Part 36 is once again shown to be flexible, in order to save a solicitor from an embarrassing mistake

Mon, 31 Jan 2022

Personal Injury and Costs specialist Stephen Goodfellow of No5 Barristers’ Chambers highlights an example of CPR Part 36 being held to be subject to common law principles, despite it generally being considered a self-contained procedural code.

The recent case O’Grady v B15 Group td (formerly Brighthouse Group Ltd) [2022] EWHC 67 (QB), concerned a fatal road traffic accident, where the claimant erroneously made a Part 36 offer to settle liability 80/20 in favour of the defendant, rather than 80/20 in favour of the claimant.  The defendant, who had itself previously offered to settle liability 60/40 in favour of the claimant, readily accepted the claimant’s offer before the claimant realised the mistake.

At a hearing, before Master Thornett, the defendant accepted that a mistake had been made but argued that pursuant to the judgment of Moore-Bick LJ in Gibbons v Manchester City Council [2010] EWCA Civ 726, Part 36 “is to be read and understood according to its terms without importing other rules derived from the general law, save where that was clearly intended” (para.6).  On this basis, the court should disregard anything not directly expressed within Part 36 to have effect, namely the doctrine of mistake.  In the case of Gibbon, the Court of Appeal had held that common law rules of rejection and implied withdrawal did not apply to Part 36.

The claimant argued that the common law principle of mistake is consistent and compatible with the issue of whether the Part 36 offer was valid and its acceptance enforceable.  The Master also considered the decision in Ho v Adelekun [2019] EWCA Civ 1988, where the Court of Appeal held that the wording of a Part 36 offer was to be assessed objectively and that it was inherently improbable that the offeror intended to offer conventional costs rather than fixed costs in the particular circumstances.  In that case the court concluded that costs under the fixed costs regime were to be applied. 

In O’Grady, whilst noting that the relevance of improbability was extremely close to those considerations in common law mistake, the Master held that common law mistake can apply to a Part 36 offer where a clear and obvious mistake has been made, which was known by the offeree when they accepted the offer.  Whilst the Part 36 procedural code is intended to provide clarity and ensure clear, binding rules, this is not at the expense of justice and the overriding objective; much to the relief of fallible lawyers!

This decision re-iterates an increasing line of authority, that despite Part 36 being a self-contained procedural code, intended to provide certainty for the parties using it, if a Part 36 Offer is objectively implausible or unsustainable from the offeree’s understanding, then the court can and will recognise that.  Similarly, the court has been held to have discretion as to how it applies the penalties under CPR 36.17(4), pursuant to JLE (a child) v Warrington & Halton NHS Foundation Trust [2018] 12 WLUK 450

It will be interesting to see what further common law rules and discretion are incorporated into the Part 36 procedural code in the future.

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