Insurance companies often make admissions of liability in accident claims. Sometimes that admission is later withdrawn. The High Court was asked to consider the issue recently in the case of Philip Cavell v Transport for London.
CPR 14.1A deals with admissions of liability as follows –
(1) A person may, by giving notice in writing, admit the truth of the whole or any part of another party's case before commencement of proceedings (a 'pre-action admission').
(2) A person may, by giving notice in writing, withdraw a pre-action admission –
(a) before commencement of proceedings, if the person to whom the admission was made agrees;
(b) after commencement of proceedings, if all parties to the proceedings consent or with the permission of the court.
In Cavell the claimant was injured when he fell from his bicycle due to a defect in highway. Liability was admitted on behalf of the local authority’s insurers prior to commencement of proceedings. However, by way of defence, the insurers denied liability. The insurers then applied to withdraw the admission accordingly.
The insurers argued that they had a strong case on liability and should not be prevented from defending the claim due to the admission, which was an error on the part of their claims handlers. Further, it was said that if the highway was found to be defective, the insurers would be unable to claim indemnity from the contractors (the actual party responsible) if the admission could not be withdrawn.
Paragraph 7.2 of the Practice Direction to Part 14 gives the grounds to be considered by the court in determining the insurers’ application –
7.2 In deciding whether to give permission for an admission to be withdrawn, the court will have regard to all the circumstances of the case, including –
(a) the grounds upon which the applicant seeks to withdraw the admission including whether or not new evidence has come to light which was not available at the time the admission was made;
(b) the conduct of the parties, including any conduct which led the party making the admission to do so;
(c) the prejudice that may be caused to any person if the admission is withdrawn;
(d) the prejudice that may be caused to any person if the application is refused;
(e) the stage in the proceedings at which the application to withdraw is made, in particular in relation to the date or period fixed for trial;
(f) the prospects of success (if the admission is withdrawn) of the claim or part of the claim in relation to which the offer was made; and
(g) the interests of the administration of justice.
In addition, the court has also to have regard to the overriding objective as set out in CPR 1.1. The concept of dealing with the case justly involves considerations of equality of arms, expense, proportionality, expedition and fairness, and allocation of court resources.
Cavell was decided in favour of the claimant. The court did not accept that the admission had been an error and showed little interest in the indemnity argument raised because statute would entitle the insurers to recover their losses in any event.
In a case of my own, the insurers have admitted liability subject to the claim being worth no more than £25,000. This is now unlikely and the insurers may seek to withdraw their admission. The courts clearly have a wide discretion in this area and in the interest of fairness I would anticipate any such application being dismissed.