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Keoghs Insight

We keep you up-to-date on emerging market issues and their impact on the insurance sector, through a variety of publications, events and our leading market initiatives.

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Matthew Perkins

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Blake v Croasdale & esure [2017] EWHC 1336 (QB)

Client Alerts||06/07/2017

Insurers reeling from the sweeping change to the discount rate earlier this year will have spent the past few months re-considering their tactics in high value claims, and with this in mind this recent Keoghs case will be of interest.

The Decision

On 18 April 2017 esure successfully applied for permission to withdraw from a pre-issue admission made almost two and a half years prior to the hearing.

The significant feature of the application was that no further evidence had come to light since the admission had been first made.

The decision to seek permission to resile had been made following a careful reappraisal of the facts, in light of the allegedly vast increase in value of the claim, which started life in the Portal but after service was said to be worth in excess of £5 million.

The judge was persuaded to follow Woodland v Stopford [2011] EWCA Civ 266 and granted the application, plus rather tellingly, made a significant costs order against the claimant who had vigorously opposed the order.

In an interesting passage for insurers the judge found:

“In my judgment esure's approach was a perfectly sensible one and I do not consider that it is to be criticised for what has been described, in my judgment erroneously, as a last-ditch effort to avoid liability. It is correct to say that the material enabling esure to raise the defence has been available to esure from an early stage, but esure cannot possibly have imagined that it was facing a multi-million pound claim when the claimant's own solicitors considered it appropriate to have started the claim within the portal. Even when the initial medical evidence was served in November 2015, esure could not then have foreseen that this was what is now described as "a catastrophic" claim running into many millions of pounds, its response then being to make an offer of £100,000 net. Accordingly, it seems to me that esure should be entitled to withdraw its admission and that to refuse to do so would discourage defendants, especially insurers, from acting proportionately, which would make the giving of admissions in like cases where it is appropriate, in the interests of reasonableness and proportionality, to give them, more difficult to secure."

The claim, in which esure argued there was at least a good arguable case for the defendant to succeed with a defence of ex Turpi causa based on a joint criminal enterprise between the occupants of the claimant’s vehicle, namely drug dealing, has now been listed for a trial on the preliminary issue of liability.
 
Prominent legal commentators have suggested that this decision may go as far as justifying a change in mind simply due to the increasing value of a claim, which would put it at odds with the decision in SE Wood v Days Health UK [2016] EWHC 1079 (QB), and while this was not the sole determinant in what is undoubtedly a complex case, it is hard to argue that this was not a highly significant feature of the decision.

Practical Guidance

The precise circumstances in which permission to withdraw will be granted are intensely fact specific, but for insurers considering whether to seek permission to resile from an admission, section 7.2 of Practice Direction 14 provides an excellent starting position.

The key features to look out for when considering whether to seek permission to withdraw an admission are:

In cases where a potentially arguable case to withdraw is identified, action needs to be taken quickly and decisively. In the event proceedings have been issued an application will need to be made promptly, and on notice, with clear communication to the other party about the decision taken and supporting reasons. While the other party should be given the opportunity to consent, it would be wise to file the application and, if appropriate, amended pleadings pending discussions.

* http://www.bailii.org/ew/cases/EWHC/QB/2017/1336.html