Jersey Unreported Judgments

2001/121

ROYAL COURT

(Samedi Division)

 

24th May, 2001 

 

 

 

 

Application by Plaintiff for Order that issue of prescription be determined as preliminary issue or for declaration that Plaintiff's course of action is not prescribed.

 

Advocate D. Gilbert for the Plaintiff and

Advocate N. J. Chapman for the Defendant

 

 

judgment

the deputy bailiff:

1.        This summons raises an issue as to whether the Plaintiff's claim is prescribed.  Both parties agree that the limitation period of three years expired before service of the order of justice but the Plaintiff contends that the Defendant is estopped from taking the prescription point.

Factual background

2.        On 11th January, 1997 the Plaintiff was a passenger in a car driven by her husband.  At a time when it was stationary due to traffic ahead, it was struck from behind by a car driven by the Defendant.  Not surprisingly, the order of justice alleges that the accident was caused by the Defendant's negligence.

3.        On 15th January, 1997, Messrs. Shoosmiths and Harrison, English solicitors ("Shoosmiths") wrote to the Defendant holding him wholly responsible for all the uninsured losses arising from the accident.  The Defendant passed this letter to his insurance company which replied to Shoosmiths in a letter dated 29th January, 1997 headed "Without prejudice".  The letter included the following three paragraphs:-

"We can confirm that from the information in our possession at present it appears that our insured was responsible for the accident.

Please would you let us have details of your client's claim together with supporting documentary evidence and we will give this matter our further consideration.

Please would you let us have details of your client's claim together with supporting documentary evidence and we will give this matter our further consideration.

4.        On 6th February, 1997 Shoosmiths responded in an open letter which said as follows:-

"We thank you for your letter of 29th January 1997 accepting liability in this matter.

We will be forwarding to you details of our client's claim together with a claim for his wife and two children in due course.  Please note that all parties were injured as a result of the accident and medical reports will be supplied to you in due course."

5.        There then followed various exchanges of correspondence between Shoosmiths and the insurance company during the remainder of 1997.  No further mention was made of who was liable for the accident but the insurance company did not at any stage deny the assertion in Shoosmiths' letter of 6th February that it had accepted liability, nor did it at any stage raise.

6.        During the course of 1997 the insurance company settled the Plaintiff's husband's special damages in full.  Each letter from the insurance company agreeing to do so was headed "without prejudice" and each payment was accompanied by a standard letter which contained the sentence "payment is made without admission of liability".  In October 1997 the parties turned their attention to the level of general damages for injuries to the Plaintiff's husband.  The insurance company offered £750, Shoosmiths contended for £1,250 and the matter was settled at £1,000 together with the reasonable costs incurred by the Plaintiff's husband.  The level of costs was eventually agreed in February 1998 after some further correspondence.

7.        During the course of 1997 the insurance company also agreed various interim payments to the Plaintiff in respect of her special damages.  Payments were made on 13th June, 30th June and 21st July 1997.  In each case the payment was accompanied by the standard letter referred to above, asserting that payment was made without admission of liability. 

8.        Things appear to have gone quiet after settlement of the costs in February 1998 because the Plaintiff's injuries had not settled down.  On 7th June 1999 Shoosmiths wrote to the insurance company to inform them that the Plaintiff was to be re-examined due to the ongoing nature of her symptoms.  The next letter we have seen is dated 22nd December 1999 from Shoosmiths to the insurance company.  It is of some importance and we therefore quote it in full:-

"Our client is due to undergo a further medical examination on her injured back and following that examination it is anticipated that she will undergo an operation. 

We are therefore unable to settle our clients [sic] claim within the three year limitation period and it [sic] our intention to commence proceedings out of The Royal Court of Jersey on a purely protective nature.

As you are no doubt aware the order of justice will have to be served by the Viscount and we would therefore ask you to nominate solicitors to except [sic] service of the order of justice, we would appreciate your reply by return due to the impending festive season and the close proximity of the three year limitation date.

Finally we can advise that we shall be using messrs Crill Canavan Solicitors and Advocates of 40 Don Street, St. Helier, Jersey to issue the proceedings on our clients [sic] behalf.

We await your early response".

There is a file note dated 22nd December indicating that the insurance company telephoned Shoosmiths to inform them that Messrs. Mourant du Feu & Jeune ("Mourants") would accept service of the order of justice on behalf of the Defendant.

9.        As a result, Messrs. Crill Canavan, acting on behalf of the Plaintiff, issued an order of justice on 4th January, 2000 and served it on Mourants the same day.  It was returnable before the Court on 14th January.  Unfortunately, presumably because of an administrative error, the action was not tabled that day and no application for late tabling was made.  The order of justice was subsequently re-served on 28th January with a return date for 4th February 2000.  However the three year limitation period had expired on 11th January, 2000.  Both parties accept that, on the authority of Racz -v- Perrier (1979) JJ 151, the service of the order of justice on 4th January did not stop time running for the purposes of prescription because the action was subsequently discontinued by the failure to table on 14th January.  Time did not stop running therefore until 28th January and that was outside the three year limitation period.

The contentions of the parties

10.      Miss Gilbert, on behalf of the Plaintiff, contends that the correspondence and conduct of the parties shows that the Defendant (through the insurance company as his agent) has admitted full liability for the accident.  The only matter which remains in dispute is that of quantum.  It was implicitly understood between the parties that, if quantum could not be agreed, the parties would then have recourse to the Court.  She relied on two English cases namely Wright -v- John Bagnall & Sons Limited (1900) 2QB 240 and Cohen -v- Snelling (1943) 2 All ER 577 as showing that, where liability had been admitted by a defendant, it was not open to him thereafter to set up any limitation period by way of defence.  The Defendant, having admitted liability in this case,  cannot now plead prescription.

11.      Mr Chapman, on behalf of the Defendant, argued that there was no agreement as to liability.  The initial letter of 29th January, 1997 was not a proper admission of liability.  To say, as the insurance company did, that it appeared that its insured was responsible on the basis of the information in its possession at present was saying no more than that it looked to the insurance company as if the Defendant was probably liable on the basis of the information then available to it (some two and a half weeks after the accident).  That was wholly insufficient to fix the writer of the letter with a formal admission of liability.  He pointed out that there was no reference thereafter in any of the correspondence to an admission of liability.  Indeed all the payments which had been made by way of interim payment to the Plaintiff and by way of interim and final payment to the Plaintiff's husband were expressly made without any admission of liability.  He contrasted the facts of the case with those of Tomlin -v- Standard Telephones and Cables Limited (1969) 3 All ER 201 where, by a majority, the Court of Appeal had held that there was an agreement on liability.  In that case there had been repeated letters between the plaintiff's solicitors and the insurance company which referred to the fact that an agreement on liability had been reached e.g. "In view of the 50/50 agreement come to between us for settlement of this claim ..." and "Liability has already been agreed at 50/50 so we are only concerned with the question of the value of the claim itself".

12.      He went on to argue that if, contrary to his submission, the Court were to hold that there was an agreement on liability, that did not mean that the Defendant had also agreed to waive the prescription point.  He accepted that the two English cases appeared to say that one followed inexorably from the other but he submitted that we should not follow those authorities.  Furthermore, it was clear on the facts of this case that the Plaintiff's solicitors had not thought that there was an agreement to waive the prescription point; otherwise why would they have written their letter of 22nd December 1999 indicating that, as the three year limitation period was about to expire, it was necessary for them to issue protective proceedings immediately. 

Conclusions

(a)       Was there an agreement as to liability?

13.      We agree that the facts of Tomlin (with the repeated references in correspondence to a 50/50 agreement) were rather clearer than in the present case.  However we are satisfied that there was an agreement between the parties that the matter would be dealt with on the basis of full liability on the part of the Defendant.  We accept that the initial letter of 29th January 1997 from the insurance company was not a full admission of liability.  It was merely an early and realistic indication that, on the basis of the information then available to the insurance company, it was likely that in due course the matter would be dealt with on the basis of full liability on the part of the Defendant.  We think it would be very undesirable to construe such language as a formal admission.  We think that Shoosmiths went too far in characterising it as an admission of liability in their response of 6th February.  If matters had rested there, we would not have found there to be an agreement on liability. 

14.      But matters did not rest there.  Not only did the insurance company not dispute the assertion of Shoosmiths as to liability, but they settled the Plaintiff's husband's claim in full and made interim payments to the Plaintiff.  Mr Chapman argued that it was never expressly stated that the husband's claim was being settled on the basis of 100% liability; the insurance company might simply have been buying off a nuisance claim having regard to the modest level of injury.  But the fact remains that the car driven by the Plaintiff's husband was stationary when it was struck and at no stage in the correspondence did the insurance company suggest that the Defendant was not at fault or that there might be some contributory negligence on the part of the Plaintiff or her husband.  We find that the insurance company did settle the claim of the Plaintiff's husband on the basis of 100% liability on the part of the Defendant and both parties understood that settlement of the Plaintiff's claim would therefore be on the same basis.  Taking account of all the circumstances, we hold that the parties had agreed to proceed on the basis of 100% liability on the part of the Defendant in relation to the Plaintiff's claim.

(b)                Was there an agreement not to plead prescription?

15.      Our understanding of Cohen -v- Snelling and Wright -v- John Bagnall & Sons Limited is that once a defendant has agreed to accept liability, it follows automatically that he is debarred from pleading prescription.  The rationale for this can be found in Cohen where Scott LJ says at 577:-

"The evidence is clear beyond all doubt that the representative said (i) that they had no defence, and that the negotiations should proceed 'on the basis of admission of liability'; but (ii) that 'a writ would have to be issued in any event because whether they agreed about the quantum of damages or not, the Court would have to approve it and apportion it.'  There was no other meeting and, in my opinion, the whole of the subsequent correspondence was written by both sides with knowledge of the agreed position which I have just stated.  The plain meaning of that agreement was that liability in damages to the Appellant's cause of action for the money loss resulting to the deceased Appellant's dependants from the Respondent's negligence was once and for all definitely accepted by both the Respondent and his insurers; and both of them were thereafter precluded from putting forward any defence whatever which would impeach that liability.  It was just as much a contract not to plead s3 of the Act, as if that undertaking had been put in words; and the insurance society knew it at the time when it caused that plea to be recorded."

16.      We are not persuaded that we should follow those cases.  In our view there is a difference between agreeing that you will be liable for a negligent act and agreeing that you will waive any requirement that proceedings in respect of that negligent act should be brought within a certain time.  Limitation periods serve an important function.  They ensure that claims are not allowed to go stale and that proceedings are brought at a time when memories are still comparatively fresh and evidence is likely still to be available.  Such considerations may be just as relevant to questions of quantum as to those of liability.  An agreement to exclude a limitation period imposed by law should, in our view, be clear and unambiguous.

17.      Furthermore it is of considerable assistance to the resolution of disputes that the parties should be able to speak freely in "without prejudice" correspondence and not find that they have said something which comes back to haunt them.  The underlying principle, and the dangers of interfering with it, were aptly put by Sir John Romilly MR in Jones -v- Farrell (1852) 15 Beav 396:-

"But, in addition to this, I find that the offers were, in fact, made without prejudice to the rights of the parties; and I shall, as far as I am able, in all cases endeavour to repress a practice which, when I was first acquainted with the profession, was never ventured upon, but which, according to my experience in this place, has become common of late - namely, that of attempting to convert offers of compromise into admissions of acts prejudicial to the person making them.  If this were permitted, the effect would be, that no attempt to compromise a dispute could ever be made."

In our judgment, if the effect of an admission of liability in "without prejudice" correspondence were that a defendant would be taken automatically to have debarred himself from relying on prescription, it is likely that insurance companies would become even more cautious of making admissions.  That would be undesirable.  We think that nothing should be done to make more difficult or more hazardous negotiations under the umbrella of "without prejudice".  On the contrary we think it is in the interests of justice that insurance companies and others should be encouraged to be as realistic and straightforward as possible in "without prejudice" correspondence so that matters which ought not to be disputed are compromised or admitted and one is left only with the real issues at stake.

18.      We see further undesirable consequences if we were to follow Cohen.  As we understand it, the case holds that once there is an admission of liability, there is no longer any period of prescription.  Thus a plaintiff could wait years and years before bringing the necessary proceedings to sort out quantum.  There would be no means in the meantime whereby the defendant could force the pace because there would be no proceedings in being and no period of prescription to encourage the plaintiff to initiate such proceedings.  Thus, even if the defendant became aware that evidence in relation to quantum was becoming unavailable with the passing of time or that he was suffering other prejudice, he could do nothing about it.  It is true that, once the quantum proceedings were begun, the Court would be able, on the application of the defendant, to ensure a speedy resolution, but there would be nothing which could be done before then.  We think that that would be a very unsatisfactory state of affairs.  It should only be visited on a defendant if he has expressly so agreed by waiving or extending the period of prescription.

19.      Neither do we think that departing from the principle in Cohen would cause any injustice to a plaintiff.  If an agreement as to liability is reached, it is always open to the plaintiff's advocates to ask for an express waiver or extension of the period of prescription.  Any express waiver or extension would undoubtedly be enforced by the Court.  It would often be in the insurance company's interest to agree such a waiver or extension.  If it refused, it would be straightforward for the plaintiff to issue a protective order of justice.  On the basis of full liability, the cost of so doing would undoubtedly be recoverable from the defendant (and therefore the insurance company) in due course.  In the event of the plaintiff's advocate forgetting to issue proceedings in time, there would seem to be little doubt that the advocate would have been negligent and would therefore be liable to the plaintiff for all the damages which the plaintiff would otherwise have recovered against the original defendant.  The plaintiff would not suffer.

20.      We decline therefore to hold that an agreement to admit liability is to be taken as bringing with it an agreement on the part of the defendant not to avail himself of any limitation period.  We hold that the Court has to consider the facts of each case in order to ascertain whether the defendant has clearly and unambiguously agreed to waive prescription or to extend the relevant limitation period.

21.      We find that in the present case the Defendant did not do so.  Not only is there no mention of the Defendant having done so in any of the correspondence, the opposite is the case.  We have already referred to the letter of 22nd December, 1999 from Shoosmiths making it clear that, as they had been unable to settle the claim within the three year limitation period, it was their intention to commence proceedings on a purely protective nature.  They went on to say that an urgent reply on the question of nominating solicitors to accept service was required because of the close proximity of the three year limitation date.  It is quite clear that Shoosmiths did not think that there had been any agreement to waive the limitation period.  On the contrary, they clearly thought that it still applied.  The approach in Cohen and the approach contended for by the Plaintiff would require the Court to find that the parties agreed that the Defendant would not take any point on prescription when the Plaintiff's solicitors clearly thought exactly the opposite, namely that the Defendant could still take the point if proceedings were not launched within the three year period. 

22.      Accordingly we hold that there has been no clear and unambiguous statement by or on behalf of the Defendant that he would not rely on any limitation period.  Nor did the insurance company do anything by its actions to lead the Plaintiff so to believe.  Indeed the Plaintiff did not so believe as is evidenced by the letter of 22nd December 1999.  In the circumstances we hold that the Defendant is not estopped or otherwise debarred from taking the point on prescription.  We therefore hold that the order of justice is prescribed and we strike it out.     

Authorities

Walker-v-Wilsher (1889) 23 QB 337.

Cohen-v-Snelling (1943) 2 All ER 577.

Wright-v-Bagnall (John) & Sons, Ltd (1900) 2QB  240.

Tomlin-v-Standard Telephones (1969) 3 All ER 201.

Recz-v-Perrier & Labesse (1979) JJ 157.