Procedure - Resiling From Pre-Action Admissions

The applicant business proprietors applied to strike out parts of the defence lodged by the respondent. The applicant ran a business from two units within a garden centre. A lorry driven by one of the respondent’s employees had struck the overhead telephone and data cables which stretched between the two units, causing damage to the buildings and severing the cable. The applicant claimed losses under their insurance policy and their insurers sought recovery of their outlay from the respondent in the sum of around £637,000 (plus uninsured losses). A few weeks later, the applicant’s insurers received a letter from the respondent’s insurers which stated that the respondent was responsible for the accident. However, the respondent’s appointed loss adjusters would not admit liability as they maintained that the cables were too low and there were signs warning of their presence. The respondent’s solicitors later confirmed that liability was admitted. However, over a year later, the respondent instructed new solicitors who stated that liability was denied. By that time, the applicant sought damages in the sum of £3.4 million. The applicant submitted that the parts of the respondent’s defence denying liability should be struck out as an abuse of process or because they failed to disclose reasonable grounds for defending the claim. It also argued that the respondent should not be allowed to withdraw its admission as key evidence may have been lost or may have deteriorated as a result of the passage of time.

 

It was held that the first admission letter relied upon by the applicant was ambiguous and could be construed as an admission. However, it became clear within weeks that liability was not admitted. The second letter was an admission of liability which had never been expressly or impliedly withdrawn until such time as the defence was filed several years later. The applicant had not asserted any bad faith on the part of the respondent and so the court could not strike out parts of the defence on the grounds of an abuse of process pursuant to part 3.4.2(b) of the CPR. The requisite parts of the defence could only be struck out if they were likely to obstruct the just disposal of the proceedings and if the applicant could show that it would suffer some prejudice which would affect the fairness of the trial. The applicant had failed to do so and it would be wrong, in the absence of such evidence, to infer that prejudice had occurred. At the time the admission was made, the claim was valued at approximately £637,000 plus uninsured losses. It was likely that if the respondent and its solicitors had known that they faced a claim amounting to over £3.4 million they would not have admitted liability so readily.   It seemed somewhat unfair to hold a defendant to an admission of liability once the value of a claim had increased five-fold. The application was refused.