The Facts

In August 2010 the claimant’s vehicle was alleged to have been involved in a collision at a roundabout. His vehicle was declared a total loss which led the appellant insurer to admit liability. The vehicle was then sold for scrap.

In May 2011 proceedings to recover damages for personal injury, together with hire charges and other heads of claim were issued. In its defence, the insurer raised, albeit faintly, concerns with the genuineness of the claim. However, in October 2011 the insurer obtained an engineer’s report whose conclusions were consistent with the claimant’s case.

In April 2012, the insurer obtained a further report which supported a case that the accident had not occurred as alleged by the claimant. It applied for permission to rely on it as expert evidence, withdraw its earlier admission, and to plead fraud. In response, the claimant obtained a report that supported his case that the accident was genuine.

The judge at first instance refused the insurer permission to withdraw the admission on the basis of the insurer’s April 2012 expert report. The Defendant insurer appealed to Eady J.

Eady J dismissed the appeal, holding that it was a matter of discretion for her to weigh the relevant factors, and that she had done so. CPR PD 14 para 7.2 required the judge to take into account prospects of success. She was entitled to take into account the first report obtained by the insurer, notwithstanding that neither party sought to rely on it. The relevant weight to be attached to various factors considered was a matter for the judge’s discretion. The graver the allegation against a litigant, the more important it became to ensure that a fair trial was possible. The judge had to take account the prejudice to the claimant in not being able to defend himself against an allegation of fraud. All of the experts agreed the best evidence was to be found on the vehicle itself, and it had been scrapped following the insurer’s admission of liability. The insurer’s second engineering report had been based on photographs and the conclusions were equivocal. In any event the application had been made too late.

Comment

At first blush this might look like a harsh outcome for the defendant insurers, but the case demonstrates the risks of making an early admission of liability, and the difficulty in withdrawing such an admission later even with the support of expert evidence. Indeed, it might be said here that the defendant insurer only had itself to blame. It had made an admission of liability pre-proceedings, with the result that the key piece of evidence – the car – was scrapped.

By the time a decision was made to withdraw the admission and plead fraud, the insurer’s expert was therefore operating under a significant handicap in reporting on the issues. Quite properly given his duty of independence under CPR 35, the insurer’s expert pointed out that it was hard to report to the court on the parties’ respective cases where all he had to work from was photographs. That limitation, and the fact that the insurer had obtained a previous report supporting the claimant’s case, appear to have been significant factors in the court refusing permission to withdraw the admission.

The expert’s approach was the right one. The case demonstrates the dangers of parties only taking a considered view on the facts late in the day, and then instructing an expert to “row them out” of the difficulties. The problem with such an approach is that the evidence the expert needs to do that is often then long gone – not just in road traffic cases, but also (for example) in building cases, where the defects can have been cured or covered up long before the expert comes to site.