Thu, 25 Mar 2021
Introduction
In Seabrook v Adam [2021] EWCA Civ 382 the Court of Appeal considered the interpretation and effect of two Part 36 offers in the context of applying the costs consequences of CPR Pt. 36.17.
In dismissing the appeal, the Court emphasised the importance of precision and specificity when drafting Part 36 offers.
Factual Background
The Claim arose out of a road traffic accident where the Defendant had driven into the rear of the Claimant’s vehicle. The Claimant was seeking damages for whiplash injury to his neck and an injury to his back.
The Particulars of Claim alleged that the Defendant had admitted ‘primary liability’; however, the Defence admitted breach of duty but denied that the Claimant’s injuries were caused by this breach.
The Claimant made two Part 36 offers on 9th March 2018, these offers read as follows:
- “To accept on condition that liability is admitted by the offeree, 90% of the claim for damages and interest, to be assessed.”
- “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.”
Neither of these offers were accepted.
At trial, the Claimant successfully established causation in respect of his whiplash injury but did not establish causation in respect of his back injury. The Claimant received £1,547 in damages out of the approximately £10,000 that had originally been claimed.
The Claimant sought to take advantage of the costs consequences set out in CPR Pt. 36.17 on the basis that he had bettered his own offers. The Claimant asserted that he had bettered his Part 36 offers because he had received 100% of the damages for his neck, whereas if the Part 36 offers had been accepted, the Defendant would only have had to pay 90% of this figure.
The trial Judge disagreed with this submission.
The Claimant appealed to HHJ Walden-Smith, who also disagreed with the Claimant’s submission and held:
- Had the Part 36 offers been accepted, the Defendant would have been prevented from challenging causation in respect of the back injury. Consequently, the Claimant would have recovered 90% of the damages for both neck and back, which would have been more than the sum the Claimant actually recovered. Therefore, the Claimant did not beat his Part 36 offers.
- The Part 36 offers made by the Claimant prevented the Defendant from disputing causation at trial. The Judge stated, “Part 36 is not designed to deny any realistic possibility of a party arguing fundamental principles with regard to liability.” ([paragraph 30] of HHJ Walden-Smith’s Judgment which is quoted at [8] by the Court of Appeal)
The Decision of the Court of Appeal
The Court of Appeal dismissed the Claimant’s appeal.
Lady Justice Asplin gave the lead Judgment, with which Lord Justice Males and Lord Justice Lewison agreed.
Asplin LJ stated, in seeking to interpret the Part 36 offers, one must consider the fact that the Defendant had admitted ‘primary liability’ but disputed causation. On that basis, a “reasonable reader would have understood both offers to be addressing liability and causation and to relate to both heads of damage”; [15]. This was for two reasons:
- In the context of a claim where breach of duty had been admitted, it made no sense to construe these offers, as Counsel for the Claimant had submitted, as offers that were confined to breach of duty and not causation. Such a reading of the offers was not consistent with the context of the case nor the ordinary meaning of the word ‘liability’, which “inevitably includes causation”; [16] and [18].
- Neither offer contained reference to the separate heads of damage in relation to the neck and back injuries. In this context, a reasonable reader would “construe the reference to ‘the claim for damages’ to mean the claim in its entirety and to construe the offers as a whole to mean that a concession as to liability and causation was required in relation to both injuries”; [17].
In light of the above, Asplin LJ concluded that the Part 36 offers required the Defendant to admit liability, in the sense of both breach of duty and causation, for both the neck and back injuries. Acceptance of these offers would have precluded the Defendant from successfully challenging causation in relation to the back injury at trial. Consequently, as the Claimant only succeeded in relation to his neck injury, he had not bettered his Part 36 offers.
Obiter of Interest
In the course of argument, Counsel for the Claimant had sought to rely upon the authorities of Lunnun v Singh [1999] 7 WLUK 5 and John Turner v P.E Coleman (1999) unrep as authority for the fact that the Defendant would still have been able to challenge causation even if he had accepted the Part 36 offers.
Asplin LJ rejected such a submission and considered that those authorities “do not establish that it is always open to a party to contest causation having admitted liability. They depended on their facts and precisely what had been pleaded just as in this case”; [20].
Asplin LJ’s comments in this case will be an important consideration for any practitioner seeking to rely on these authorities in the future.
Final Guidance for Practitioners
Asplin LJ’s Judgment concludes with some words of guidance that should be borne in mind by all practitioners who are drafting Part 36 offers:
“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, in accordance with CPR 36.5(1)(d). In particular, if the issue to be settled is “liability”, it would be sensible to make clear whether the defendant is being invited only to admit a breach of duty, or if the admission is intended to go further, what damage the defendant is being invited to accept was caused by the breach of duty.” [23]
