England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HER HONOUR JUDGE FABER

		Royal Courts of Justice Strand, London, WC2A 2LL
		17 December 2012

Mr Justice Eady :

1. On 23 November 2012 I heard an appeal by the Second Defendant, Gateway Insurance, against an order made by Her Honour Judge Faber at the Central London County Court on 12 June 2012. It followed a case management decision on her part, whereby she refused permission to withdraw an admission of liability in relation to a collision occurring on 22 August 2010 which had been made on 6 September of that year. It was accepted by Mr Grant, appearing for the Appellant, that generally the court will be slow to overturn a judge's exercise of discretion in such circumstances. He argues here, however, that the circumstances are exceptional because the Appellant has good reason to believe that the accident was not genuine: the Appellant contends that it was staged in order to make a fraudulent insurance claim.
2. The Appellant's application for permission to appeal was initially refused on paper by Mackay J on 10 September of this year and permission was granted when the application was renewed at an oral hearing before Stuart-Smith J on 10 October.
3. The Claimant's case is that on 22 August 2010 he was driving his brother-in-law's Mercedes Benz motor car along Dawley Road in Hayes to the west of London. It was his intention to drive round a roundabout to the third available exit in order to travel back in the direction from which he had come.
4. He says that as he was negotiating his way around the roundabout a vehicle emerged from the second exit and collided with the near side of the Mercedes. The vehicle in question was a Volvo S80 motor car registered at the material time to the First Defendant. It seems that the Mercedes was recovered from the scene of the accident, or from a spot close by, later on the same day by a recovery firm called Camford Accident Specialists Ltd, based at 144 Camford Way in Luton. Its invoice was before the court. Although it specified the date of collection (22 August 2010), it did not record on its face the location from which the vehicle was recovered.
5. It is difficult to imagine how an accident of this kind could be staged at a roundabout – not least because it would be virtually impossible to arrange for the two vehicles to be in exactly the right spot at the right time. It is therefore implicit in the Second Defendant's case that the collision between the two vehicles happened elsewhere – and presumably that the Mercedes was thereafter driven to a spot on or near the roundabout to await collection by Camford. Yet so far, I gather, no attempt has been made to contact Camford in order to see whether its records could throw any light on the important issue of location.
6. It was claimed that the impact caused substantial damage to the Mercedes, to the extent that it was ultimately declared by the assessing engineer acting on the Second Defendant's behalf to be uneconomic to repair it. This conclusion gave rise to the admission of liability on 6 September 2010 and in December of that year the Second Defendant paid out £16,800 in respect of the net pre-accident value of the Mercedes and £2,342.42 to the First Defendant for the net pre-accident value of the Volvo. It seems that it was in the same month that the Mercedes was sold for scrap.
7. It was on 20 May 2011 that the Claimant issued these proceedings (originally in the Edmonton County Court) claiming £37,086 in credit hire charges, £1,584 in storage charges, £180 for recovery, £20 in travelling expenses and general damages in respect of a whiplash injury. On 20 June 2011 the court permitted joinder of the Second Defendant with a view to protecting its interests. A month later, on 20 July 2011, the Second Defendant served its defence, which stated that no admissions were made as to the alleged accident "for want of knowledge of the same". It was stated that the Second Defendant had "grave suspicions about the genuineness of the claims advanced by the Claimant", who was put to proof regarding all the circumstances of the accident. Nothing was said at that stage, either in the particulars of claim or the defence, about the admission of liability which had been made the previous September. Despite "trailing" a case of fraud in this rather unconventional way, nothing was done to provide a proper pleading to that effect or, apparently, to obtain evidence in support. If a litigant intends to take the serious step of alleging fraud, then it should be done clearly and as soon as possible. It is not appropriate to prevaricate or simply do nothing.
8. Another nine months elapsed before the Second Defendant's application of 26 April 2012 to withdraw the admission.
9. A pre-trial review had been scheduled for 27 April 2012, but this appointment was vacated because of the last minute application. The matter was argued before Judge Faber on 17 May.
10. Because of the admission of liability, the Claimant had not made any arrangements prior to the disposal of the Mercedes for an engineer's report to be prepared. In fact, the Second Defendant obtained such a report from a Mr Bentham, about 10 months afterwards, on 31 October 2011, but it seems that this was not received with any enthusiasm because the conclusions were consistent with the Claimant's case.
11. Six months after that, a second report was obtained, with some haste, from a Mr Harris of M D Assessors which was dated 26 April of this year. He naturally recorded that he had not been given the opportunity to inspect the Mercedes but added: "However, I do have 18 digital images of the vehicle in a damaged condition. I consider the images are of sufficient clarity to enable me to form a balanced view on the consistency of the damage when compared with the description of the incident that has been provided". He later added, however, that " … there is no substitute for a physical inspection, this always being the preferred method when reporting upon the consistency of damage". He reiterated that he thought the digital images to be of sufficient clarity to enable him to provide a balanced opinion. He went on to express disagreement with Mr Bentham's conclusions.
12. Mr Harris expressed a number of opinions, including particularly that the Mercedes was stationary at the time of the impact on the nearside front wing and, moreover, that there was pre-existing damage in the form of scratch marks on the nearside front door (which had earlier been attributed to the events of 22 August 2010 and were thus relevant to calculating the pre-accident value of the vehicle). By way of response, the Claimant's solicitors obtained a report from Mr Worrall dated 15 May 2012, which did not support the proposition that the Mercedes had been stationary at the point of impact.
13. In the light of Mr Harris's report, three applications were made to Judge Faber on 17 May. First, as I have said, it was sought to withdraw the admission made as long ago as 6 September 2010. Second, there was an application for permission to rely on Mr Harris' report as expert evidence. This was against the background of an earlier direction that each party could rely upon expert evidence provided the relevant reports were served by 15 February 2012. The Second Defendant failed to comply with that provision. Thirdly, the Second Defendant wished to amend to plead fraud for the first time and to launch a counterclaim for losses in excess of £19,000. A good deal thus depended on Mr Harris' report.
14. It was accepted on both sides that it was necessary for the Judge, on an application to withdraw an admission, to take into account inter alia the specific considerations listed at CPR 14 PD 7.2:

(a) the grounds upon which the applicant seeks to withdraw the admission including whether or not new evidence has come to light which was not available at the time the admission was made;

(b) the conduct of the parties, including any conduct which led the party making the admission to do so;

(c) the prejudice that may be caused to any person if the admission is withdrawn;

(d) the prejudice that may be caused to any person if the application is refused;

(e) the stage in the proceedings at which the application to withdraw is made, in particular in relation to the date or period fixed for trial;

(f) the prospects of success (if the admission is withdrawn) of the claim or part of the claim in relation to which the offer was made; and

(g) the interests of the administration of justice.

15. There is no doubt from the Judge's careful and detailed reserved judgment that she was well aware that these were the considerations to be borne in mind and she made express reference to them. On an appeal of this kind, by way of review, I should only interfere if I am satisfied that the learned Judge was "wrong". I need to consider whether she misunderstand the facts in a material way or misdirected herself in law. I need to ask whether she took into account any irrelevant factors or failed to take into account something which was relevant. Finally, I should consider whether she stepped outside, in the exercise of her discretion, the generous ambit within which there is room for reasonable disagreement. Mr Grant submits that her conclusion was perverse in all the circumstances of this case.
16. I turn to address the grounds of appeal. First, it is said that the Judge "erred in fact in that she failed to make a clear finding that if the expert evidence of Mr Harris were correct, then his expert conclusions could not be reconciled with any assertion by the Claimant that his Mercedes was damaged in a bona fide accident with the First Defendant's Volvo".
17. It is clear from the judgment, and in particular at paragraphs [24] and [25], that the Judge well understood that there was a "stark contrast" between the two cases being advanced (as was noted by Stuart-Smith J when granting permission on 10 October of this year). She also expressly acknowledged that Mr Harris' report provided "unequivocal evidence of the unreliability of the Claimant's account". The first ground, therefore, seems to be unsustainable.
18. Secondly, it is suggested that the Judge misdirected herself in law, in that she sought to conduct a mini-trial as to the merits of the various expert reports. It is said that she should have admitted the evidence of Mr Harris and left any assessment of its cogency to be tested at trial. A particular complaint made by Mr Grant is that she included, within this supposed mini-trial, an evaluation of an expert report not so far relied upon by either party (i.e. that of Mr Bentham dated 31 October 2011).
19. It seems clear to me that the learned Judge was well aware that a mini-trial would be inappropriate; on the other hand, it was plainly necessary for her to make some tentative evaluation of the available evidence, since she was required to take into account inter alia "prospects of success". Indeed, Stuart-Smith J noted in his judgment that " … Mr Grant accepts that the learned Judge correctly identified the tests that she was obliged to apply and, in the course of her judgment, reviewed the application under headings which were correct for an application of this kind".
20. As Mr Willetts pointed out, Mr Bentham's report was material before the court of which the Judge was entitled to take account, not least when addressing the prospects of success. Furthermore, even though the Second Defendant had no intention of placing reliance on Mr Bentham's report in addition to that of Mr Harris (since they are hardly consistent with one another), it would be open to the Claimant to make reference to its contents in the light of CPR 35.11:

"Where a party has disclosed an expert's report, any party may use that expert's report as evidence at the trial."

In the light of this, it appears that it is not necessary for a party to seek permission to rely upon such a report, when disclosed by another party, even though the court has not given anyone specific permission to do so: see e.g. Gurney Consulting Engineers v Gleeds Health and Safety Ltd [2006] EWHC 43 (TCC).

21. I am not persuaded that the Judge conducted a mini-trial or that she impermissibly took into account Mr Bentham's report.
22. I turn next to the argument that she exercised her discretion perversely in giving undue weight to certain factors over others. This is a difficult hurdle to surmount, since it is well recognised that the relevant weight to be attached to the factors to be taken into account is a matter for the judge exercising the discretion: see e.g. Woodland v Stopford [2011] EWCA Civ 266.
23. In particular, it is submitted that the Judge was wrong to accord priority to the consideration that the application to amend came late in the day over the important factor that "the Second Defendant was seeking permission to rely on cogent evidence that the court's process was being abused by the bringing of a claim that was contaminated to its core by dishonesty". Yet when the Judge made her assessment of the cogency of Mr Harris' report, alongside the balancing factors, she was criticised for conducting a mini-trial. But I have to ask whether she exceeded the generous ambit within which there is room for reasonable disagreement. In other words, did she exercise her discretion in a manner in which no reasonable judge should have done?
24. Having decided to reserve her judgment, the Judge considered all the circumstances with care and gave what weight seemed to her to be appropriate to each of the relevant factors. She was obviously well aware of the need for the court to discourage or refuse to permit its process to be abused by the advancement of false claims. Every judge is. On the other hand, the graver the allegation made against a litigant, the more important it becomes to try and ensure that a fair trial is possible and, in particular, that he has an opportunity to do himself justice in the presentation of his case. (That is obviously a matter engaging his rights under Article 6 of the ECHR.)
25. As all three experts unsurprisingly agree, the best evidence on which to make an assessment of how a collision occurred is that to be found on the vehicles themselves. The Mercedes probably would not have been sold for scrap if there had remained any doubt as to the Second Defendant's acceptance of liability. Indeed, it would certainly not have been disposed of in this way if there were any hint of fraud. It is thus not simply a question of the Judge giving undue weight to the lateness of the application (although a satisfactory explanation for the long delay has not been forthcoming even now). She had to take into account fully the prejudice to the Claimant in not being able adequately to defend himself against a serious charge of dishonesty and a consequent claim for substantial damages and costs.
26. Even taking all that into account, a judge might still have found in the Second Defendant's favour if there were compelling evidence of fraud – and especially so if it had only recently become available. But this was not the situation confronting Judge Faber.
27. The hastily formed opinion of Mr Harris was based on photographs which led other experts (Mr Bentham and Mr Worrall) to different conclusions. The evidence was, therefore, for a judge who was merely addressing the prospects of success, at best equivocal. She was not under any compulsion to decide that Mr Harris' view was bound, or even likely, to prevail. It might or it might not. Indeed, in the express context of assessing the prospects of success, she stated that she would be "hesitant to find fraud based on the expert evidence". That obviously was not a pre-emptive finding on her part, but rather a personal assessment based upon her experience of how much impact Mr Harris' report was likely to make upon a judge at trial.
28. Moreover, if the Second Defendant had sought to resolve its suspicions earlier, Mr Harris or any other expert would have been able to reach his conclusions as readily in December 2010 as in April 2012. No further information emerged in the intervening period. She was thus entitled to conclude that this was an application to introduce evidence that was only equivocal and one that was, in any event, made far too late.
29. In my view, the Judge did not arrive at a perverse conclusion. It was one that was entirely reasonable in the circumstances confronting her.
30. I am not convinced by any of the grounds I have addressed and the appeal is accordingly dismissed.