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Insurer's statement not waiver of right to time bar plea, court rules

21 February 2017

An extrajudicial statement by an insurer at an early stage of a claim that they would not take a plea of time bar was not a unilateral promise or waiver of rights and did not prevent a change of mind, a Court of Session judge has ruled.

Lady Stacey in the Outer House gave her decision in excluding from proof the averments of waiver by a firm of solicitors, Kilcoyne & Co, in an action by Christopher Brits, a former client who alleged that they had missed the time bar when instructed to raise proceedings following an accident he had at work.

In their pleadings the defenders admitted that when the action was raised, after the three year period had expired, the employers took a plea of time bar, and that in a telephone conversation with the solicitors who subsequently acted for Mr Brits their insurers agreed that the prospects of a court using its discretion to allow the action to proceed despite the time bar were poor. However they averred that in an email, a Mr Hotson, representing the employers' insurers, stated that his client would “not be taking the time bar defence”. That amounted on its face to an unequivocal waiver of the employers’ right to plead a limitation defence, on which the pursuer was entitled to found in the pursuit of his claim, but he had unreasonably failed to do so. The failure broke the causal connection between any failure of the defenders and any loss sustained by the pursuer.

Lady Stacey agreed with the pursuer's argument that the case most in point was Van Klaveren v Servisair (2009), where the court ruled that an admission of liability was a mere extrajudicial admission which might be withdrawn at any time before the record closed; it was neither an offer requiring acceptance nor any undertaking of a binding obligation to pay damages.

She concluded: "The difficulty for the defenders is that they have averred all that they can aver about the statement that was made by Mr Hotson: he indicated at an early stage, extrajudicially, that his client, that is the firm he insured, would not take the plea of time bar. He then changed his mind and the plea was taken. The authorities show that in those circumstances he was entitled to act as he did. There are no averments that support a plea that the right to take that plea was waived."

Click here to view the opinion.

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