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Wormald v Ahmed - Part 36 Offers and the Death of a Protected Party - Paul Stagg, 1 Chancery Lane

05/05/21. The sudden death of the claimant in a personal injury claim where there are substantial claims for future losses may cause the value of the claim to reduce radically overnight, leaving parties regretting that they made, rejected or accepted offers to settle. The judgment handed down on April 21st 2021 of Ms Clare Ambrose, sitting as a Deputy High Court judge, in Wormald v Ahmed [2021] EWHC 973 (QB) exposes some of the clashes of competing objectives of the CPR that can arise in such a situation.

Facts

The claimant was seriously injured in a road traffic accident in 2009 at the age of 20. He suffered a traumatic brain injury. He lacked capacity to litigation and his mother was appointed as litigation friend for the purposes of his claim against the defendant driver who had hit him. Proceedings were commenced in 2013. Liability was contested. On October 15th 2014, the defendant made a Part 36 offer in the sum of £2 million in respect of the whole claim. In November 2014, a liability trial took place. The claimant succeeded in establishing negligence, subject to a reduction of 40% for contributory negligence. An appeal to the Court of Appeal was dismissed. The defendant’s offer of £2 million remained in place.

The claimant was wheelchair-bound and had a stent in his trachea. He had been admitted to hospital on a number of occasions with respiratory problems, and the defendant’s solicitors had been aware of those episodes. On September 14th 2020, he was admitted to hospital having had a choking fit and suffered what his mother told his solicitors was a “cardiac episode”. On the following day they were told that he was in a critical condition. They carried out an urgent review of the claim and the offers on the table. On September 17th, the defendant’s solicitors were told that the claimant had been hospitalised. Counsel was consulted about the proper valuation of the claim and in the evening, the claimant’s mother gave authority to accept the £2 million offer.

On the morning of September 18th, the claimant’s solicitors sent notice of acceptance of the Part 36 offer by e-mail. The defendant’s solicitors replied later asking for confirmation that the claimant was alive and for details of his condition and prognosis. A reply confirmed that the claimant was in a critical condition. On that evening, the claimant passed away. The claimant’s solicitors were notified of the death on September 21st. On September 25th, they sent notice purporting to withdraw the 2014 offer.

Applications were made by the claimant for a declaration that the offer had been validly accepted and for approval of the award. The defendant’s position was that the settlement should not be approved and that permission should be granted for the withdrawal of the offer.

Decision

The deputy judge defined the issues in the following terms, at [29]:

i) Where a protected party accepts a Part 36 offer is the other party subsequently able to withdraw that offer before approval of the settlement?

ii) When the court is asked to approve a settlement, on what grounds (if any) can a Part 36 offer be withdrawn?

iii) Should the court grant permission for withdrawal of the Defendant’s offer of 15 October 2014 or approve the settlement in the amount offered?

The deputy judge pointed out at [31] that it has always intended that CPR Part 36 was a self-contained code. This was first made explicit in the current 2015 version of Part 36: see CPR 36.1(1). Another important factor which Part 36 sought to promote was certainty: at [32]. By contrast, the provisions of Part 21 were designed to protect the interests of children and protected parties, to ensure that defendants could obtain a valid discharge from a claim, to ensure that awards were properly managed and to ensure that dependents are protected: at [35].

At [36]-[40], the deputy judge noted pre-existing case law, which had consistently held under predecessor rules that a compromise reached by or on behalf a child or protected party (or patient, as they were formerly known) was not valid unless approved by the court: Dietz v Lennig Chemicals [1969] AC 170; Drinkall v Whitwood [2003] EWCA Civ 1547, [2004] 1 WLR 462; Revill v Damiani [2017] EWHC 2630 (QB).

The claimant argued that the position was different under the new Part 36, because it provided expressly that the defendant could not withdraw the offer once accepted. The settlement should be approved, since even if there was a windfall benefit to the claimant, the court was not concerned with that. The offer had been deliberately left on the table by a defendant who had known of the claimant’s illness. The defendant relied on the pre-existing case law to suggest that a binding settlement could not be reached until approval had been granted under CPR 21.10.

The deputy judge concluded that there was no reason to hold that the wording of CPR Part 36 “trumped” the operation of Part 21: at [51]-[54]. Part 36 did not promote certainty at the expense of justice. In her conclusions on the first point at [59] she began by appearing to favour the defendant’s position:

a) A compromise made on behalf of a protected party by acceptance of a Part 36 offer requires the approval of the court under CPR 21.10 (CPR 36.11 & 36.14).

b) Where a protected party accepts a Part 36 offer, the offer and its acceptance are not binding to make a valid settlement until approved by the Court (CPR 21.10).

c) The proceedings are not stayed until the court approves the settlement (CPR 36.14).

d) Until the settlement is approved the other party may resile from its offer by giving notice of withdrawal (Drinkall). The withdrawal serves a purpose in giving notice that the settlement is challenged.

However, she then appeared to row back from the logical conclusion from those findings in her next sub-paragraph:

e) However, the notice of withdrawal will not in itself be valid for the purposes of Part 36 (CPR 36.9), in particular in relation to costs consequences.

f) Either party may apply for approval of the settlement (Practice Direction 21). A party resiling from the settlement may raise its position on that application. The court will decide whether the withdrawal is to be given effect or the settlement is to be approved.

g) Further consequences were not explored but that party could probably issue an application to resolve any issue as to how the proceedings continue, including the effectiveness of its withdrawal from the settlement.

The deputy judge then went on to look at the second of the three issues. She concluded that the court could confirm whether or not to grant approval of the settlement: at [60]-[63]. She said that investigation into whether the compromise amounted to over-compensation was undesirable, but then went on to state that “it may go in the balance” if it was a “clear case”: at [63]

On the evidence, she decided that in light of the inequality of knowledge, it would be unjust to hold the defendant to the settlement: at [64]-[69]. In the final paragraph of her judgment, she decided to give the parties the option to make further submissions as to whether the settlement offer should be approved: at [70].

Discussion

The problems in this case were caused by a lack of clarity as to the interaction between CPR 21.10 which requires approval of any settlement reached on behalf of a protected party and the terms of CPR Part 36. Neither Part is expressly made subject to the other. The only reference to CPR 21.10 in Part 36 is in CPR 36.11, which states (in part):

(1) A Part 36 offer is accepted by serving written notice of acceptance on the offeror.

(2) Subject to paragraphs (3) and (4) and to rule 36.12, a Part 36 offer may be accepted at any time (whether or not the offeree has subsequently made a different offer), unless it has already been withdrawn.

(Rule 21.10 deals with compromise, etc. by or on behalf of a child or protected party.)

(Rules 36.9 and 36.10 deal with withdrawal of Part 36 offers.)

The CPR commonly adopt that technique of referring in parentheses to other relevant rules after a statement of a rule. The aim is to make the rules more user-friendly, but it does not assist in determining which rule takes precedence if there is a conflict between them.

It is suggested that the deputy judge’s attempt to navigate between the submissions of the parties before her leads to unsatisfactory uncertainty all round. It appears to give the court a discretion as to whether the settlement should bind the parties or not. The criteria on which the court is to judge that issue are left wholly unclear.

It was incumbent on the deputy judge to decide categorically between the two submissions made before her rather than try to adopt a compromise solution. Both have a good deal to be said for them. The defendant’s stance is reflected properly in the historic case law. However, it is suggested that the claimant’s position is better reflected in the wording and purpose of the rules. The effect of accepting the defendant’s position is to require words to be read into CPR 36.9 and 36.11 which are not there. The right interpretation is that contended for by the claimant. Provided that the solicitors have authority to act on behalf of the claimant, the service of notice of acceptance amounts to acceptance of the Part 36 offer, as CPR 36.11(1) expressly states. The court’s permission to accept it is only required in the circumstances set out in CPR 36.11(3). The offer cannot then be withdrawn, as CPR 36.9(1) expressly provides. The role of the court is then to decide whether the settlement is in the best interests of the claimant under CPR 21.10. If it provides for more than fair compensation, approval should plainly be given. If it does not, then clearly the court’s approval must mean that the acceptance of the offer does not take effect, and to that extent the wording of CPR 36.9(1) and CPR 36.11(1) is abrogated. However, the claimant’s position undoubtedly does less violence to the wording of the rules than the defendant’s stance.

It is also suggested that the overall justice of the situation favoured the claimant here. There is force in the point made on behalf of the claimant that the defendant had a considerable degree of knowledge of the claimant’s condition and of his regular hospitalisations, and that any Part 36 offer involves the risk that the claimant will die prematurely and his estate will have a windfall as a result.

It is unknown whether the claimant will seek to challenge the deputy judge’s decision. The circumstances will probably not occur that frequently. Where a claimant dies before an offer is accepted, his solicitors will not have authority to accept it after his death: see eg Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (2018 edn) para 59-17. They will not acquire authority until the claimant’s estate has an administrator who can re-instruct the solicitors, which will give the defendant time to withdraw the offer if appropriate. The Civil Procedure Rules Committee ought to give further consideration to the interaction between CPR 21.10 and Part 36 so that a clear and principled position as to cases like this is reached.

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