Limitation & The Substitution of Parties in RTA Claims

Article

05 December, 2013

Nemeti & Ors v Sabre Insurance Co Ltd [2013] EWCA Civ 1555

The Court of Appeal recently handed down Judgment in the case of Nemeti & Ors v Sabre Insurance Co Ltd.

The case arose following a personal injury claim brought by the Claimant, a passenger in a car involved in a RTA in Romania. The Claimant issued proceedings against the Defendant insurance company pursuant to regulation 3 of the EC (Rights Against Insurers) Regulations 2002. Proceedings were issued on the cusp of limitation and it subsequently transpired that the Claimant did not have a right of action under the EC regs as the driver of the vehicle was not the insured, but actually the insured's son and the accident occurred outside the UK. Accordingly the Particulars of Claim as presented contained no legal cause of action against the Defendant but unfortunately this was only identified after limitation had expired.

The Claimant therefore sought to substitute the Defendant under s.35 of the Limitation Act 1980 and proceed with a claim in negligence against the driver of the vehicle. The Claimant sought to rely upon the "relation back" principle under s.35 to have the proceedings against the substituted party deemed commenced on the same day as the proceedings were issued against the Defendant.

s.35 allows 'new claims' to be brought under the "relation back" principle in limited circumstances and in this case it was agreed that the relevant provision could be found in s.35(5)(b) - "if the addition or substitution of the new party is necessary for the determination of the original action", such a substitution will not be "necessary" unless (s.35(6)(b)) "any claim already made in the original action cannot be maintained by or against an existing party unless the new party is joined or substituted as plaintiff or Defendant in that action...".

The Judge concluded, firstly that this was not a matter for discretion, outside of s.35 there is no power to substitute the parties and the Claimant must bring themselves within that section if the claim is to proceed. The Court of Appeal was not satisfied that the Claimant had done so in this case. They found that the cause of action, reg.3 of the EC regs, although based on negligence, was derived from statute and accordingly was its own distinct cause of action. It wasn't a claim for negligence but a claim for an indemnity under statute. The Court concluded:
"Although the...alleged negligence underlies both claims, the claims are not the same. It is not simply a matter of form. In substance these are two different causes of action."

The proposed substitution was not designed to maintain the original action but would constitute a new action against a new party. The appeal was accordingly dismissed.

Forbes Comment

This case highlights the dangers of issuing proceedings close to limitation, had the matter been identified prior to limitation expiring it would have been a simple matter to correct but in the circumstances, the Court has no discretion and justice cannot be a consideration, the Claimant's claim had to fail. From a Defendant's point of view it is important to identify all avenues of a possible defence. Here the Defendant was able to identify a procedural error or lack of understanding of the relevant regulations and defeat what ought to have been a relatively straightforward PI claim.

For further information please contact Nick Holgate at our Manchester office on 0161 918 0000 or email Nick Holgate

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