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Howard Dean

Howard Dean

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Part 36 offers must be interpreted in light of the pleadings and any admissions made

Client Alerts19/03/2021

Seabrook v Adam [2021] EWCA Civ 382 – 18 March 2021

The Court of Appeal dismissed the claimant’s appeal finding the defendant had bettered both of the claimant’s Part 36 offers.

Circumstances

The claimant had pursued damages for a neck injury and an injury to his back arising out of a road traffic accident. The defendant had admitted breach of duty of care but denied causation.

The claimant made two Part 36 offers, with the first in respect of the whole of the claim:

 “To accept on condition that liability is admitted by the offeree, 90% of the claim for damages and interest, to be assessed.”

The second offer was in respect of an issue in the claim:

“To agree the issue of liability on the basis that the claimant will accept 90% of the claim for damages and interest, to be assessed.”

The offers were not accepted and at trial the claimant succeeded in being awarded damages for the neck injury but not for the back injury.

At first instance, District Judge Reeves found the offers were not genuine offers to settle and awarded the claimant fixed recoverable costs in the usual way.

The claimant appealed the order on the basis that the judgment was at least as advantageous as the Part 36 offers. It was submitted that the claimant had bettered his own Part 36 offers because he obtained 100% of the damages which were awarded.

In dismissing the appeal, Her Honour Judge Walden-Smith found that the defendant had bettered the Part 36 offers because only one of the two alleged injuries was found to have been caused by the admitted breach of duty of care.

Claimant’s case on appeal

The claimant appealed, contending that the Part 36 offers were genuine offers to settle providing a 10% discount on damages in return for an admission that “some damage” had been caused; and had the defendant accepted one of the offers, he would still be able to argue issues of causation upon assessment.

Defendant’s case on appeal

The defendant submitted that Part 36 is a self-contained code and any such offer must comply with CPR 36.5(1) and state whether it relates to the whole of the claim or to part of it; or to an issue that arises in it; and if so, to which part or issue.

If the defendant had accepted one of the offers then the effects of CPR 36.14(2) and (3) would apply in that the claim would be stayed upon the terms of the offer. If the offer accepted related to the whole claim it will be stayed. If it relates to part only, the claim will be stayed as to that part. As a result, it was contended it would not have been open to the defendant to argue causation.

The claimant’s case was confused as the offers clearly stated “liability” and yet he now sought to interpret them to mean “liability and some degree of causation”. Further, the claimant’s case was now that “some damage” had been caused and yet the offer referred to “the claim for damages” which could only mean the claim for damages to the neck and to the back. As a result, it was submitted that the offers were ill drafted and of no effect.

Judgment

In a short and succinct judgment, the Court of Appeal dismissed the appeal, finding that the “reasonable reader” of the offers would understand them as addressing liability and causation in relation to both the neck and back injuries.

It was not right to say there was room to accept either Part 36 offer but still dispute causation in relation to either or both of the alleged injuries.

Comment

Keoghs acted for the defendant upon instructions from Key Claims (Handling agents for Service Insurance).

Paul Twilley, Claims Director, said: “This is an excellent result for Service Insurance and their policyholder. It vindicates the decision to reject the offers and for Key Claims and the team at Keoghs to oppose the appeal.”

Whilst the judgment is limited to the facts of this case, the offers were specifically designed to maximise the amount of costs.

If the defendant had accepted the offers then judgment would have been entered and the case listed for a disposal hearing giving the claimant an entitlement to the fixed recoverable costs to trial.

If the defendant had rejected the offers and the judgment had been at least as advantageous, the claimant would have sought Part 36 penalties of costs on an indemnity basis, an additional amount, and interest on damages and costs.

If you have any questions regarding Part 36 offers of this nature then please contact Howard Dean.