When is an admission not an admission? Pervez Akhtar v Jordan Boland. CoA 25 June 2014

This case involved a dispute over whether an admission in a defence which resulted in the proceedings being allocated to the small claims track (SCT) was in fact an admission or whether it was an offer.

The facts

The proceedings arose out of a road traffic accident on 13 October 2011 and were issued in May 2014. They stated that the value of the claim was in excess of £5,000 but less than £10,000 plus interest and costs. There were various heads of claim, including hire and recovery and storage. Together, the pleaded amounts came to a little over £5,000 which, at the time, was the threshold of the SCT limit.

A defence (albeit perhaps a little muddled) was served which admitted the accident and the defendant’s liability to compensate the claimant for any proven loss and damage.

Although admissions to sums of money were made in the counter schedule of special damages there was some contradiction in later paragraphs which seemed to put the entirety of the heads of claim in dispute. What was clear from the defence however, was that it contended for allocation to the SCT on the basis that, after deduction of the apparently admitted sums, the amounts in dispute fell squarely within its limit.

At allocation stage the defendants again contended for the SCT on the basis that the issues in dispute were not complex and the disputed amounts were just less than £4,000. The claimants not unexpectedly contended for allocation to the fast track. Costs were estimated to be £15,000 to trial (inclusive of a 100% success fee).

Upon consideration of the court documents the district judge allocated the matter to the SCT. The claimant applied for this order to be overturned and the matter allocated to the fast track. That application failed and the court entered judgment for the claimant in the sums admitted and ordered that paragraph 15.1 of the Costs Practice Direction should apply until service of the defence. This meant that the special costs rules applying to the SCT would not apply during that period.

The claimant appealed on the grounds that the judge had erred in considering a partial admission reduced the amounts in dispute. In the alternative it was suggested that the judge had erred in his discretion when considering the relevance and impact of the partial admission. For reasons unknown, in the appellant’s notice the claimant did not seek to set aside the judgment nor the order they were appealing, but merely asked to vary the order.

DJ Platts, despite granting permission to appeal, went on to dismiss it.

The claimants had sought to argue that the ‘admissions’ were merely an offer, not an acceptance, of a liability to pay those amounts. This stance was taken because of the aforementioned ambiguity in drafting. This argument was forcefully rejected on the basis that the initial paragraphs were clear in their intention; there had been reference to the amounts in dispute having been reduced because of the admissions. Indeed, it was commented that had the judge not been of the view that there were clear admissions he would not have entered judgment.

The defendant’s costs of the appeal were awarded in the sum of £2,738.94. The claimants further appealed to the Court of Appeal (CoA) in respect of both the allocation to track and the costs order.

The CoA decision

The matter came before Lady Justice Gloster, Lord Justice Floyd and Sir Stanley Burnton on 11 June 2014. Again, the claimant’s principle contention was that the defence did not include true admissions but in reality offers. An admission that part of a sum claimed was payable was not an admission for the present purposes.

The claimant referred to CPR 14 on admissions and argued that such an admission does not lead to judgment unless the claimant seeks judgment pursuant to CPR 14.5. The defendants however, focussed on CPR 26 which deals with case allocation and the amounts genuinely in dispute. At the point that judgment was entered the defendant accepted that at trial the claimant could not recover less than the £2,496 admitted.

It followed therefore, that at trial the allegations in the defence which were inconsistent with the admissions, would be disregarded and could indeed have been struck out. Guidance as to admissions and possible clarification was provided:

• When a matter is conceded in an unqualified manner, the party which makes that admission must not seek to adduce evidence or raise arguments to the effect that the admission is not binding on him. The reason for this is that the court has no jurisdiction to investigate a fact that has been admitted unless permission to resile has been obtained.
• That same principle applies even more strongly to a judgment for all or part of a claim. Neither party may adduce evidence or make submissions that if accepted would lead to decisions or findings inconsistent with the judgment unless the judgment is successfully set aside.
• Where a defendant admits part of an unliquidated damage claim, the claimant is entitled to judgment on that admission, and to pursue the proceedings to seek and obtain judgment for the balance. Such a judgment does not extinguish the claimant cause of action.
• Where an admission is ambiguous or inconsistent with other allegations in the defence, the claimant may, and should, seek further information or clarification of the defendant’s case under CPR 18.1.
• If the court (where the claimant fails to act as above) considers that it is uncertain what are the issues between the parties that fall to be determined at trial, it may itself make an order for clarification, and in extreme circumstances, where the defence is truly incoherent, the court may strike out the defence.

In considering the above, the court found that in the presence of the judgment and the rules on allocation the sum in dispute (and therefore determining the track) was less than the fast track threshold. As such, it could not be said that the allocation to the small claims track was incorrect.

In respect of the costs it was argued that as the matter had been allocated to the small claims track the court had no power to order the claimant to pay the defendant’s costs of the appeal. The court considered CPR PD 44.15:

“...where a claim has been allocated to one of those tracks, the special rules which relate to that track will apply to work done before as well as after allocation save to the extent (if any) that an order for costs in respect of that work was made before allocation

“This paragraph applies where a claim, issued for a sum in excess of the normal financial scope of the small claims track, is allocated to that track only because an admission of part of the claim by the defendant reduces the amount in dispute to a sum within the normal scope of that track.”

It followed that, with no such order for costs pre-allocation having been made, the judge should not have made his order for costs against the claimant. That part of the appeal was therefore allowed.

What does this mean for insurers?

If an insurer wishes to make an admission in respect of part of the claim in order to reduce the amounts remaining in dispute, then the terms of that admission must be made absolutely clear - and unequivocally so. It is unfortunate that the defence in this matter was not unambiguous as otherwise much of the argument would have been avoided. We suspect however, that the key point in the appeal being unsuccessful was that no request to set aside the judgment was ever made. Had it been made, then the outcome may well have been different.

Making a formal admission can be a useful tool in narrowing the issues. However, insurers (and their panel lawyers) will need to be careful about the wording of those admissions and also the possible detriment to other arguments where lines of enquiry reveal information which changes the picture of whether that admission will leave insurers liable to an overpayment.

The court seems to place the onus upon the claimant to seek clarification if they consider the admission is unclear and that the claimant should utilise Part 18 questions to seek such clarification. Bearing in mind Part 18 does not apply to SCT cases this should be done immediately upon receipt of the defence, or at the very latest prior to allocation.

Another interesting point is that the court expressed the view that the admission of 21 days for the period of hire meant that any arguments as to need, period and rate, could only be raised and considered after that admitted period. Again, another reason for any admissions to be specific. It may be possible however, to avoid all arguments on the construction and meaning of admissions by simply presenting that the claimant has no reasonable prospect of recovering an amount in excess of the SCT limit. In our experience, this is an argument that has found favour with the courts.

As with many of these issues, each matter will turn on its own facts and insurers will need to give careful consideration as to whether an admission should be made. If done correctly, the costs benefits can be significant.