Rogers & Norton News

Delay At Your Peril – A Lesson to The Insurer

Monday, March 14, 2016

A recent decision in the Court of Appeal in Gentry v Miller (1) and UK Insurance Ltd (2) 2016 has provided further guidance as to how courts will deal with applications for relief from sanction. In this case, the insurer was seeking the court’s permission to defend a case on the grounds of what it believed was fraud on the part of the Claimant, who it suspected had conspired to perform this fraud with its own policyholder. In this case, notwithstanding the insurer’s belief, when initially presented with the claim the insurer did not respond to numerous letters written by the Claimant’s solicitors seeking to pursue the claim. Further, the insurer later admitted liability for the accident in writing but did not respond with a payment on account of the damaged vehicle when invited to do so.  As a result court proceedings were issued and the insurers did not respond which allowed the Claimant to obtain a judgement on the issue of liability against the insured, Mr Miller, as no defence had been filed. To make matters worse, the insurer allowed the case to go to a disposal hearing, did not turn up at the hearing and as a result judgement was entered for the Claimant for damages in the sum of £74,034.

At this stage, the insurer finally realised the position and having instructed solicitors, it decided to investigate the potential allegation of a fraudulent claim and then sought to set aside the judgment of £74,034 on the two grounds under the court rules, known as the Civil Procedure Rules (CPR). The relevant rules were CPR 13.3 which allows a court to set aside a judgment entered against a Defendant who did not file a Defence on certain grounds and CPR 39.3 which allows a court to set aside a judgment which is entered in a party’s absence, in this case at the disposal hearing- again on certain grounds. 

Applications which are made to set judgments aside are governed by two very important cases, Mitchell and Denton and these cases set out the tests a court must apply to decide if a judgment should be set aside. One of the key factors in these cases and in the court rules is that a party seeking permission does so quickly. In this case, the speed of the application must be judged in the context of when the party making the application knew of the circumstances from which they are seeking the relief.

When the current case was first decided, the Judge hearing the application considered that the allegation of fraud was sufficient to excuse the Defendant’s delay which had been present throughout the case and particularly so following the court proceedings. This was notwithstanding the fact that the Defendant had delayed in responding to correspondence and only investigated the fraud issue at a very late stage. However, the Judge allowed the judgement to be set aside and the case could therefore proceed afresh with the fraud allegations then being raised for the first time. In effect, the Judge took the view that the onerous tests laid down by the Court of Appeal in Mitchell and Denton did not apply and therefore the Defendant had an easier task in persuading the court to set the judgment aside because of the fraud allegation.

The case was appealed to the Court of Appeal and the judgment has recently been handed down. Reversing the decision, the Court of Appeal have accepted that tests in Mitchell and Denton apply to all applications for relief from sanction (in this case relief for the effect of the judgements) and an allegation of fraud does not change or reduce the burden on the applying party from the tests the court must apply which are set out in the earlier cases and the court rules. The court also held that the delay by the insurers in this case both before and after the issue of court proceedings was inexcusable and did not allow the application to set the judgment aside under either CPR 13.3 or CPR 39.3. As a result, the judgement stood and the insurer remained liable for the judgement of £74,034 and no doubt the costs.

The judgement can be read at  http://www.bailii.org/ew/cases/EWCA/Civ/2016/141.html

Commenting on the case, Mark Hambling, Director of Rogers & Norton Personal Injury team indicated that the case highlights a frequent problem that Claimants face with insurers. “Whether by desire, intent or perhaps a lack of resources, often an insurer will delay in responding and the solicitors need to issue court proceedings to actually get a response. This often creates additional costs by issuing court proceedings which could be avoided if the insurers responded. Although in this case the facts are very case specific to the extent to which a fraud allegation changes (or we now know does not change) the test the court applies, the principle that the Court of Appeal will not tolerate an insurer who delays is a welcome one”.

Rogers & Norton’s Personal Injury and Clinical Negligence team are well equipped to deal with insurers and their tactics and we are regularly obtaining significant settlements for our clients as a result of our commitment to the access to justice and persistence to get the right result for our client. This judgment serves to remind insurers that where they delay,  the court are unlikely to be tolerant of that delay and therefore adds a further tactic to the Claimants case plan to achieve the best result.

Mark Hambling is a Solicitor, Association of Personal Injury Lawyers, Accredited Senior Litigator and Director of Rogers & Norton’s Personal Injury and Clinical Negligence Department. The practice offer a free initial consultation at a venue to suit the client and can offer a No Win No Fee service in appropriate cases.

Mark can be contacted on 01603 675637 or by email mark.hambling@rogers-norton.co.uk.