Jagger and others v AXA Insurance UK Plc [2023] 7 WLUK 263 – Three Strikes Not Out

The Court has found that it was an abuse of process to rely on the evidence of an expert whose independence was in question, as well as issuing the claims for significantly less than they were later amended to (and where the increased court fee was not paid until an Unless Order was issued). However, this abuse of process did not result in the striking out of the claims.

Background

Sheffield based law firm, SSB Law, represented 1,428 litigated claims concerning the defective or inappropriate installation of cavity wall insulation. 143 of these claims were issued within the Damages Claims Portal (‘DCP’) and this judgement relates to four of those claims, in respect of which AXA Insurance UK PLC (‘AXA’) was the Defendant.

AXA brought an application seeking a finding of an abuse of process by SSB, AXA alleged that:

• The DCP was not the appropriate procedure for the claims;
• SSB had understated damages on issuing in the DCP, paying a lower court fee as a result;
• SSB subsequently failed, or delayed, in paying the increased court fee, payable as a result of the revision to the pleaded value; and
• The expert evidence upon which the claims were founded was not independent.

Issues for Consideration by the Court

1. DCP not the appropriate procedure for the claims

AXA asserted that the DCP was not the appropriate method for bringing the underlying claims as they could not be said to be ‘damages only’ claims, as is required by the DCP (PD51ZB para 1.6 (3)(i)).

The defective installation of cavity wall insulation was undertaken by Heatwave Energy Solutions Limited, but no claim could be brought against them directly as the company had entered insolvency. Accordingly, claims were brought against AXA pursuant to the Third Party (Rights Against Insurers) Act 2010.  Section 2(2) of the Act allows Claimants to seek a declaration as to the insurer’s potential liability to it. As such, the Claimants in the underlying cases were seeking, not only damages, but a declaration as to liability. For this reason, AXA submitted that use of the DPC was inappropriate.

2. Understating of damages and failure to pay increased court fees

SSB asserted that they had initially obtained expert evidence to consider whether proceedings were merited (not a Part 35 compliant report). When that expert later became unavailable and limitation approaching, SSB chose to issue based upon a value limited to £10,000. SSB intended to obtain revised expert evidence in the four months prior to service. However, this was not possible and so the claim form was amended to account for the sums detailed in the original inspection report. The referencing back to the original inspection reports, in many instances, resulted in a significant increase in the valuation of the claims, up to £104,000.00 in one case.  AXA asserted that this amounted to an abuse of process, this being an improper way to conduct proceedings, which were compounded by SSB’s failure to pay on time, or at all, the increased court fees (required as a result of the increased claim value).

3. Lack of independence of expert evidence

AXA asserted that the Claimants’ original expert lacked independence. AXA asserted that the expert being a director at a company with direct links to the claims management company (who had initially approached the Claimants regarding the making of the claim) meant he, therefore, had a financial interest in the claim.

AXA had raised this issue in a previous unrelated matter and the expert had been found not to be independent. AXA, therefore, sought a determination that the Claimants’ reliance on evidence of the same expert (in three of the four underlying cases) was an abuse of process, as SSB should have been alive to the issues as to independence. SSB refuted this in their response, stating; “… no one else at SSB Law had any reason to believe that the reports prepared …… were anything other than entirely independent and honest….”.

Held

1. DCP not the appropriate procedure for the claims

AXA’s contention as to the misuse of the DCP was accepted by the court, the use falling foul of PD 51ZB para 1.6(3)(a). The judge also found that a more liberal interpretation of this practice direction could not be applied to allow the claims, as was requested by the Claimants. DJ Dawson indicated that, as this practice direction is a pilot, should revisions be needed, this was to be undertaken by the Rules Committee and not the judiciary. Instead, the judiciary must strictly apply the wording of the pilot as currently drafted.

Despite this finding, DJ Dawson was unwilling to determine the misuse of the DCP as an abuse of process. Instead, the conduct was determined to be ‘misguided’ but not reaching the severity necessary for an abuse finding.

2. Understating of damages and failure to pay increased court fees

DJ Dawson did not accept that SSB had taken a reasonable approach to the pleaded value:

• SSB had been aware for many months that their previous expert was unable to continue with their instruction, however, no alternative was found. Accordingly, issuing proceedings and then seeking to obtain and serve replacement expert evidence within the four months before service of the pleadings was not reasonable.
• Each case contained a pleading for damages for ‘distress and inconvenience’ at a rate of £3,000.00 per annum, a total of £15,000.00 per claim. This alone exceeded the initial pleaded value of £10,000.00. On average across the four cases, the Court was short £4,179.00 in fees per claim.
• The approach of serving an amended claim form in every matter would put the court to additional work through processing the same and taking the relevant payment.

As a result, DJ Dawson found the approach taken by SSB as to pleaded value was indeed an abuse of process.

3. Lack of independence of expert evidence

SSB’s evidence that their former expert was, in fact, independent and there was nothing to suggest the contrary was categorised as ‘erroneous or disingenuous’. The Court agreed with the Defendant that there were significant concerns surrounding the former expert’s evidence.

The findings in the previous matter relating to the same issue weighed heavily in DJ Dawson’s judgment who found it distressing that AXA’s previous application for wasted costs based on their instruction of Mr Miller had not deterred SSB from, again, instructing the expert. SSB were also criticised for failing to seek confirmation from the Claimants that no sums arising from a successful action would be paid to the company linked to the former expert.

Accordingly, DJ Dawson also found that the instruction of Mr Miller was an abuse of process in respect of the three claims upon which his reports were relied.

Sanctions

DJ Dawson found that SSB had abused the court process on two separate counts: (i) understating the value of the claims and failing to pay increased issue fees on increase of the pleaded value; and, (ii) instructing an expert whilst in the knowledge that there were significant concerns relating to that expert’s independence.

Despite this, DJ Dawson was reluctant to strike out the claims and, instead, considered that financial penalties would be appropriate. As such, the following sanctions were applied:

1. The Claimants bear the Defendant’s costs of the application from which the abuse of process finding was made out; and,
2. The Claimants have no entitlement to costs incurred between the date of issue (this being the start of the abuse of process) to the date the increased issue fee was paid or 28 days from when it was proffered (the end of the abuse).

DJ Dawson was not, however, prepared to order that the Claimants bear the Defendant’s costs during the period of the abuse as this was deemed to be disproportionate.

For other cases where SSB sought to rely on the expert evidence of Mr Miller, an unless order was issued, requiring alternative expert evidence to be served within three months of the date of the judgment, failing which, they would be struck out.

Takeaways

The judgment provides some key takeaways for practitioners, including: 

1. You cannot use the DCP if seeking damages against an insurer directly via the Third Party (Rights Against Insurers) Act 2010.  The Act requires a declaration and, as such, any such claim is not “for damages only”.
2. Parties should give thorough consideration to the pleaded value on any claim form and should plead the highest potential value. Should an upward variation be required, the increased issue fee should be paid expeditiously on filing of the amended claim form.
3. Investigations should be undertaken by parties to ensure there are no contractual arrangements between any appointed expert and the client which may impact the independence of that expert.