage. I do not myself see that paragraph 95 of Aktas on which Ms Mulcahy also relied takes the matter any further.

The relevance of a claim against the earlier solicitor

12. Ms Mulcahy accepted that the existence of such a claim was relevant but submitted it was not determinative. Mr Wilkinson QC did not say it was determinative but according to Ms Mulcahy he was wrong to say that the claim against the former solicitors was "unanswerable" and wrong to say that the prejudice in having to pursue that claim was "slight" by comparison to the prejudice confronting the defendants. To the extent that this is an argument about weight, that was for the judge and is not for this court. To the extent that it is more than an argument about weight, Ms Mulcahy submitted that the judge failed to take into account that any claim against the solicitors would have to be confined to a loss of the chance of success against Aegis (and thus inevitably of less value to Mr Davidson) and would be in Rix LJ's words in paragraph 96 of Aktas "a generally unsatisfactory way of litigating the claimant's claim" doing "little or nothing for the court's limited resources".
13. But it is apparent from paragraph 8 of the judgment that Mr Wilkinson was fully aware that the claim against the solicitors would have to be based on a loss of the chance of success in the original proceedings. The process of evaluating a personal injury claim is a common place for personal injury lawyers; even if Mr Davidson's claim against Aegis proceeded, his advisers would continuously be evaluating his chance of success. No one pretends that litigation against a claimant's former solicitors is other than second best but as the authorities from Donovan v Gwentoys [1990] 1 W.L.R. 472 onwards show it is something which a judge can (and usually should) take into account as best as he or she can.

Prejudice to defendant after expiry of limitation period

14. Ms Mulcahy submitted that the only possible prejudice found by the judge was the fact that in July 2011 Aegis had closed down their operations in Iraq and had arranged for a container of documents to be transported back to the United Kingdom via Kuwait. The documents were apparently stolen during that transit and, although some were later recovered, they were so illegible as to be useless. Since no one knew whether such documentation had any relevance to Mr Davidson's claim, it was impossible, said Ms Mulcahy, to hold that there was any prejudice in the loss of such documents.
15. In any event, Ms Mulcahy submitted, the defendants had had plenty of opportunity to deal with the claim once they had received the pre-action protocol letter in December 2009, eleven months before the limitation period expired. They should have been searching for any relevant documentation in order to make a considered response to the claim within the 6 month period required by the protocol for dealing with claims where the injury had occurred overseas. Instead, Aegis provided documents relating to Mr Davidson's position during his employment but no other documents which had been requested, such as risk assessments or guidance to instructors before training was to commence. As far as such documentation was concerned they (or, more accurately, their insurers, Chartis) said in October 2010 that they were still making inquiries and in January 2011 that disclosure documentation was still being finalised. If Aegis and their insurers had within the correct time investigated whether there was relevant documentation and arranged for it to come to London or kept in a safe place, the loss of the documents in the container in August 2011 would not have mattered.
16. The difficulty for Ms Mulcahy is that all these matters were considered by the Deputy Judge. He accepted that loss of documentation did occur without any fault on Aegis' part. It is fair to say that he did not explain in detail why Aegis could not be criticised for dilatoriness once they knew in December 2009 that a claim was going to be pursued but since the claimant's advisers were themselves dilatory (although in one sense they were entitled to be since the limitation period had not yet expired) that is not entirely surprising. He merely said that he was unimpressed by the challenge to the defendant's inactivity. What did concern the Deputy Judge, quite apart from the loss of (possibly relevant) documentation, (see paragraph 13) was that it would be difficult or perhaps impossible to discover the identities of the other four to six people on the course. They might well (if traceable) be able to give evidence on matters such as whether Mr Craig Dickson gave a demonstration before requiring the participants on the course to lift one another (a matter which is in dispute) and whether any other preparation took place. The Deputy Judge evidently did not accept the submission now made to us that the case against Aegis would turn almost entirely on expert evidence and could be based on Mr Craig Dickson's report of 11^th December 2007 made for the purposes of Mr Davidson's insurance claims.
17. The Deputy Judge was well-aware of the fact that, for the purpose of section 33(3)(a) and (b), it was delay after the expiry of the limitation period that was important and said twice (in paragraphs 17 and 18) that the position was made worse (or exacerbated) by that delay. That is not just a reference to the loss of (possible relevant) documentation but also to the well-known fact that memories become less and less reliable, the staler an action becomes. If authority is required for that assertion of common-sense, it can be found in Donovan v Gwentoys at page 479, Roebuck v McGovern [1994] A.C. 224 at page 234 and Price v United Engineering Steels Ltd [1998] PIQR P 407 at page 414, no doubt all authorities at the back of the Deputy Judge's mind.
18. In my view, he was entitled to conclude that there had indeed been prejudice caused to Aegis in the period between November 2010 when limitation expired and April 2012 when a second claim form was issued and an application to disapply the time limit was made.

Prejudice to defendant within the limitation period

19. In the light of my acceptance that Mr Wilkinson was entitled to conclude that there was prejudice after November 2010, Ms Mulcahy's fourth attack on the judge falls away. Prejudice during this period may not be relevant under section 33(3)(a) or (b) but is clearly relevant as part of the overall picture.

Conclusion

20. I am not therefore persuaded by any of Ms Mulcahy's four attacks on the Deputy Judge's discretion. He followed the guidance of Smith LJ on Cain v Francis and came to a conclusion to which he was entitled to come; I would dismiss this appeal.

Lord Justice McFarlane:

21. I agree.

Lord Justice Vos:

22. I also agree.