Successful strike out upheld for portal incubation claim

Matter: Barry Cable v. LV=

A successful strike out application under CPR Part 8 has been upheld on Appeal by HHJ Wood at Liverpool County Court on a case that was eventually pleaded in excess of £2.2million.

The case was led by Keoghs’ Charlotte Smith on behalf of LV=

The case

An RTA occurred on 1.9.14 with the Claims Notification Form (CNF), sent under the MOJ Portal, being submitted shortly thereafter on 24.9.14. Liability was admitted via the Portal. In November 2014 a GP report was served indicating whiplash type injuries but with some dizziness and a referral to a neurologist was recommended.

Despite numerous correspondence and telephone calls from LV= and thereafter Keoghs, nothing further was received from the claimant’s solicitors. It was not until September 2016 that the claimant’s solicitors indicated a neurologist’s report had been obtained (although it was not disclosed). At that point the defendant highlighted that if the claim exceeded £25,000 it should exit the Portal process.

In July 2017 the claimant issued a Part 8 Claim Form and sought a stay for 1 year (under CPR 8BPD paragraph 16), a positive indication this claim was still within the Portal limits and valued at less than £25,000. This Order wasn’t served on the defendant until some six months later and it wasn’t until August 2018, only days before the stay expired, that the claimant served two neurology reports and at the same time indicated this claim was of a significant value. 

The claimant sought to transfer the matter to Part 7 and the defendant cross-applied to have the matter struck out, under CPR 8.1 (3). The claimant’s solicitor served a Schedule of Loss totalling in excess of £2.2million. This was the first indication to the defendant, almost four years’ post-accident, that the claim was valued at more than £10,000.

The defendant’s application for strike out was successful in light of the claimant’s conduct. DJ Campbell commented in her Judgment:

“66.     So when I look at the totality of what has gone on I find that this was an abuse of the court process. It is one thing to use the portal procedure and seek a stay and then sit on a case for a year, do nothing and ask for a further stay and delay and delay. Those sorts of cases come before this court regularly with Defendants arguing that they are an abuse, BUT I have never had an application before me where it is so obvious on the evidence that this was never a portal case and yet the Claimant’s solicitors have decided to use that procedure when it did not apply to this case and when it bought them a further 12 months. I cannot even see that during those 12 months they were doing anything constructive whatsoever, because I am told this afternoon that the first time anyone valued that case was August 2018 at the very end of that stay.”

“67.     For those reasons I find that there is an abuse of process. On that basis, therefore, I am going to set aside District Judge Doyle’s order……”

The claimant appealed on the basis that DJ Campbell erred when she considered the prejudice to the parties. However, HHJ Wood upheld the decision on appeal and the strike out remained. He was satisfied the Judge applied the correct test to determine whether or not the claimant should be entitled to proceed with his claim notwithstanding the abuse of process attributable to his solicitors, but also came to a conclusion which was within the reasonable and generous ambit of the judge’s discretion.

What this means for insurers

This case confirms that the Judge has discretion, when considering whether to transfer a Part 8 Portal claim to Part 7, to strike the claim out as an alternative. We successfully argued that as part of the Judge’s discretion, she was entitled to take into account that this was a wholly inappropriate use of the Part 8 procedure. There was a deliberate misuse of incorrect procedure to keep the defendant in the dark. The decision of Lyle v. Allianz was entirely on point, and, in fact the circumstances of this case were significantly worse as the claim was valued well in excess of £400,000 when the Part 8 claim was issued.
 
Claimants ought to be very cautious of using the Part 8 procedure to obtain a stay in the proceedings without properly considering whether the value of the claim exceeds £25,000.

The prospects for success are considerably enhanced if cases that are at risk of developing in this way are identified at an early stage, the right letters requesting information in respect of the claim are sent out and appropriate and clear markers are placed in the sand and then continued through the progress of the claim. In our experience such an approach is more likely to flush these cases out well before any application for a stay because it presents the claimant’s solicitor with a significant problem if ignored and certainly makes it much harder for them to argue that they were not misleading both the insurer and the Court.

There is a strong case for reform of Practice Direction 8B (para 16.1 to 16.7) and in particular the mechanism by which cases are stayed, with the power to lift a stay resting with the Claimant alone. The way by which the process was used in this and other cases cannot be what the Rules intended.    

Commenting on the case, Caroline Johnson, LV= GI Director of Third Party Technical Claims, said: “This is a particularly pleasing result. The behaviours shown by the claimant’s solicitors in this case are seen all too often and hopefully this judgement will serve to discourage future abuse of the process.”

For more information please contact Charlotte Smith.