Speak now

The Court of Appeal has upheld an earlier High Court decision giving permission for defendants to withdraw a pre-action admission of liability '“ because they changed their mind. This is the first reported case since the change to CPR rule 14.1.A.

In Woodland v STA [2011] EWCA Civ 266 last month the Court of Appeal upheld a decision to allow a defendant to personal injury litigation to withdraw a pre-action admission of liability. The defendant gave neither explanation nor justification for altering its stance on liability, nearly two years after the admission was first made.

The case will cause concern for claimants conducting personal litigation in reliance on an early liability concession. Does the decision mean defendants can whimsically admit liability and later drop the bombshell that they have changed their minds? Is the court failing to protect pre-action admissions?

The Court of Appeal decision, handed down on 16 March, is to be considered in the context of the tragic circumstances of the case. On 5 July 2000, the claimant almost drowned during a school swimming lesson in Essex. At the age of just ten, the claimant encountered difficulty while swimming a length of the pool and became submerged under the water. School teachers, lifeguards and swimming instructors were present but the claimant's case is that it was her classmates that spotted her distress and managed to drag her to the poolside. The claimant had stopped breathing by the time she was rescued. She was eventually resuscitated but sustained a hypoxic brain injury. Now aged 21, the claimant continues to suffer with cognitive difficulties and learning disabilities. She is unable to work or live independently.

The Court of Appeal recognised that their decision comes as yet a further devastating blow to the claimant and her family who have endured the stress of litigation for over ten years; however, they considered the judge at first instance had acted within the scope of his reasonable judicial discretion in reaching the decision that the defendants be permitted to withdraw their admission.

The claimant's parents instructed their former solicitors in early 2001. In March 2001, two letters of claim were sent '“ one to Basildon District Council (owner of the swimming pool) and one to a Beryl Stopford. Beryl Stopford was the sole proprietor of Direct Swimming Services, the entity that provided the swimming teachers and lifeguards on the day of the accident. Both parties denied liability. At this time the HSE had produced an extremely short report concluding that the claimant had been rescued promptly and had made a full physical recovery.

The HSE later reopened its investigation following complaints from the claimant's parents. Their second investigation was more thorough. The report of an expert commissioned by the HSE was sent to the loss adjustors representing the defendants with an invitation that they reconsider their liability position.

On 27 November 2007 the loss adjustors wrote to the claimant's solicitors stating that 'liability will be conceded for this claim in full'. In light of this significant development, liability investigations ceased and medical evidence was sought.

It was against this background that the current solicitors representing the claimant, Pannone, and then those representing the defendant, Fishburns, came to inherit this case in 2008. Naturally, following the admission, correspondence between the parties focused on issues of quantum. Indeed the defendant's solicitors reassured the claimant's solicitors 'we are not seeking to go behind the admission of liability, merely to understand the entire case'.

Then out of the blue on 27 July 2009 the first defendant's solicitor announced without warning to the claimant's solicitor, that the admission of liability made on 27 November 2007 was being withdrawn. No explanation was given. Significantly, no new evidence had come to light to prompt the defendant's sudden change of heart.

The claimant issued proceedings on 25 November 2009 pleading reliance on the admission. Shortly thereafter the claimant applied for judgment to be entered. In response the defendant cross applied for permission to withdraw the admission, saying it had been made in error.

HHJ Holman heard the applications on 26 April 2010 and came to the decision that the balance, 'albeit by no great margin', came down in favour of the defendant. Permission to appeal this decision was granted by the Court of Appeal in August 2010.

Lord Justices Ward, Arden and Moore-Bick heard the appeal on 24 February 2011. Unfortunately for the Woodland family, and perhaps for claimants generally, the appeal was dismissed. The Court of Appeal found that the judge at first instance had exercised his discretion correctly and was fully entitled to come to his conclusion, which was well within the range of reasonable decisions.

In his judgment Ward LJ offered his sympathy to the claimant and his family. But this will bring little comfort to the Woodland family as they prepare for trial on a case that was on its way to settlement three years ago.

Changing nothing

The case calls into question the success of the much welcomed changes to the law on withdrawal of admissions made on 6 April 2007. Before the introduction of these changes, Gale v Superdrug Stores [1996] 1 WLR 1089 was the leading case. Gale stated that, when deciding if a defendant should be allowed to resile from an admission, the court must consider the extent to which either party might suffer prejudice as a result of the withdrawal. It was for the claimant to show prejudice.

Following the introduction of the CPR, subsequent cases developed tests in relation to post-action admissions in multi-track cases but pre-action admissions were not considered until Sowerby v Charlton [2005] EWCA Civ 1610. The conclusion in Sowerby was that defendants can withdraw an admission before issue without the court's permission.

The Sowerby case highlighted a flaw in the CPR that the Court of Appeal picked up on in the case of Stoke on Trent City Council v John Walley [2006] EWCA Civ 1137. Brooke LJ said: 'There would, in my judgment, be great force in giving the status of an admission of liability'¦ before action in a multi-track claim more powerful effect than it at present enjoys.'

The Civil Justice Council addressed this issue in April 2007 when CPR 14.1A was introduced. Rule 14.1A amended the rules so that defendants could no longer withdrawa pre-action admission without the court's permission or the consent of the other parties. The rule referred the court to a list of factors to take into account when considering a defendant's application to withdraw an admission as set out in practice direction (PD) 7.2.

These factors are the grounds for withdrawal, including whether new evidence has come to light, the conduct of the parties, prejudice to either party, the stage in proceedings, the prospects of success and the interests of the administration of justice. This was the rule considered in Woodland by the judge at first instance and Court of Appeal.

In the circumstances of Woodland, it is uncertain whether CPR 14.1A has made a difference. In this case, no new evidence had spurred the defendant's change in stance. The judge of first instance noted this but did not consider it to be a problem and the Court of Appeal made no criticism of this approach. The defendant had also failed to explain adequately or, indeed for a long time, at all, why the sudden change of heart had come about. Eventually, their explanation was 'there was insufficient investigation of the facts' of the case when liability was initially considered. It is arguable that this is an easy justification for a defendant to use in any case.

A unique case

The judgment in Woodland poses a definite worry for personal injury lawyers who believe a pre-action admission puts an end to liability investigations. Fortunately for claimants, however, there are a number of unusual quirks of the Woodland case that may set it apart from future cases on the issue of withdrawing admissions.

For example, the withdrawal could not be shown to cause major prejudice to the claimant's liability investigations in Woodland, even through the accident happened over a decade ago. There was an unfortunate period of inactivity between 2001 and 2007 when the claimant's previous solicitors appear not to have aggressively pursued liability enquires. The judge essentially took the view that the passage of time had not made any prejudicial difference '“ memories would be only slightly hazier now than in 2007.

It is also notable that, when considering the stage of proceedings, though the accident itself was a long time ago, proceedings were only issued at the end of 2009.

In the circumstances, the application to withdraw the admission was not so late in the day.

Perhaps what is most remarkable about Woodland is that there was confusion on both sides as to whose behalf the admission of liability was made on in the first place.

There are a number of potential defendants to the claim of which there are currently five in the main proceedings. The loss adjusters giving the admission made it on behalf of the Swimming Teachers Association and Assitalia (the insurer of Beryl Stopford and the lifeguard present at the incident).

The judge clarified that only Beryl Stopford could be bound by the 2007 admission as the letter of claim was addressed to her. However, there remained in the action other parties not bound by this admission.

It should also be remembered that this is a catastrophic case with a value of more than £2m. The court therefore felt that the decision to lumber the defendant with an admission made in error should not be taken lightly.

The Woodland decision came against a background of a uniquely complicated set of facts and a long and confusing procedural history. The new rule 14.1A was designed to ensure that reliance could be placed on a pre-action admission of liability. This decision perhaps suggests otherwise.

In addressing the need for change, Lord Justice Brooke in Stoke on Trent suggested that 'anything that lends uncertainty to the value of a pre-action admission of liability appears to run against the grain of the overriding objective and be likely to lead to avoidable delay, expense and worry'. Woodland suggests for claimants that the uncertainty remains.