Limitation: A second bite at the cherry

Summary
Under the 1979 House of Lords’ decision in Walkley v Precision Forgings Limited (1979) 1 WLR 606 a Claimant who issued proceedings, did not actively pursue them and allowed limitation to expire, was debarred from issuing fresh proceedings out of time. This has now been overruled by the House of Lords in Horton v Sadler (14 June 2006).

Background
In Walkley, the Claimant had issued a writ (how quaint that seems now) in time, served it but failed to take any further steps in the proceedings on the back of unfavourable advice from Counsel. Some years later – after the limitation period had run out – but armed with better evidence, the Claimant issued a second writ, served it and sought the Court’s discretion under s.33 of the Limitation Act 1980 to allow the second action to proceed. The House of Lords held that as the initial writ was issued in time, the discretion under s.33 was not available – the Claimant had not been prejudiced by the limitation requirements, but by his own delay. The claim was therefore struck out.

Horton arose out of a road traffic accident. The Defendant was uninsured. The Claimant issued proceedings against the Defendant and against the MIB two days before limitation expired. However, he failed to comply with the MIB’s strict notice requirements. The MIB filed a Defence, disputing liability on that basis and defeated those proceedings.

The Claimant issued a second identical set of proceedings, now (just) out of time but complying with the MIB’s notice requirements. The MIB filed a Defence raising limitation. The Claimant applied for discretion under s.33 of the Act to allow the action to proceed and finally succeeded on appeal to the House of Lords.

Their Lordships criticized the earlier decision in Walkley as unsound and unduly restrictive of the broad discretion that Parliament had intended to confer under s.33 of the Limitation Act 1980. The Court has a wide general discretion under s.33, which should not be reserved for unusual or exceptional cases. The key issue is the balance of prejudice to each party and Lord Bingham specifically noted the comments of the judge (Cooke J) at first instance:
> Viewing the matter without reference to the appellant’s claim against his solicitor’s insurers, he found the balance to favour the appellant since the delay was small, the effect on the trial minimal and the MIB would lose a fortuitous limitation defence. He then considered whether the appellant’s claim against his solicitor’s indemnity insurers tilted the balance the other way. He noted in the MIB’s favour that the appellant had an undisputed claim, whether against his solicitor or the MIB, and described the balance he had to strike as a fine one. But he concluded that the balance remained in the appellant’s favour, since the MIB had been on notice of the claim, and had no evidential problem and were simply losing the windfall of a limitation defence, whereas the appellant would have to bring a further action against a new defendant.

Conclusion
While this is unlikely to be a ‘floodgates’ decision, personal injury carriers, and their reinsurers, should be aware that a limitation defence in such circumstances cannot now be taken as automatic. Everything will turn on the relative prejudice to each party. In particular, they should bear in mind that the Courts are not to reserve the discretion “for unusual or exceptional cases”, though one can expect the Courts to stamp on unmeritorious application of the case pretty hard.

[Nicole Kerr](mailto:Nicole.Kerr@halliwells.com) (0870 365 9116)
[Jolyon Patten](mailto:Jolyon.Patten@halliwells.com) (0870 365 9136)

Halliwells LLP

Aside: It is wonderful to note how loathe the House of Lords are to depart from earlier precedence. This is pure magic from Lord Hoffman:

…it is with a reluctance verging on disbelief that one is driven to conclude that the deliberate opinions of Lord Wilberforce and Lord Diplock were quite wrong. Of each of them it may be said, as Viscount Simonds said of Lord Macnaghten when faced with a rather similar situation in Public Trustee v Inland Revenue Commissioners [1960] AC 398, 409, that “to generations who have passed their lives in the law his is truly clarum et venerabile nomen.”

Beautifully and elegantly put.