Concerns have been raised over the rising incidence of pre-action admission withdrawals, with the result that changes in the approach taken by claimants may follow. Rachael Allison explains
The clear intention of the Woolf Reforms was that personal injury claims be dealt with in a balanced, cost-effective and proportional manner.
As such, the Pre-Action Protocol allows a claimant to set out allegations of negligence within a 'letter before action'. Thereafter, a defendant has three months to respond by either admitting or denying liability, with reasons given for any denial. Where liability is admitted "the presumption is that the defendant will be bound by this admission for all claims with a total value up to £15,000" - the fast-track limit.
The aim was a reduction in litigated cases and a consequent saving of costs and court time, with litigation being a last resort. Inherent within this approach has been the insurer's decision to settle some cases on an economic basis. However, recent case law could change the approach of claimants in a manner not foreseen by either legislators or insurers.
Gale v Superdrug (1996) was the leading case on this point prior to the implementation of the Civil Procedure Rules. It was held that a defendant could retreat from a pre-action admission provided that "in all the circumstances it is just to do so having regard to the interests of both sides and to the extent to which either side may be injured by the change".
Within the CPR, rule 14 makes provision for a party to admit the truth of the whole or part of a case, in writing (either letter or statement of case) and R14.5 states, "the court may allow a party to amend or withdraw an admission".
So does this wording apply to pre-action admissions and is the test in Gale still applicable?
The recent Court of Appeal case of Sowerby v Charlton (2005) sought to address whether the language of CPR14 was capable of embracing pre-action admissions - as had been the case in the now revoked RSC O27 r3. The defendant admitted primary liability pre-action but reserved its position on contributory negligence. However, the defence subsequently filed, denied primary liability.
The claimant successfully applied to strike out those parts of the defence relying on the admission of liability. The defendant appealed on the basis that CPR14 raised an important point of practice.
Lord Justice Brook ruled that CPR14.1 did not embrace pre-action admissions of liability - the presumption within the Pre-Action Protocol that admissions were binding on fast-track cases did not apply to multi-track cases.
There was express recognition in paragraph 2.9 of the protocol that letters of claim and responses were not intended to have the same status as a statement of case in proceedings.With this precedent created, pre-CPR authorities were no longer considered reliable.
Lord Justice Brook approved the test in Braybrook v Basildon and Thurock University NHS Trust (2004) for withdrawal of post-action admissions, which essentially allowed for the discretion of the court when considering all the circumstances of the case and sought to give priority to the overriding objective.
Considerations include balance of prejudice to the parties; reasons and good faith of the application; prospects of success of any issue arising from the withdrawal; public interest including avoiding satellite litigation; disproportionate use of court resources; and strategic manoeuvring. Proximity to the final hearing date would also be considered.
Following the judgement in Sowerby, a claimant cannot therefore rely on pre-action admission, particularly in a multi-track case. Although a fast-track case attracts the presumption as set out within the Pre-Action Protocol, presumption is always vulnerable to rebuttal.
Consequently, a claim remains vulnerable until settled pre-action or upon the filing of an admission post issue, upon which judgement can be entered.
Investigation of liability can be a costly exercise best undertaken at an early stage, to preserve evidence including reliable and traceable witness evidence. To rely in good faith on an admission, which can be withdrawn later, could prove fatal to a claim - not least on the grounds of prejudice - and could also further expose its advisers to criticism including potential allegations of negligence.
Considering this, what options are available to a claimant?
In terms of pre-issue, a claimant should ensure the letter before claim sets out precise allegations of negligence that are to be repeated in any pleadings that follow. An open admission is less likely to survive subsequent judicial scrutiny in the event of post-action denial or withdrawal.
Contributory negligence should also be specifically addressed in open terms; failure to do so can result in delayed and often post-issue investigations long after the trail of evidence has gone cold. If the defendant refuses to be drawn on the point then the subsequent costs of safeguarding the issue must be justifiable.
Upon receipt of an admission, a claimant could be advised to issue proceedings and seek judgement, leaving damages to be assessed. This is evidently not the desired solution for insurers or one envisaged by legislators as it arguably serves to increase costs and flood the court service - going against the original aims of the protocol. Yet how can this be an abuse of process if admissions are unreliable?
In conditional fee agreement cases, there need be no reassessment and reduction of the success fee to reflect the ongoing risk to a claimant until judgement.
Finally, regarding the post-issue withdrawal of admission - or allegations of contributory negligence when the point is addressed in open terms, pre-issue - claimants should immediately bring the issue to the attention of court by way of specific application; assuming the test in Braybrook is satisfied.
However, delay and proximity to a final hearing date could prove fatal to any such application. Alternatively, claimants could request a split trial on the issue of liability with a concurrent part 36 liability offer, placing early and heavy costs pressure on the defendant.
As can be seen, Sowerby has served to open a potential floodgate of claims.
In the meantime, insurers may well have to address their approach to claims, basing decisions on admissions of liability and not economic issues. If the net result is less pre-action admissions then so be it. A claimant is free at an early stage to fully investigate and assess the consequent risks of pursuing their claim. Prejudice is avoided and reserves can be better assessed.
- Rachael Allison is a solicitor at Colemans-CTTS.
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