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Gunn v Taygroup Ltd, High Court, 6 July 2010

20 July 2010
The issues

Pre-action admission – withdrawal of pre-action admission – resilement from admission.

The facts

The Claimants sold, repaired and serviced garden machinery. In May 2005 a lorry driven by Mr Hackett, an employee of TayGroup Ltd, was making a delivery to the garden centre when the lorry came into contact with overhead cables which were alleged to have been physically damaged. In May 2005 loss adjustors wrote an ambiguous letter containing a reference to the incident “for which our policy holder was responsible”. In September 2007 solicitors were appointed for the Defendant and in April wrote to the Claimant’s solicitors confirming that liability was repudiated. In July 2007 they wrote a second admission letter confirming that liability was not in dispute. The two firms subsequently merged and the Defendant’s solicitors file was passed to a third firm. That firm had been inactive and in February 2010 the Claimant’s issued proceedings. The Defence denied liability in detail. The Claimant applied to strike out those parts of the Defence denying liability.

The decision

The relevant principles were contained within Walley v Stoke-on-Trent City Council, a decision of the Court of Appeal. In that case the Court had said that for a Claimant to show that the withdrawal of an admission would amount to an abuse of the process of the Court, it would usually be necessary to show that the Defendant had acted in bad faith.

In order to show that the withdrawal of the pre-action admission was likely to obstruct the disposal of the case, it would usually be necessary for the Claimant to show that it would suffer some prejudice which would affect the fairness of the Trial. In this case the first admission letter was ambiguous and it could not be treated as an effective admission. The second admission letter was properly an admission however which was never withdrawn expressly or by implication until the Defence was filed.

The context of that letter was important however, the quantified claim was £637,662.00 plus excess and uninsured losses. Nine months after the second admission letter the Claimant’s solicitors were arguing that the remedial works alone, which had been previously valued at £130,000.00, would be some £480,000.00. By Christmas 2009 the Claimant’s solicitors had quantified the total claim at over £3.4 million, a five-fold increase.

There was no allegation of bad faith as against the Defendant and therefore the Court could not strike out on the basis of abuse of process. The Court therefore could only strike out parts of the Defence if the Claimant could show that it would suffer some prejudice which would affect the fairness of the Trial. The Claimant had produced no evidence of prejudice but the Court had been asked to infer that witness recollection might well have dimmed between 2005 and 2007 and that relevant documents might well have been lost. It was not proper to infer that such prejudice had occurred in the absence of evidence. It was unfair to hold a Defendant to admission of liability on a claim which at the time of the admission had been quantified at over £600,000.00 when two years later the value had increased five-fold. Had the insurer known at the time of the admission of the likely size of the claim they would not have admitted liability so readily.

Application dismissed.

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