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Troublesome Part 36 issues

16 June 2021
Since the original inception of the Civil Procedure Rules in 1998 and subsequent amendments to Part 36, litigators are still regularly turning to the courts for direction on Part 36 issues.

Since the original inception of the CPR in 1998 (and the subsequent comprehensive amendments to Part 36 in 2007 and 2015 respectively – both brought in as an attempt to simplify the rules and reduce the necessary satellite litigation), litigators are still regularly turning to the courts for direction and to decide on Part 36 issues which remain troublesome and incapable of agreement between the parties.

One of the most recent decisions is that of Seabrook v Adam [2021] EWCA Civ 382 with the lead judgment provided courtesy of Lady Justice Asplin.

Background

The underlying claim was one for damages following a low value road traffic accident. This was a rear-end shut where breach of duty of care was admitted pre-issue. Crucially however causation remained in dispute. The Claimant alleged two separate injuries as a result of the index RTA. These were whiplash and an additional back injury.

During the course of the litigation the Claimant, Mr Seabrook, made two Part 36 offers similar in substance but not identical. The wording of the two offers were as follows:

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

In short, both offers were to accept 90% of the pleaded claim for damages and interest awarded by the court (on the basis that full liability was admitted in full [i.e. to include causation]). Neither offer was accepted and at the fast track trial judgment was entered in favour of the Claimant with damages assessed at £1,574.50.

The issues that then remained in dispute between the parties and therefore required court determination were as follows:

  • Were the Part 36 offers genuine attempts to settle the claim? and:
  • If they were, did the Claimant better those offers considering that he recovered 100% of one of the heads of loss, whilst recovering nothing whatsoever in relation to the other heads of loss?

First Instance Findings

District Judge Reeves answered the first question above in the negative, holding that the offers were not genuine offers to settle. As a result DJ Reeves refused to take said offers into account when dealing with the issue of costs and chose to award costs in the usual way pursuant to CPR 44.2.

First Appeal

This order drawn by DJ Reeves then found itself before HHJ Walden-Smith. Her honour dismissed the Claimant's appeal on the basis that at trial, liability was limited to only one of the two pleaded injuries. The judge dealing with the original trial had found that the whiplash neck injury was proven on a balance of probabilities, but not the back injury. As a consequence, an award of damages of just over £1,500 was made which was set against a claim of approximately £10,000. For this reason, the court held that it was in fact the Defendant who had bettered the Claimant's Part 36 offers.

Court of Appeal

The lead judgment was undertaken by Lady Justice Asplin, who focused her findings around how the Claimant's Part 36 offers ought to be construed. More specifically, Asplin LJ made the point that when making Part 36 offers, parties should make express reference to exactly what their offer applies to (especially if limited to a particular part or head of a claim).

The judgment went on to admit that any 'reasonable reader' of the Claimant's offers would no doubt have understood that such offers when made must have been addressing both liability and causation, the former already having been admitted by the Defendant pre-issue. Asplin LJ also highlighted that both of the Claimant's offers failed to make any reference to the separate heads of damage for both pleaded injuries. It therefore followed that it was incontrovertible that both Part 36 offers must have been made in relation to the whole claim, encompassing both of the alleged injuries.

The Court of Appeal held that it was not inappropriate to find that, had the Defendant accepted either of the Part 36 offers, it would have meant that the Defendant had admitted liability for both the alleged injuries and this would then preclude its ability to subsequently submit that it had not caused the back injury at all. As the Defendant had only been found liable in relation to the neck injury, the Court of Appeal concluded that the Defendant had bettered both Part 36 offers. The Claimant was not awarded the additional costs it sought under CPR 36.17.

Consequences of the Court of Appeal Decision

What can litigators practising in the personal injury and costs arenas take from this decision?

This relatively simple yet powerful judicial authority operates as a compelling reminder that the list of required formalities contained within CPR 36.5 are not there merely for academic consideration, with r.36.5(1)(d) being the individual aggressor in this case. A suggested golden rule would be for practitioners to ensure, at the very least, that any Part 36 offers made in relation to a particular issue or head of loss of a claim are identified as such in a clear manner. It should always be borne in mind that the part of the claim to which a Part 36 offer refers to will be stayed with immediate effect if said offer is accepted.

Citing CPR 47.20(4) it wouldn't be foolish to note that the consequences of this judgment could equally apply to those Part 36 offers made for the purposes of, or during, live detailed assessment proceedings. The formalities are king and if a Part 36 offer made in relation to a Claimant's bill of costs represents only a certain aspect of it, such as hourly rates, then it is imperative that this is stated within the offer.

Contact Sukhjit Dhadwal or Jamie Bedford for more information.

Further Reading

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