Court of Appeal highlights the importance of clarity in Part 36 offers

A recent Court of Appeal judgment highlighted the importance of clarity in drafting Part 36 offers. In Seabrook v Adam [2021] ECWA Civ 382, the claimant’s failure to provide express terms within the Part 36 offer led to the defendant beating the offer terms and successfully avoiding the indemnity costs consequences under CPR 36.17.

Background

The claimant was involved in a road traffic accident, suffering neck and back injuries. The defendant conceded primary liability and breach of duty; however the issue of causation remained in dispute.

The claimant made two simultaneous Part 36 offers, both offering acceptance of 90% of the assessed damages and interest, but on different terms. The first offer stated that the claimant would settle the whole of the claim “on the condition that liability is admitted by the offeree…”. The second offered a compromise in relation to a specific issue, namely liability, “on the basis the claimant will accept 90%”. At first instance it was determined that whilst each offer was differently worded, the terms of the compromise amounted to much the same thing.

At the trial, judgment was entered for the claimant in the sum of just over £1,500, representing damages for the neck injuries only.

The claimant argued that they had beaten the terms of their own Part 36 offers by achieving 100% of the damages in respect of the neck injuries and sought the costs consequences in accordance with CPR 36.17. The court rejected this position and determined that both offers were on the basis of liability being accepted for all of the injuries pleaded. The claimant had failed to prove causation in relation to the back injuries, and it was the defendant who had beaten the Part 36 offer terms because liability was limited to damages for the neck injuries alone. The claimant appealed.

Decision

The appeal was dismissed.

The Court of Appeal held that the wording of the offers would be reasonably interpreted as relating to the resolution of all liability (including causation) for all of the pleaded injuries. As the judgment was for the neck injuries only, the defendant had beaten the offers.

Lady Justice Asplin concluded that:-

“Cases of this kind turn, inevitably, on the precise wording of the pleadings and the particular terms of the Part 36 offer. In order to avoid the kind of dispute which has arisen here, especially in a low value claim, it is important to make express reference in the Part 36 offer to whether the offer relates to the whole claim or part of it and/or the precise issue to which it relates…”

Comment

This judgment is a salutary lesson to those drafting Part 36 offers, showing that this should not be treated as a routine task. Getting it wrong can have major costs consequences. The wording of the offer must clearly set out what is intended. Recipients who are confronted with an ambiguous offer should consider seeking clarification before deciding whether or not to accept.

The authors would like to acknowledge the assistance of Nicholas Draper, senior paralegal at CMS Sheffield, in preparing this article.