Ace Insurance SA-NV v Seechurn

Promissory estoppel will prevent reliance on a contractual limitation defence only where the insurer made a clear, unequivocal, unambiguous and unconditional promise not to rely on that defence. A willingness to continue negotiating, or to keep settlement discussions open subject to further medical examination, does not ordinarily amount to such a promise. The correspondence is construed objectively. Reliance and detriment, or circumstances making it inequitable or unconscionable to withdraw the promise, must also be established. Silence or inaction is ordinarily equivocal. Where no such promise is proved, continued negotiations and delay do not prevent reliance on limitation. The appeal was therefore allowed and the claim dismissed.

The respondent suffered disabling injuries in a bus accident and claimed benefits under two disability insurance policies. The first preliminary issue, concerning accrual of the contractual cause of action, was accepted on appeal. The second was whether the insurers were estopped from relying on section 5 of the Limitation Act 1980, because their correspondence had led the claimant to believe that they would continue considering his claim and would seek a stay if proceedings were issued before further medical examination.

The Central London County Court held that the insurers were estopped and that the action, issued more than six years after accrual, was not statute barred. The insurers appealed. The central issue was whether the correspondence contained a sufficiently clear promise not to rely on the statutory limitation defence.

1. Appeal allowed; claim dismissed. The court held that no estoppel prevented the insurers from relying on section 5 of the Limitation Act 1980.
2. The applicable inquiry was whether there was a clear, unequivocal, unambiguous and unconditional promise that the insurers would not raise the limitation defence. The promise had to be construed objectively by asking whether the correspondence could reasonably be understood to contain that particular promise.
3. A promise to keep negotiations open, or to reconsider the claim if the claimant underwent further medical examinations, was conditional and did not amount to a promise to surrender the insurers’ legal rights. Nor did warnings that proceedings might be stayed pending examination imply that limitation would not be pleaded. There was no duty to warn the claimant that the limitation period was approaching or had expired.
4. The court accepted that, if the necessary promise had been established, reliance causing loss of the opportunity to commence proceedings could have constituted detriment and made it inequitable or unconscionable to plead the time bar. That issue did not arise because no qualifying promise was proved.
5. After expiry of the limitation period, the claimant had refused the requested examinations and could not show that he had altered his position to his detriment. In the circumstances, the insurers were entitled to refuse further negotiations and deny liability for the stale claim.
6. Lord Justice Thorpe and Lord Justice Keene agreed that the appeal should be allowed. The order was for costs here and below, subject to the stated undertaking and set-off arrangement. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): [2002] EWCA Civ 67. Appeal from the Central London County Court allowed, with costs here and below; the claim was dismissed.
• Central London County Court: The judge held that the insurers were estopped from relying on section 5 of the Limitation Act 1980.