This website uses cookies

This website uses cookies to ensure you get the best experience. By using our website, you agree to our Privacy Policy

Jean-Yves Gilg

Editor, Solicitors Journal

Civil litigation brief

Feature
Share:
Civil litigation brief

By

Gordon Exall looks at the House of Lords decision in Horton v Sadler and considers its practical implications



The decision in Horton v Sadler [2006] UKHL 27 puts an end to one of the most ridiculous and anomalous principles affecting the law of limitation '“ the principle in Walkley v Precision Forgings Ltd [1979] 1 WLR 606.

Facts of Horton

The claimant was injured in a road traffic accident in 1998. The defendant was not insured. Proceedings were issued within the limitation period, but the claimant failed to give the requisite notification to the Motor Insurers' Bureau (MIB), which meant that the MIB had no liability to pay any judgment. The claimant then issued a second set of proceedings outside the limitation period, but in which the MIB had been given appropriate notification. This second set of proceedings was struck out because of the existence of the Walkley principle.

The Walkley principle

In Walkley, the House of Lords decided that a court could not exercise its discretion under s 33 of the Limitation Act 1980 to disapply the limitation period in cases where the claimant had issued proceedings prior to the limitation period expiring and brought a second set of proceedings outside the limitation period.

The rationale of the decision was that the claimant was not prejudiced by the existence of the limitation period, but by the failure to proceed with the first action.

Effect of the Walkley principle

Clearly the principle prevented a personal injury claimant from proceeding with a second action when, for some reason, the first action could not proceed. This was usually, but not invariably, because of a problem with valid service of the first set of proceedings.

However, the principle was soon realised as ridiculous, over the intervening years, the courts went to great lengths to distinguish the principle leading to major anomalies.

  • In Wilson v Banner Scaffolding Ltd [1982] The Times, 22 June 1982, it was held that the principle did not apply where the first set of proceedings was issued against a company in compulsory liquidation. The first set of proceedings were ineffective and a nullity. The court retained a s 33 discretion.
  • Similarly, it was held that where a defendant company had ceased to exist because it was dissolved before the first set of proceedings, the second action was not caught by the Walkley principle '“ Workvale Ltd (No 2) [1992] 2 All ER 627.
  • Further, where proceedings were issued against an unincorporated club in its own name and the club was not a legal entity, the second set of proceedings was not caught by Walkley '“ White v Glass [1989] The Times, 18 February 1989, CA.
  • In Shapland v Palmer [1999] 3 All ER 50, it was held that the Walkley principle did not apply where the first action was issued against the employers of the negligent driver, but the second set was issued against the driver himself.
  • Finally, in Piggott v Aulton [2003] All ER 271, the Court of Appeal held that the principle did not apply when the first set of proceedings were issued against the personal representatives (PRs) of the estate of the deceased defendant when there were no personal representatives. The claimant's solicitors could have applied to court to appoint PRs and regularise the position, but did not do so. The second set of proceedings were not against the same defendant as the first and Walkley did not apply.
The anomaly of the situation was clear. The situation could benefit a really negligent solicitor who had issued the first action against the wrong party or in the wrong circumstances. This initial act of negligence could, inadvertently, lead to the claimant having the opportunity to make a s 33 application.

Criticism of Walkley

The Law Commission criticised the decision in Walkley in its report on Limitation of Actions, 10 July 2001. This report was accepted by the government, in principle, in July 2002.

House of Lords decision in Horton

In Horton, the House of Lords had little hesitation in overturning Walkley. The judgments show agreement with various submissions made on behalf of the claimant:

(1) Section 11 of the Limitation Act 1980 provides the defendant with a time limit in proceedings brought outside the three-year limitation period. It applied just as much to a second action. If a second action is issued, it is just as much defeated by s 11 as an action issued within the initial limitation period.

(2) There was no logical justification for distinguishing between a case where a first action had been issued within the limitation period and floundered for some procedural reason and cases where proceedings were not issued in the limitation period at all.

'There was no rational ground for concluding that a defendant should be vulnerable in the latter case, where the plaintiff's solicitors would probably be greater, but not in the former case where it would probably be less.'

(3) Section 33 is designed to give a wide and unfettered discretion and the Walkley decision is inconsistent with this interpretation of the statute.

Lord Brown observed:

'The curious but plain fact is that in Walkley Homer nodded: an impossible and illogical construction was put upon the section... It is for the very reason that the Walkley ruling is so lacking in logic and intrinsically productive of anomalies that the courts have found such difficulty in its subsequent application. There is simply no coherent principle by which to judge its true scope and how in any particular case which raises the smallest factual distinction it should apply... There can be no doubt that both justice and certainty would be advanced by the House now departing from the Walkley ruling. That it has stood for so long is a pity. It is certainly no reason to perpetuate it any longer.'

Practical effect

It is important to note that all that the Horton decision does is to give a claimant the opportunity to make a s 33 application. The claimant is not now automatically barred, but, if it the action is to proceed, the claimant must still succeed on the s 33 application.

Comments on the s 33 application

The House of Lords was reluctant to interfere with the observations of the first instance judge. He had found that he had no discretion under s 33 because of Walkley, but that if he did have a discretion, he would have exercised it in the current case.

Section 33 discretion

The Lords made some interesting observations in relation to the s 33 discretion.

Lord Bingham observed that one of the difficulties of the 'curious hotchpotch' of the factors given in s 33 is that it tends to treat the claimant and the defendant as individuals liable to suffer prejudice, with no recognition that it is the competing interests of insurers which will be liable to suffer prejudice. He declined to give general guidance on the discretion, but noted that:

'If Walkley represents a very clear case for refusal to exercise the discretion, Hartley v Birmingham District Council [1992] 1 WLR 968 might be thought a clear case for its exercise: the writ was issued one day late; there had been early notification of the claim; and the defendant's ability to defend the case was unaffected. Thus, even if the plaintiff had a cast-iron claim against her solicitors, the limitation defence could fairly be regarded as a windfall or gratuitous bonus. Between these extremes lie a variety of cases turning on different facts.'

In Horton, the MIB argued that the court should take into account the fact that the lawyer's insurer had collected a premium against the risk and the loss should fall on the party who had received a premium. Lord Bingham observed:

'The judge was in my opinion entitled to view a motor insurer (or in default, the MIB) as the primary source of compensation for the victim of a road traffic accident.'

Lord Hoffmann observed that the argument put forward on behalf of the MIB, and insurers generally, were issues of general public policy that should be considered by Parliament and not interfere with years of settled jurisprudence.

Lord Carswell stated that he initially thought that the solicitors' default in failing to notify the MIB was so serious a piece of professional negligence that it should be marked by the court when considering its discretion under s 33.

'On reflection, however, I have come to the view that... the seriousness of the solicitors' error should weigh in the balancing exercise under s 33, which should assess the prejudice to the respective parties."

Human rights

An argument by the claimant based on Walkley violating Art 6 of the European Convention was not considered, but it was clear that it would not have been given serious consideration. The claimant had untrammelled access to the courts for three years.

Second action not an abuse of process

An argument by the defendant that it was an abuse for the claimant to bring a second action when a first action was still extant was also rejected. Ordinarily, it is an abuse for a claimant to pursue two actions against a defendant in respect of the same subject matter. It was held that the correct response of the courts was to require the first action to be discontinued, if the court gave permission for the second action to continue.

Horton: not a licence for the negligent

It has to be pointed out that Horton is not a licence for the negligent. It cures an anomaly and gives a claimant the opportunity to make a s 33 application. It does not guarantee success in that application.

Gordon Exall is a barrister practising from Zenith Chambers, 10 Park Square, Leeds