The case of Alton v PZU S.A. [2024] EWCA Civ 1435 arose out of a road traffic accident on the M20 motorway that occurred on 12 September 2017 and was a claim for damages in respect of personal injury and consequential losses, limited to £13,500. I adopt the past tense because the claim has now in fact been compromised, therefore, the judgment of the Court of Appeal was the final act in this particular drama.
Background
The Defendant was a Polish insurer who issued a policy of motor insurance in respect of the vehicle which caused the material road traffic accident – breach of duty was conceded. The claim was issued by a Claim Form dated 17th September 2020. Initially, the claim was, wrongly, brought against Defendant’s UK Green Card Correspondents, InterEurope A.G. The Claimant successfully applied by an application dated 15th March 2021 for permission to substitute PZU S.A. as the defendant in the proceedings. That application was granted by Deputy District Judge Murphy’s Order dated 23rd April 2021. There was no challenge to that Order.
Prior to Deputy District Judge Murphy’s Order dated 23rd April 2021, a Defence, dated 2nd March 2021, was filed making clear the Claimant’s error as to naming and pointing out that, in any event, the claim as constituted disclosed no cause of action because Regulation 3 of the European Communities (Rights against Insurers) Regulations 2002 on which the Claimant was relying did not apply in the specific circumstances of this case, whether as against PZU S.A. or their Green Card Correspondents. Further, and for the avoidance of doubt, it was pointed out that there was no viable of cause of action pleaded by the Claimant.
Whilst the Claimant had sought (and obtained) permission to amend the claim to name PZU S.A. as the defendant, her solicitors took no action to amend the cause of action relied upon by the Claimant to in order to found her claim despite being on notice of the point.
1st instance
The Defendant duly made an application to strike out the claim pursuant to CPR r.3.4(2)(a) on the same basis, namely that the claim as pleaded was defective and failed to disclose a cause of action. Deputy District Judge Pithouse heard the application, which proceeded on the basis of concessions made by counsel for the Claimant that the pleaded case of action was unviable; and also that the hearing was only to deal with the strike out application.
The Claimant sought to argue that she might have open to her a cause of action in Polish law. No evidence of Polish law was put before DDJ Pithouse and the height of the Claimant’s position (based on a bare (unevidenced) assertion) was that “[t]he overwhelming likelihood is that the law of Poland permits direct actions against liability insurers in the circumstances of this accident”. The Claimant’s position was that a unless order should be made against her, thus giving her an opportunity to apply to amend.
DDJ Pithouse acceded to the Defendant’s application to strike out the claim and he so ordered.
Appeal to the Circuit Judge
On appeal, His Honour Judge Parker reversed DDJ Pithouse’s Order on the basis that he considered that it was outside of DDJ Pithouse’s discretion to strike out the claim. In reaching this conclusion he found that DDJ Pithouse failed to: (i) consider whether striking out the claim was a proportionate response to the Claimant’s failings, (ii) give the Claimant a chance to put the defective pleading right as advocated by Tugendhat J in Kim v Park [2011] EWHC 1781 (QB), and (iii) address the possibility of making an unless order (as contended for by the Claimant).
In essence, Judge Parker held that striking out the claim was a too draconian sanction and disproportionate in the circumstances. He was also influenced by the fact that breach of duty for the accident had been conceded by the Defendant. Further, he followed the decision in Kim v Park, in which Tugendhat J stated:
“… where the court holds that there is a defect in a pleading, it is normal for the court to refrain from striking out that pleading unless the court has given the party concerned an opportunity of putting right the defect, provided that there is reason to believe that he will be in a position to put the defect right.”
In considering whether the Claimant would be in a position to advance a cause of action against the Defendant he noted that the Defendant did not positively assert that no cause of action was available to the Claimant in the circumstances. He considered the latter point significant. Judge Parker was unable to identify any prejudice occasioned to the Defendant by the dilatory conduct of the Claimant’s solicitors – he noted that the conduct of the Claimant’s solicitors was “deeply unimpressive”. Having reached the conclusion that DDJ Pithouse’s Order was “plainly wrong”, Judge Parker was entitled to exercise the decision afresh.
By the time the appeal was determined the Claimant had applied to amend the Particulars of Claim to advance her claim pursuant to Article 822(4) of the Polish Civil Code. Judge Parker directed that the Claimant’s application to amend and the Defendant’s application to strike the claim out would be considered at a further hearing (not before himself) by a circuit judge or a recorder.
Appeal to the Court of Appeal
The Defendant appealed. Popplewell LJ, giving the judgment of the Court at [2024] EWCA Civ 1435, held that Judge Parker was entitled to interfere with original order of DDJ Pithouse. He did not consider that DDJ Pithouse’s judgment was easy to follow, but he was satisfied that DDJ Pithouse was: (i) wrong to doubt that the Claimant could plead an effective cause of action against the Defendant, (ii) wrong to doubt that there was a lack of conviction on the Claimant’s part to pursue an application to amend the claim, and (iii) wrong not to take account of the balance of prejudice to the parties.
The Court of Appeal held that it deciding whether a pleading could be cured by amendment it was necessary to ask whether a pleading could be advanced which had a real prospect of success. Popplewell LJ made clear that this did not mean that the Claimant in this case had to show she would be bound to succeed, but rather that she had an arguable claim. He held that on the facts of this case, there was material from which it was “overwhelmingly likely” that the Claimant could advance a pleading that would succeed. The Court of Appeal was impressed by the likelihood of there being a provision in Polish law that would give a direct right of action against a motor insurer because of Poland’s obligation to implement the Sixth Motor Insurance Directive. It was unnecessary for the particular provision in Polish law to be articulated for the purpose of assessing whether there was reason to believe that the defect in pleading could be rectified. Still less was it necessary to adduce evidence of Polish law at this stage.
It is evident that the Court of Appeal relied on the fact that the Defendant, a Polish insurer, did not assert that there was no basis for a direct claim against it at all (and its reluctance to do so is no doubt because of the Directives, with which any travel practitioner is well acquainted whether versed in Polish law or not). Still further, Popplewell LJ noted that the Claimant’s assertions about the possibility of a direct claim against the Defendant arising in Polish law, “was not met by the suggestion that there was no such claim under Polish law”. This, he held, should have led DDJ Pithouse to “have drawn what we take to be the obvious inference that there was most unlikely to be an issue about the direct claim existing under Polish law once it was pleaded”.
Perhaps somewhat troubling for those acting on behalf of foreign defendants, Popplewell held that CPR r.1.3 (the parties’ duty to assist the court in furthering the Overriding Objective) should have meant that it was “incumbent on PZU to make clear whether it challenged what was said in paragraph 17 of Mr Rowley’s skeleton about what Polish law must provide, and to admit it if it was not challenged, a matter which PZU as a Polish motor insurer would have known without having to undertake any inquiries”. Popplewell LJ correctly noted that CPR r.1.3 cannot be interpreted as requiring a party to assist its opponent, however, the writer (who acted for PZU before the Court of Appeal) maintains that it cannot be right that a foreign party is under a duty to challenge unevidenced assertions. It is a fundamental evidential principle that he who asserts must prove. The need for a foreign party to challenge unevidenced assertions of foreign law is of real concern and potentially creates an unlevel playing field.
The Court of Appeal noted that there had been some argument before DDJ Pithouse as to whether a cause of action arising out of Polish law “arises out of the same facts or substantially the same facts” as the unamended claim for the purposes of s.35 of the Limitation Act 1980 and CPR r.17.4(2). The Court of Appeal did not purport to decide this issue, this issue being unnecessary to its disposal of the appeal. Further, and perhaps more importantly, the Court of Appeal heard no argument on this point; commentators suggesting the point was decided may want to revisit the judgment and specifically paragraph 33!
It is true to say that the Popplewell LJ doubted whether the fact a new cause of action arose from Polish law would offend either s.35 of the Limitation Act 1980 or CPR r.17.4(2). Popplewell LJ offers the opinion that foreign law, although treated as a special kind of fact, is “in substance, part of the identification of the legal, rather than factual, basis for a claim”. In other words, the requirement to treat foreign law, for pleading and evidential purposes, as ‘facts’ does not make foreign law averments ‘facts’ for the purpose of CPR r.17.4(2) or s.35 of the Limitation Act 1980, which is the genesis of CPR r.17.4(2).
Popplewell LJ’s obiter remarks are consistent with the obiter remarks of the Vice Chancellor in Latreefers Inc. and v Hobson [2002] EWHC 1586 (Ch). He suggested in that decision that the requirement to treat foreign law for the purpose of pleading as ‘facts’ did not mean that they were ‘facts’ in the sense envisaged by either s.35 of the Limitation Act 1980 or CPR r.17.4(2). The Vice Chancellor’s comments were obiter dicta as he found in Latreefers that the proposed amendments, in Liberian law in that case, arose out of facts put in issue by the defences filed in that action in any event. It is difficult to fault Popplewell LJ’s obiter comments on the relationship of foreign law and s.35 of the Limitation Act 1980 or CPR r.17.4(2) as it is difficult to sustain an argument that foreign law is actually a matter of fact.
In this case the new cause of action relied upon by the Claimant is a cause of action in Polish law. More precisely, it appears to be a Polish law provision that provides a direct right of action against a civil liability insurer providing cover in respect of compulsory insurance, namely motor insurance. There is no question that, in principle, the Claimant was able to rely on such a direct right of action on the basis of Article 18 of Regulation (EC) 867/2007 (“Rome II”), which provides that an injured party may rely on a direct right of action against a civil liability insurer where either the applicable law or the law governing the insurance contract permits such a direct right of action. Here, whilst the applicable law, namely English law, does not permit such a direct right of action, the Claimant would have been able to rely on any direct right of action that arises in Polish law, that being the governing law of the insurance contract.
For the avoidance of doubt, Brexit does not affect the position because the effect of Article 66.2 of the Withdrawal Agreement is that Rome II will apply to any accidents that occurred prior to the end of the transition or implementation period (exit day). The accident here occurred well before exit day.
Whilst the Court of Appeal benevolently suggests that an unevidenced assertion which is to the effect that there is a direct right of action in a foreign law is enough to see off a strike out application, this does not mean that those representing claimants should not properly consider whether a direct right of action actually arises in the circumstances. A useful starting point where there is any doubt would be to make enquires with the MIB or an appropriately qualified foreign lawyer.
Over the years I have seen a number of cases like the present be struck out often with a show cause order against the solicitors who acted for the claimant(s). This decision will hearten those caught out by pleading a claim against a foreign insurer. However, it would be dangerous to assume that strike out can be avoided in all circumstances. It must be noted that Alton was a case in its infancy in case management terms, the position might have been different if the claim had reached trial or a trial date was looming.
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